Tech shares weigh down ASX after Wall Street slide; $A slumps
By Damian Troise and Alex Veiga
The Australian sharemarket has opened lower following a weak lead from Wall Street, with tech shares leading the early drop.
The ASX200 is 0.3 per cent lower to 7105.5 in early trade. The tech sector has shed 2 per cent, but most sectors were lower aside from energy which posted strong gains on the back of Woodside, Santos and coal stocks. On Wednesday, the ASX added 0.3 per cent. The Australian dollar has retreated sharply overnight to be fetching 69.38 US cents at 10.30am AEST.
Stocks on Wall Street closed broadly lower as drops by big technology companies wiped out the S&P 500’s gains for the week.
The benchmark index fell 0.7 per cent, snapping a three-day winning streak. The Dow Jones Industrial Average fell 0.5 per cent and the tech-heavy Nasdaq slid 1.3 per cent.
Small-company stocks fell more sharply than the rest of the market, pulling the Russell 2000 1.6 per cent lower.
Traders focused on a mix of retail updates that indicate inflation pressure continues to affect businesses and consumers, but also shows that spending remains strong. A government report showed retail sales were flat last month, and Target shares slumped after the retail chain reported a nearly 90 per cent skid in quarterly profits.
“You saw Target coming out and being softer than we thought, so maybe it spooked investors a little bit,” said Sylvia Jablonski, chief investment officer at Defiance ETFs. “It’s a small correction from the bear market rally.”
Trading has been choppy throughout the week as the benchmark S&P 500 comes off a four-week winning streak.
Pricey technology companies, communication stocks and retailers had some of the biggest losses. Only energy stocks notched gains as the price of US crude oil rose.
Bond yields rose significantly. The yield on the 10-year Treasury rose to 2.89 per cent from 2.81 per cent late Tuesday.
Wall Street has been closely reviewing the latest economic data and corporate updates to get a better sense of how inflation is affecting businesses and consumers and whether the hottest inflation in 40 years is peaking or beginning to cool. Investors are also monitoring inflation to determine how much further central banks have to go in their fight against higher prices.
Meanwhile, Target fell 2.7 per cent after reporting a nearly 90 per cent plunge in second quarter profits as it was forced to slash prices to clear unwanted inventories. The retailer warned earlier this summer that it was cancelling orders from suppliers and aggressively cutting prices because of a pronounced spending shift by Americans as the pandemic eased.
Britain’s inflation rate rose to a new 40-year high of 10.1 per cent in July, a faster pace than in the US and Europe as climbing food prices in the United Kingdom tightened a cost-of-living squeeze fuelled by the soaring cost of energy. Inflation pressures prompted the Bank of England to boost its key interest rate by half a percentage point this month, the biggest of six consecutive increases since December.
AP
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