Morning Wrap: US stocks mixed, copper slumps to six month low, ASX 200 to fall

US stocks mostly lower on Thursday, Alphabet shares surge following AI product and integration announcements, copper falls sharply to a fresh 6-month low, Disney+ loses 4 million subscribers on price hikes, the Bank of England hikes by 25 bps and China might have a deflation problem.

Let's dive in.

S&P 500 SESSION CHART

S&P 500 lower but recovered from session lows (Source: TradingView)

MARKETS

• S&P 500 lower, closed near session highs and off lows of -0.70%

• US Dollar Index rallies 0.65% to a near two-week high, dragging gold lower

• Copper slides 3.4%, breaking recent trading range to hit 6 month low

• Growth concerns back in focus amid uptick in initial job claims, China’s increasing deflation risks and latest signs of regions bank stress 

• Minneapolis Fed President Kashkari said inflation is coming down but has been persistent, Fed will have to keep policy tighter for an extended period of time

• Markets remain hopeful US can avert default despite little progress (Bloomberg)

STOCKS

• Disney guides wider loss for Disney+ as price hike impacted subscriptions (Bloomberg)

• Blackstone in talks with large regional banks over lending partnerships (FT)

• Microsoft won't raise salaries for full-time employees this year (Insider)

• PacWest says deposits fell 9.5% in the week of 6-May (CNBC) 

• Peloton slides after another product recall (Bloomberg)

• JD.com rallied after beating earnings expectations (CNBC)     

• Alphabet rallied after Google unveiled new software and gadgets at its developer conference (CNBC)

ECONOMY

• US producer prices up 0.2% month-on-month in April, softer than expected  (Reuters)

• BoE raises rates by 25 bps and Bailey promises to ‘stay the course (Reuters)

• China inflation continue to dissipate, adding to economic uncertainty (Bloomberg)

• China April bank loans tumble more than expected (Reuters)

Deeper Dive: Charts of the Week

This segment of the morning wrap brings you weekly technical commentary on the ASX 200 and some of the more interesting charts in the market. These are not meant as recommendations. They are for illustrative purposes only. Any discussion of past performance is for educational purposes only. Past performance is not a reliable indicator of future return. Always do your own research.

ASX 200 – Holding Pattern

ASX 200 chart (Source: Commsec)

It has been a pretty quiet week on the ASX 200. When we caught up last week the index was trading around 7200. It now sits at 7252 but, in the scheme of things – particularly technically - nothing has changed. We need to wait until the index tests either resistance towards 7600, or support around 6885, in order to see some fireworks. Until then, we’re in a holding pattern.

Aristocrat Leisure (ALL) – Press to start feature

Aristocrat chart (Source: Commsec)

It has been a volatile ride for ALL over the past few years, with the stock impacted by the pandemic. Since plunging to a low around $30 in December last year, however, the stock has rallied strongly and is on the verge of breaking to 12-month highs above $38.50. The only caveat, volumes have dropped off a little recently so you would really want to wait to see a clear break higher to confirm the move.

Washington H Soul Pattinson (SOL) – Keeps on keeping on

Washington H Soul Pattinson chart (Source: Commsec)

I have featured Soul Patts before but wanted to highlight it again. This is a perfect example of the trend being your friend. Many would baulk at a stock like this, saying it is ‘expensive’ but the reality is that it could get a lot more expensive. The price action has just broken higher again, through $32, and the momentum is clearly with the bulls. Average volume has been rising through the most recent part of the rally and it’s not particularly overcooked on the RSI. SOL is also historically a great dividend payer, which is something a lot of investors want in the current market environment.

• Trading ex-div: Janus Henderson (JHG) – $0.585, SSR Mining (SSR) – $0.078, ANZ (ANZ) – $0.81, WAM Capital (WAM) – $0.077, Macquarie Group (MQG) – $4.50 

• Dividends paid: Waypoint REIT (WPR) – $0.041, Newmark Property REIT (NPR) – $0.02, Cosol (COS) – $0.01 Washington H Soul Pattinson (SOL) – $0.36

• Listing: None

Economic calendar (AEST):

• 4:00 pm: UK GDP

• 12:00 am: US Consumer Confidence