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Morning Research Notes - 01.05.25
U.S. stocks exhibited mixed results on Wednesday, driven by optimism over the potential easing of U.S.-China trade tensions, despite data indicating that the U.S. economy contracted in Q1. Commodities faced headwinds on Wednesday. Gold declined by 0.7% to $US3293.87 an ounce, while Brent Crude (oil) fell by 1.8% to $US63.12 a barrel and iron ore decreased by 1.5%, reaching $US96.95 a tonne.
Wall Street closed mixed on Wednesday, with the S&P 500 ending flat at -0.01%, the Dow Jones Industrial Average rising 141 points (0.4%), and the Nasdaq slipping 0.1%. Hopes of easing U.S.-China trade tensions buoyed the market, as reports indicated that the U.S. had initiated contact with China to discuss tariff-related matters. This move, highlighted by a post on Weibo (linked to China Central Television), suggested a potential thaw in trade relations. Despite this, data showed the U.S. economy contracted by 0.3% in Q1, a significant fall compared to last year's Q4's data (+2.4%), driven by a 41.3% surge in imports. Additionally, U.S. private payrolls added only 62,000 jobs in April, down from 147,000 in March. Corporate earnings also impacted the market, with Starbucks falling nearly 6%, Caterpillar reporting lower profits, Norwegian Cruise Line dropping over 7%, Super Micro Computer slumping 11.5%, and Snap declining more than 12.5%. Meanwhile, Microsoft and Meta's results were in focus, with Apple and Amazon set to report later in the week.
The Australian stock market closed higher on Wednesday, with the ASX 200 increasing by 0.68%. Key sectors such as Financials, Information Technology, and Healthcare all ended the day in positive territory. In contrast, Materials and Utilities closed down, falling by 0.43% and 1.48%, respectively. Major commodities performed strongly, with Aluminium, Copper, and Zinc all closing in the green, rising by 1.25%, 1.30%, and 1%, respectively. However, Nickel declined by 0.45%.
More than 100 countries increased their military spending in 2024, with Europe’s military spending surpassing levels last seen at the end of the Cold War, driven mainly by the war in Ukraine. Meanwhile, the Middle East’s expenditure reached an estimated $243 billion, a 15 per cent increase on 2023, as the Israel-Gaza war and the conflict with Hezbollah in southern Lebanon continued. Asia saw its biggest annual increase since 2009 at 6.3 per cent amid heightened tensions, particularly in East Asia.
Source: SIPRI
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