United States
Wall Street pulled back overnight as traders navigated a sharp selloff in major technology stocks, mixed economic data, and fresh tariff concerns. The S&P 500 fell 1.2%, the Nasdaq 100 lost 2.1%, and the Dow Jones Industrial Average slipped 0.3%.
Nvidia was at the centre of the tech rout, tumbling 6.2% after posting solid but not exceptional earnings, failing to meet sky-high investor expectations. The losses dragged down the broader semiconductor sector and reinforced concerns that AI-driven gains may be showing signs of fatigue.
Adding to market jitters, US President Donald Trump reaffirmed his plan to impose 25% tariffs on Mexico and Canada by March 4, while also announcing a 10% levy on Chinese imports. The escalation in trade tensions kept equity markets volatile, with investors weighing the broader implications for inflation and economic growth.
Economic data painted a mixed picture. The US economy expanded at an unrevised 2.3% annualised pace in the fourth quarter, with consumer spending growing at 4.2%. However, inflation proved stickier than expected, reinforcing the view that the Federal Reserve is unlikely to rush into rate cuts.
Treasuries declined, pushing the 10-year yield up two basis points to 4.28%, while the US dollar strengthened, with the Bloomberg Dollar Spot Index rising 0.6%.
Note: U.S. market prices are as of 7:30 a.m. Sydney time (3:30 p.m. NY).
Europe
European markets retreated from record highs as concerns over potential US trade tariffs weighed on sentiment. The Stoxx 600 fell 0.5%, with automakers leading declines after Trump’s comments on tariffs targeting the European Union.
Volkswagen and Stellantis dropped as investors assessed the risk of retaliatory measures, while beverage and mining stocks also faced pressure. Rolls-Royce, however, defied the broader selloff, jumping 16% after raising its profit guidance and announcing a £1 billion share buyback.
European economic data continued to show resilience, but investors remain wary of geopolitical risks and potential supply chain disruptions should trade tensions escalate further. The 10-year German Bund yield edged two basis points lower to 2.41%.
Australia
The ASX 200 is set to open lower, with futures pointing down 22 points (-0.3%) to 8,224 following Wall Street’s selloff.
Thursday’s session saw the Australian market snap a two-day losing streak, lifted by strong earnings from Coles (+3.5%), Qantas (+5.6%), and Medibank Private (+10%). However, today’s session may be under pressure as global sentiment sours.
Investors will be watching earnings results from Harvey Norman, Endeavour Group, and TPG Telecom, while focus will also turn to US inflation data due early Saturday morning for potential market-moving signals.
Beyond corporate earnings, iron ore prices slipping below US$105 a tonne is expected to weigh on mining stocks, particularly BHP and Rio Tinto. Banks may see some buying interest as investors rotate into defensive sectors, while consumer discretionary stocks could come under pressure given the cautious global outlook.
ASX-listed tech stocks may also feel the pressure from the Nasdaq’s sharp decline, with key names like Xero and Wisetech Global under watch. Market participants will be looking for further guidance on domestic economic conditions, particularly as inflation concerns persist.
Commodities
Oil prices rose, with Brent crude gaining 2% to US$73.99 a barrel, while WTI crude climbed 2.4% to US$70.25. Gold fell 1.1% to US$2,885.79 an ounce, pressured by a stronger US dollar.
Iron ore slipped 0.6% to US$105.30 a tonne amid concerns over weaker Chinese demand, while the Australian dollar weakened 0.9% to US62.51¢. The recent decline in iron ore, coupled with broader risk-off sentiment, is likely to keep pressure on the AUD in the near term.
In currency markets, the US dollar strengthened, weighing on commodity-linked currencies, including the Australian dollar and Canadian dollar. Cryptocurrencies saw a mixed session, with Bitcoin easing 0.3% to US$84,018, while Ethereum fell 2.6% to US$2,279.93.
Meanwhile, bond markets were relatively stable, with the 10-year Australian government bond yield at 4.34%, slightly above US Treasuries at 4.29%.
Key Economic Events
- US: January personal income & spending, PCE inflation (Friday)
- Australia: Corporate earnings reports (Harvey Norman, TPG, Endeavour Group, Star Entertainment)
- Japan, France, Germany: Preliminary February CPI (Friday)
This article was written by Paul Darwell, Rivkin Securities Pty Ltd. Enquiries can be made via [email protected] or by phoning +612 8302 3632.
