Technology shares on the Australian sharemarket suffered a blow on Wednesday following negativity on Wall Street.
The tech-heavy Nasdaq index recorded its third worst first-day performance since the 2001 dotcom bust, as traders reined in their bets on the scale of interest rate cuts in the US.
The S&P/ASX 200 fell 64.2 points, or 0.8 per cent, to 7563.6 at about 11am AEDT as tech stocks and miners led the decline and all sectors except consumer staples traded in the red.
The operator of Dan Murphy’s, Endeavour Group (up 1.9 per cent), was the biggest large-cap advancer after its chair Peter Hearl stepped down, lifting the consumer staples sector (up 0.1 per cent) alongside supermarket giant Coles which gained 0.4 per cent.
Insurers QBE (up 1.6 per cent), Suncorp (up 0.7 per cent), Medibank Private (up 0.4 per cent) and IAG (up 0.3 per cent) were also among the winners in Wednesday morning trade, paring back a weaker performance in the previous session.
Technology companies (down 1.6 per cent) were among the worst performers, tracking a substantial fall in the Nasdaq 100 overnight. Data centre operator NEXTDC shed 1.9 per cent and Xero slid 1.8 per cent.
Gold miners Northern Star (down 2.8 per cent) and Evolution (down 2.3 per cent) were among the biggest large-cap decliners as traders reined in their bets on the scale of interest rate cuts in the US. Gold assets tend to perform better when traders flock to them as a hedge against inflation, which higher interest rates are often used as a tool against.
Miners more broadly shed 1.4 per cent as iron ore heavyweights BHP (down 1.2 per cent), Fortescue (down 2 per cent) and Rio Tinto (down 1.5 per cent) fell. The big four banks also traded in the red as CBA shed 1.2 per cent, NAB lost 1.1 per cent, Westpac slipped 0.9 per cent and ANZ dropped 1 per cent.
Meanwhile, Asian equities are set to track a drop in US stocks and Treasuries. Stock futures for Hong Kong pointed to a decline, while the Nasdaq Golden Dragon China Index, a gauge of US-listed Chinese shares, fell 3.5 per cent on Tuesday. Japanese markets remain closed for a holiday.
The Nasdaq 100 dropped the most in more than two months as the tech sector giants dubbed the Magnificent Seven fell. The Bloomberg Dollar Spot Index jumped the most since March, while the yield on the 10-year Treasury rose. Cash Treasuries are closed during Asian hours due to the Japanese holiday.
The first trading day of the new year brought 2023’s scorching rally to a halt after a more than $8 trillion surge in the S&P 500 last year. The slump in bonds worldwide reflects doubts that policymakers will deliver the extent of monetary easing that’s priced by money markets, with central banks reluctant to give up the fight against inflation too soon.
Traders are waiting for the release of the latest US Federal Reserve minutes on Wednesday. The tone is expected to be hawkish, according to BMO Capital Markets’ Ian Lyngen. “A dovish surprise, while unlikely, would hold far greater shock value for a market that has moved away from taking the Fed at face value in favour of a more sceptical approach,” the strategist wrote.
US job openings data released on Wednesday (Washington time) and Friday’s non-farm payrolls will also be scanned for signs of weakness in the labour market.
“If Fed Chairman Powell is right that inflation can slow further without a sharp increase in unemployment, then the stock and bond rallies are justified,” according to Bloomberg Economics.
Kristalina Georgieva, the head of the International Monetary Fund, told CNN International that the US economy is “definitely” headed for a soft landing thanks to the Fed’s “decisiveness” in taming inflation.
Almost all emerging-nation currencies traded lower against the greenback on Tuesday. The yen weakened in thin trading as investors monitored conditions after an earthquake in Japan on Monday.
Bitcoin climbed above $45,000 for the first time in almost two years Tuesday. Anticipation is intensifying around the expected US approval for an exchange-traded fund investing directly in the biggest token.
In Asia, sentiment was dented after Chinese President Xi Jinping acknowledged some companies and citizens had endured a difficult 2023 in a rare admission of domestic headwinds facing the country.
The People’s Bank of China injected nearly US$50 billion ($74 billion) worth of low-cost funds into policy-oriented banks last month, suggesting the central bank may be ramping up financing for housing and infrastructure projects to support the economy.
Despite persistent weakness in China, some investors consider a slump of almost 60 per cent as a signal to buy Chinese stocks. Almost a third of 417 respondents to Bloomberg’s latest Markets Live Pulse survey say they will increase their China investments over the next 12 months.
Source: Thanks smh.com