ASX set to fall as Wall Street wraps up ugly April with more losses

Without the benefit of easing interest rates, companies will need to deliver bigger profits in order to support their stock prices, which critics have called too expensive following their run to records.

GE Healthcare Technologies tumbled 13.3 per cent after it reported weaker results and revenue for the latest quarter than analysts expected. F5 dropped 7.8 per cent despite reporting a better profit than expected. Its revenue fell short of forecasts, and it said customers were remaining cautious and forecasting largely flat IT budgets for the year.

McDonald’s erased an early loss and was up 0.2 per cent after its profit for the latest quarter came up just shy of analysts’ expectations. It was hurt by weakening sales trends at its franchised stores overseas, in part by boycotts from Muslim-majority markets over the company’s perceived support of Israel.

Helping to keep the market’s losses in check was 3M, which rose 3.1 per cent after reporting stronger results and revenue than forecast. Eli Lilly climbed 5.9 per cent after turning in a stronger profit than expected on strong sales of its Mounjaro and Zepbound drugs for diabetes and obesity. It also raised its forecasts for revenue and profit for the full year.

This earnings reporting season has largely been better than expected so far. Not only have the tech companies that dominate Wall Street done well, so have smaller companies across a range of industries.

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That’s a change from the recent past, and it helped push strategists at Deutsche Bank to raise their forecast for full-year earnings growth for the S&P 500. Many companies are topping forecasts because they’ve been able to wring more profit out of each dollar of revenue than analysts were expecting, according to Binky Chadha, chief strategist at Deutsche Bank.

Such strength could support stock prices even if interest rates end up staying high, according to Kristy Akullian, head of iShares Investment Strategy, Americas.

“Equities don’t need Fed rate cuts for the rally to continue, all they need is solid earnings growth,” she said.

In stock markets abroad, Japan’s Nikkei 225 rose 1.2 per cent after reopening following a holiday. The government reported stronger-than-expected gains in industrial production for March.