Pre-Market Report – Wednesday 15 May: Budget Fall Out | Winners in Retail and Mining

Market Updates

Wall Street ended higher overnight, near best levels in another lower volume trading session leading into CPI results tomorrow. Markets shrugged off a mixed reading on producer inflation, and Powell signalled that interest rates will be higher for longer. Dow +127 points (+0.32%). Up 185 points at best. Down 60 points at worst. S&P 500 gained 0.48%, just a few points away from its record, and the NASDAQ rose 0.75%, closing at record high, with Tesla +3.3% and Nvidia +1.1% leading gains in Megacap tech stocks. US PPI rose more than expected in April, up 0.52% MonM, significantly above expectations of 0.3% as the cost of services and goods rose sharply. Powell described PPI results as more mixed than hot, given the prior period was revised lower. US treasury yields slipped, following PPI results, 10Y down 4.5bps, 2Y down 4.7bps, with the inversion between the 2Y and 10Y little changed at -38.1bps. US President Biden unveiled steep tariff rises on Chinese imports, including EV batteries, computer chips, and medical products affecting $18bn in imported Chinese goods.
ASX to rise. SPI Futures up 30 points (+0.40%).

• Base metals mixed. Copper %, Nickel %, Aluminium %, Zinc %, Lead % and Tin %.
• Copper fell 1.32% on arbitrage trading and speculative buying by funds. Copper producers and traders are shipping more metal to the US to profit from higher prices for CME futures compared to LME.
• Gold gained 0.90% helped by a pullback in the USD and treasury yields.
• Oil prices eased after US data raised concerns that interest rates may stay higher for longer but supply concerns put a floor under prices. WTI down 1.35% and Brent Crude off 0.76%.
• Currencies – AUD +0.03%, USD Index -0.19%, Euro +0.02%, and Bitcoin -1.87%.
• 10Y Bond Yields – US 4.445%, Australia 4.343%, and Germany 2.540%.

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