Outlook for the day: Mildly negative after the Dow has its worst night in more than a month.
ASX futures: down 16 points or 0.19%
Overnight themes:
US stocks slid as a rally in treasury yields resumed, pressuring rate-sensitive megacaps and raising questions about the likely pace of interest rate cuts.
The Dow and S&P 500 fell to a third straight loss. The blue-chip average dropped 410 points or 0.96%, its biggest percentage loss in more than four weeks. The S&P 500 shed 0.92%.
The Nasdaq Composite gave up 1.6% as Apple, Nvidia, Amazon and Meta all lost at least 2%.
Stocks fell as the yield on 10-year US treasuries hit a three-month high. Yields have been on the rise for the last month as strong economic data challenged market consensus pricing on rate cuts, and as a second Trump presidency appeared more likely. Both presidential candidates have floated policies that appear likely to increase the national fiscal deficit.
"The market is repricing the probability that the Fed can aggressively cut rates. There have been parts of the economy that haven’t felt the impact of rising interest rates yet, but the longer rates remain higher, the more different parts of the economy have to reprice to that reality… the economy is out of equilibrium” - Brent Schutte, chief investment officer at Northwestern Mutual Wealth Management (per CNBC).
The three sectors dominated by megacap stocks were hit hardest: consumer discretionary -1.82%, tech -1.68% and communication services -1.37%. Losses elsewhere were more modest - materials -0.35%, financials -0.12%.
Utilities and real estate were the only sectors to defy the selling, gaining around 1%.
Tesla shares surged after the conclusion of regular trade this morning as the electric car-maker surprised analysts with a profit beat and bullish full-year outlook. The share price jumped 8% in after-market trade.
Gold's run of all-time highs continued before a sharp reversal as the US dollar and US treasury yields built on recent gains. (A stronger greenback increases the cost of purchase for buyers using other currencies.) Spot gold set a new high of US$2,758.37 an ounce late yesterday Australian time, but was this morning 1.1% in the red. Gold futures settled US$30.40 or 1.1% lower at US$2,729.40.
"There is some profit-taking and Treasury yields are going up, gold's going to have a hard time moving higher given where yields are headed" - Bob Haberkorn, senior market strategist at RJO Futures (per Reuters).
Oil fell for the first time in three sessions after US crude inventories unexpectedly increased last week. The US Energy Information Administration reported a 5.5 million barrel increase in the national stockpile. “This report does little to encourage buying interest,” Matt Smith, head U.S. analyst at Kpler, told MarketWatch. Brent crude declined 1.4% to US$74.96 a barrel.
Key events today:
Flash manufacturing/services PMIs - 9 am AEDT
US jobless claims - tonight
US flash manufacturing/services PMIs - tonight
S&P 500: down 54 points or 0.92%
Dow: down 410 points or 0.96%
Nasdaq: down 296 points or 1.6%
Dollar: down 0.68% to 66.35 US cents
Iron ore (Dalian): down 0.3% to US$104.62
Brent crude: down US$1.08 or 1.4% to US$74.96
Gold (futures): down US$30.40 or 1.1% to US$2,729.40
Gold (spot): down US$30.50 or 1.1% to US$2,716.02
Silver (spot): down US$1.05 or 3.02% to US$33.67
NYSE Arca Gold Bugs: down 1.76%
Bitcoin: down 1.5% to US$66,450
Copper (LME): down 0.5% to US$9,535
Nickel (LME): down 1.09% to US$16,315
Lithium carbonate (China): up 0.41% to 73,650 yuan
Global X Lithium & Battery Tech ETF: down 1.25%
Uranium (spot): steady at US$82.75
Global X Uranium ETF(URA): down 3.6%
BHP: down 1.6% (US); down 1.51% (UK)
