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Live ASX Update – Friday, May 22, 2023
Welcome to our live coverage for the ASX as we commence today’s trading. Expect a flurry of updates throughout the morning, with a summary wrap-up by 2:00 PM AEST. We appreciate your feedback to enhance our coverage further.
Eurozone PMI Declines Amid Rising Inflation and Employment Woes
[8:59 AM] The Eurozone’s composite Purchasing Managers’ Index (PMI) dipped to 47.5 in May from 48.8 in April, indicating a second consecutive month of contraction and the steepest output drop in over two and a half years.
- Services Sector: Experienced its fastest contraction since February 2021.
- Manufacturing Sector: Growth decelerated, with new orders decreasing.
- Economic Outlook: S&P Global anticipates a 0.2% contraction in Q2, with France at the forefront of the slowdown.
- Inflationary Pressures: Input costs surged to a 3.5-year high, with selling prices increasing at the fastest rate since late 2020.
- Employment: Fell for the fifth month consecutively with significant job losses in the services sector.
- Business Sentiment: Declined to a 32-month low, indicating widespread pessimism, particularly in France.
UK PMI Enters Contraction Due to Middle-East Conflict
[8:58 AM] The UK flash composite PMI fell to 48.5 in May from 52.6 in April, signalling contraction for the first time since April 2025 and raising concerns about stagflation.
- Services Activity: Saw the sharpest decline since January 2021.
- Manufacturing: Managed to reach a three-month high due to pre-emptive stockpiling.
- Economic Projection: S&P Global estimates a 0.2% quarterly contraction in GDP for May.
- Job Market: Private sector payrolls decreased for the 20th consecutive month, reflecting declining business confidence.
- Input Costs: Although slightly moderated, they continue to rise, influenced by surcharges related to the Middle East conflict.
US Flash PMI Indicates Growth Amid Rising Costs
[8:58 AM] The S&P Global flash PMI for the US held steady at 51.7 in May, although signals indicate ongoing inflationary pressures.
- Overall Growth: The three-month growth rate is now the weakest since early 2024.
- Manufacturing Gains: Surged to a peak supported by stock replenishment, while services growth remains subdued.
- Input Costs: Increased, marking the highest rise since 2022, driven by supply constraints and escalating energy costs.
- Employment Trends: Job loss in services countered by manufacturing job growth.
- Diverging Sector Sentiments: Manufacturers exhibiting optimism while services face decline.
Potential US-Iran Ceasefire Agreement on Horizon
[8:57 AM] According to Iran’s ILNA news agency, a mediated ceasefire draft agreement between the US and Iran may be announced soon.
- Key Features: The proposal includes a comprehensive ceasefire and guarantees for maritime navigation in critical regions.
- Sanction Adjustments: The US may gradually lift sanctions in return for Iranian compliance with the agreement.
- Negotiations Timeline: A week is set for discussions on remaining issues.
SpaceX Proposes Historic IPO on Nasdaq
[8:55 AM] SpaceX has submitted its S-1 registration to launch what could be a record IPO on the Nasdaq under the ticker SPCX.
- Valuation Insight: The company was valued at $1.25 trillion as of February.
- Revenue Streams: Q1 revenue reached $4.69 billion, with Starlink contributing a significant $3.26 billion.
- Profitability and Losses: Despite robust revenue, certain segments, including AI, reported heavy losses.
- Vision Ahead: SpaceX estimates a $28.5 trillion market opportunity across various sectors, planning innovative initiatives including solar manufacturing and orbital data centres by 2028.
Nvidia Reports Strong Earnings, Shares Slip
[8:45 AM] Nvidia’s stock slipped 1.7% despite beating Q1 earnings expectations and upgrading its Q2 guidance.
- Financial Highlights: Revenue surged 85% year-on-year, driven by substantial growth in the data centre sector.
- Future Projections: Q2 revenue forecasted to rise significantly, though a buyback programme and higher dividends failed to buoy investor sentiment.
Walmart Exceeds Revenue Expectations but Guides Lower
[8:42 AM] Walmart reported a revenue uptick but offered disappointing guidance for FY27, leading to a 7.2% decline in its stock.
- Performance Metrics: Revenue rose 7% to $177.75 billion, outpacing expectations, while guidance for future earnings fell short.
- Management Insights: Highlighted strong growth in essential categories, yet rising fuel costs posed significant challenges.
Market Movements Driven by Ceasefire Possibilities and AI Impact
[8:36 AM] US markets rebounded following reports of a potential ceasefire agreement and ongoing excitement in AI sectors.
- Inflation Response: A rally in Treasury prices complemented the recovery in equity indices, although oil prices experienced a slight drop.
- Market Indices: The Dow closed at a historic high, with modest gains seen in S&P 500 and Nasdaq.
Good Morning!
[8:25 AM] ASX 200 futures are up by 35 points (+0.40%). A brief overview of overnight market dynamics:
- The Dow continued to reach new highs.
- Signals of a US-Iran agreement are stirring market optimism.
- Stock performances varied significantly, influenced by a mix of earnings reports and geopolitical developments.
This concise overview reflects the latest developments; stay tuned for additional updates throughout the day!
