US tech stocks set the tone: US senate passes $280b semiconductor bill

Market Reports

by Tim McGowen

US equities were sharply higher in Wednesday trading with support from better than feared big tech earnings and clarity around interest rates after the Fed’s 75 bps rate rise announcement.

Stocks hit their highs of the session in the afternoon as Fed Chairman Jerome Powell left the door open about the size of the central bank’s rate move at its next meeting in September and noted it would eventually slow the magnitude of rate hikes. The market currently expects a 50 bp move.

Investors were also encouraged after Powell noted that he doesn’t believe the economy is currently in a recession. The second-quarter GDP reading is due on Thursday and will confirm this one way or another.

The Dow Jones Industrial Average jumped 436.05 points, or nearly 1.4 per cent, to 32,197.59. The S&P 500 gained 2.62 per cent to close at 4,023.61. The Nasdaq Composite climbed 4.06 per cent to 12,032.42.

Over night the U.S. Senate passed a $280 billion bill to counter China. In rare bipartisan fashion, the US Senate passed an expansive $280 billion bill aimed at building up Americas manufacturing and technological edge to counter China.

Did you know the most advanced category of mass-produced semiconductors - used in smartphones, military technology and much more is made by a single company in Taiwan which makes about 90 percent of them. US factories make none. The US military relies on these chips - hence the passing of this bill to fund the manufacture of these semiconductors in the US.

Stocks started the day on a high note after getting a boost from tech earnings. Tech stocks added to those gains as the overall market rallied.

The strength in tech stocks was reflected across the sectors with communication services, IT & consumer discretionary significantly outperforming.

Alphabet shares rose about 7.7 per cent after the tech giant’s quarterly report showed strong revenue from Google’s search business.

Microsoft gained close to 6.7 per cent after reporting a 40 per cent jump in revenue growth. Microsoft’s profits, while below expectations, were still up. Sales of its signature software products, like Office, rose 13 percent. Its cloud services were up 40 percent. And LinkedIn, the professional social network Microsoft bought in 2016, grew 26 percent from a year ago, continuing to benefit from the tightest job market in decades.

Meta Platforms shares rose nearly 6.6 per cent, ahead of its earnings scheduled for after the bell. The stocks is currently down 4 per cent after market post its earnings report.

Amazon advanced more than 5 per cent after getting hit by the retail carnage Tuesday. Apple added 3.4 per cent.

Retailers rallied too as inflation concerns softened Wednesday afternoon. Walmart, which led retail declines in the previous session, climbed about 3.8 per cent and Costco added more than 2 per cent each. The SPDR S&P Retail ETF advanced roughly 2.6 per cent.

One Australian dollar has strengthened overnight compared to the US dollar yesterday, buying 70.01 US cents

In commodity news

Iron ore is 0.6 per cent lower at US$111.05 tonne. Iron ore futures are pointing to a 2.8 per cent gain.
Gold gained $16.10 or 0.9 per cent to US$1752 an ounce.
Silver was up $0.53 or 2.8 per cent to US$19.06 an ounce.
Copper was up $8.80 or 2.6 per cent to US$347.25 a pound.
Oil gained $3.26 or 3.4 per cent to US$98.24 a barrel.

Bitcoin futures were up 9.1 per cent, back above $22K.

The SPI futures are pointing to a 0.8 per cent gain.

Figures around the globe

Across the Atlantic, European markets closed higher. Paris added 0.8 per cent, Frankfurt gained 0.5 per cent and London’s FTSE closed 0.6 per cent higher.

Asian markets closed mixed. Tokyo’s Nikkei added 0.2 per cent, Hong Kong’s Hang Seng lost 1.1 per cent and China’s Shanghai Composite closed 0.1 per cent lower.

Yesterday, the Australian sharemarket added 0.2 per cent to 6,823.


There are five companies set to trade without the right to a dividend.

Euroz Hartleys Group (ASX:EZL) is paying 8.5 cents fully franked
Gryphon Capital Income Trust (ASX:GCI) is paying 0.97 cents unfranked
Kkr Credit Income Fund (ASX:KKC) is paying 1.0938 cents unfranked
Perpetual Credit Income Trust (ASX:PCI) is paying 0.4206 cents unfranked
360 Capital Enhanced Income Fund (ASX:TCF) is paying 3 cents unfranked

Dividends payable

There are four companies set to pay eligible shareholders today.

Australian Unity Office Fund (ASX:AOF)
Clime Capital (ASX:CAM)
Sunland Group (ASX:SDG)
Turners Automotive Group (ASX:TRA)


There is one company set to make its debut on the ASX today. Keep an eye out for Coolabah Metals (ASX:CBH) after raising $6 million at 20 cents per share. 

Sources: Bloomberg, FactSet, IRESS, TradingView, UBS, Bourse Data, Trading Economics, CoinMarketCap.

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