On Tuesday, the US stock markets experienced a modest decline, driven by rising inflation concerns attributed to surging oil prices. While the Dow Jones narrowly missed ending in negative territory, the S&P 500 and Nasdaq both registered declines of 0.6% and 1%, respectively. In the tech sector, giants like Microsoft and Apple bore the brunt of these worries, with their stocks declining by 1.8% and 1.7%, respectively.
Alongside these market moves, several significant corporate developments took place, including Apple’s unveiling of the iPhone 15 and Oracle’s disappointing fiscal first-quarter revenue. However, WestRock’s merger announcement brought some positive momentum to the market. In the midst of these developments, the S&P/TSX Composite index in Canada managed to outperform its US counterparts. Here, we delve into the key factors influencing these market movements and the dynamics shaping soybean and corn futures.
US Stock Markets Respond to Inflation Concerns
The decline in US stock markets on Tuesday can be attributed to concerns surrounding inflation, primarily driven by higher oil prices. With investors eagerly awaiting inflation readings due the following day, market sentiment was cautious. In particular, the tech sector, which is sensitive to interest rate changes, faced headwinds. Tech giants like Microsoft and Apple saw their stock prices drop by 1.8% and 1.7%, respectively. These declines were partially driven by worries that rising inflation could lead to higher interest rates, impacting the valuations of growth-oriented tech companies.
Apple made waves in the corporate world by announcing its new iPhone 15, featuring USB-C charging, with a starting price of $799. Additionally, the company unveiled a brand-new Apple Watch, further cementing its position as a leader in the tech industry.
Meanwhile, Oracle disappointed investors as its fiscal first-quarter revenue fell short of expectations, causing its stock to plunge by 13.5%. Conversely, WestRock experienced a surge in its stock price, jumping 2.8%, after announcing a merger with Smurfit Kappa. This merger is set to create the world’s largest listed paper and packaging company, with an estimated value of nearly $20 billion.
Canadian Markets Shine
The S&P/TSX Composite index in Canada ended 0.2% higher, closing at 20,223 points. The energy sector drove the standout performance, offsetting losses in metals and technology stocks. Energy producers in the oil sector experienced significant gains after OPEC projected a shortfall in the oil market for the year. Canadian Natural Resources and Suncor Energy saw stock prices increase by 1.9% and 2.4%, respectively, propelling the energy sector to a 2.1% gain.
Additionally, financial shares in Canada rose by 0.2%. However, muted sentiment ahead of the release of US Consumer Price Index (CPI) figures tomorrow impacted the Nasdaq Composite and tech shares traded in Toronto. Shopify, a prominent tech company, saw its stock price drop by 2.5%.
Soybean and Corn Futures React
The price of soybean futures in the US dropped to $13.3 per bushel, hitting a four-week low. This decline occurred due to the US Department of Agriculture (USDA) reducing the soybean harvest. Hot and dry conditions during key growth stages were responsible for the reduction. Despite falling short of projections, the soybean yield is expected to be the fifth-largest on record. Meanwhile, China continues to exhibit strong demand for soybeans, as evidenced by their record-high imports in the 2022-23 period.
Conversely, corn futures in the US fell to below $4.7 per bushel, marking their lowest point in one week. This decline followed a USDA report that indicated corn crops were not as negatively impacted by hot and dry weather during the summer as initially feared. The extensive acreage planted offset damage to yield projections caused by extended dry conditions. The USDA projected corn production at 15.134 billion bushels, surpassing expectations, and average yields were anticipated to be 173.8 bushels per acre.
Currency Market Trends
In the currency markets, the Polish Zloty, Norwegian Krone, and Japanese Yen faced depreciation, with losses of 0.67%, 0.56%, and 0.43%, respectively. Conversely, the Russian Ruble, Dollar Index, and Mexican Peso saw gains of 0.21%, 0.21%, and 0.13%, respectively.
The US stock markets experienced a modest decline driven by inflation concerns amid rising oil prices. Tech stocks were particularly impacted, while Apple’s product announcements and Oracle’s disappointing revenue were notable corporate events. In Canada, the S&P/TSX Composite index outperformed its US counterparts, with gains in the energy sector offsetting losses elsewhere.
Soybean and corn futures reacted to the USDA’s crop reports, with soybeans hitting a four-week low and corn futures experiencing a one-week dip. Currency markets saw fluctuations, with some currencies losing ground and others making gains. These developments underscore the interconnectedness of global markets and the importance of monitoring various factors that influence asset prices.