Markets Overview

  • ASX SPI 200 futures down 0.8% to 6,489.00
  • Dow Average down 0.5% to 30,630.17
  • Aussie down 0.2% to 0.6748 per US$
  • U.S. 10-year yield rose 2.7bps to 2.9595%
  • Australia 3-year bond yield rose 12bps to 2.98%
  • Australia 10-year bond yield rose 2bps to 3.41%
  • Gold spot down 1.5% to $1,710.07
  • Brent futures up 0.2% to $99.76/bbl

Economic Events

  • 11am: (AU) Australia to Sell A$700 Million 4.75% 2027 Bonds

Stocks closed well off session lows as comments from Federal Reserve officials brought some relief to investors worried that a more aggressive pace of rate hikes could trigger a recession.

The S&P 500 almost erased a slide that topped 2% as Fed Governor Christopher Waller and Fed Bank of St. Louis President James Bullard said they would back a 75-basis-point hike in July after a hot inflation print. The tech-heavy Nasdaq 100 climbed amid gains in giants like Apple Inc. and Intel Corp.

About $1.9 trillion of options are set to expire Friday, obliging investors to either roll over existing positions or start new ones. The monthly event includes $925 billion of S&P 500-linked contracts and $395 billion of derivatives across single stocks scheduled to run out, Goldman Sachs Group Inc. estimates.

Treasury two-year yields fell as traders shifted their bets away from a full-point hike by the Fed this month. Markets may have gotten a little ahead of themselves in betting on a move of that magnitude, Waller said.

Other News

Twitter’s legal complaint accusing Elon Musk of violating his $44 billion takeover agreement includes an unusual exhibit: a tweet from the billionaire containing the poop emoji.

The lawsuit filed on Tuesday in Delaware cites Musk’s May 16 tweet, among others, as evidence that he publicly disparaged Twitter, in violation of the merger agreement, before he backed out of the deal entirely.

Musk’s tweet with the smiling poop emoji came in response to Twitter CEO Parag Agrawal, who had sent several tweets explaining the company’s procedures to combat spam and fake accounts, a battle Agrawal described as ‘dynamic’.

Last week, Musk said he was terminating the buyout deal over concerns about bots and fake accounts, and he responded to the lawsuit with a tweet explaining that his use of the colorful emoji was shorthand for ‘BS’, a common abbreviation for ‘bulls**t’.

Now Twitter is seeking a court judgement to force Musk to buy the company at $54.20 per share, as he agreed in the April 25 merger deal — and many legal and financial experts believe the social media platform has a strong case.

Twitter’s lawsuit cites numerous tweets from Musk as evidence that he violated the merger agreement by disparaging the company and revealing non-public information.

In one May 17 tweet, Musk appeared to encourage the SEC to investigate the accuracy of Twitter’s public disclosures.

The company argues that these tweets violate the merger agreement, which states in part that Musk is allowed to tweet about the buyout ‘so long as such Tweets do not disparage the Company or any of its Representatives.’

While Musk’s tweets are presented as evidence that he has been pursuing the takeover in ‘bad faith’ — but the crux of Twitter’s argument is that the world’s richest man is bound by the deal to buy the company that he signed on April 25.

The suit notes that the deal includes no contingency requiring Musk to secure financing, and that the billionaire waived the customary right to due diligence, which refers to the type of investigation into business fundamentals that he later pursued regarding fake accounts.

Twitter stock jumped nearly 8 percent on Wednesday, to $36.75, in a sign that investors view the company’s lawsuit as likely to succeed in some capacity.

(Daily Mail)