United States
Wall Street pulled back overnight as investors locked in profits from some of the year’s strongest artificial intelligence performers, dragging major indices away from recent record highs. The retreat followed renewed concerns around the pace and cost of AI investment, alongside a rise in longer-dated bond yields.
Technology stocks bore the brunt of the selling. A sharp fall in Broadcom weighed heavily on the semiconductor complex after the company’s sales outlook failed to meet elevated expectations. The move added to existing pressure triggered earlier in the week by Oracle, which flagged rising capital expenditure requirements and a longer timeline for AI-related revenue. Reports of delays to some Oracle data centre projects further dented sentiment, with stocks linked to AI infrastructure and power supply also sliding.
The Nasdaq 100 dropped 1.9 per cent, while the S&P 500 fell 1.1 per cent after closing at a record in the previous session. The Dow Jones Industrial Average eased 0.5 per cent, and the small-cap Russell 2000 retreated 1.5 per cent from its own all-time high. Global equities followed suit, with the MSCI World Index down 0.8 per cent.
Bond markets were also in focus, with US Treasury yields pushing higher. The 10-year yield rose four basis points to 4.19 per cent, while the 30-year yield climbed to a three-month high. The rise came despite the Federal Reserve delivering its third consecutive rate cut this week, as comments from officials highlighted ongoing concerns about inflation and the resilience of economic momentum.
Volatility ticked up, with the VIX jumping 6.5 per cent. In currency markets, the US dollar steadied after a two-day slide, though it remained on track for a third weekly decline. Bitcoin fell 2.9 per cent, while Ether dropped 5.2 per cent.
Europe
European equities also finished lower, retreating from the cusp of record levels as weakness in US technology stocks spilled into global markets. The Stoxx Europe 600 fell 0.5 per cent, reversing earlier gains and ending the session just over 1 per cent below its November closing high.
Sector performance was mixed. Travel and leisure stocks outperformed, along with utilities, while banks and basic resources led declines. Despite the broader pullback, some individual stocks stood out. UBS shares rose 2.5 per cent to their highest level since 2008 after Swiss lawmakers proposed a compromise on future capital requirements, easing concerns around balance sheet constraints.
Sportswear stocks also moved higher following a strong session for Lululemon in the US. Adidas gained 2.0 per cent and Puma added 3.2 per cent as optimism around consumer demand lifted the sector.
Government bond yields across Europe edged higher, broadly tracking moves in the US. Germany’s 10-year yield rose one basis point to 2.86 per cent, while the UK 10-year yield increased three basis points to 4.52 per cent.
Overall sentiment in European markets remained constructive despite the day’s pullback, with investors continuing to rotate within markets rather than exiting risk entirely. The Stoxx 600 remains close to record territory heading into the final weeks of the year.
Australia
The Australian share market closed last week on a strong note, posting its best session in nearly three weeks before pointing lower at the open today. The S&P/ASX 200 rose 1.2 per cent on Friday to 8,697.3, marking its longest winning streak since August and lifting the index 0.7 per cent for the week.
Miners led the charge, driven by a surge in gold prices. Spot gold jumped above USD 4,280 an ounce, sending local gold stocks sharply higher. Newmont gained 5.7 per cent, Genesis Minerals rallied 7.6 per cent, and Evolution Mining rose 4.2 per cent.
The major banks also contributed to the rally. Commonwealth Bank added 2.1 per cent, National Australia Bank rose 1.8 per cent, Westpac gained 1.4 per cent, and ANZ climbed 1.2 per cent.
Corporate news was mixed. Austal fell 3 per cent after approval was granted for a foreign investor to lift its stake, subject to conditions. Scentre Group edged higher after bringing in a new joint venture partner for a further stake in Westfield Chermside. 4DMedical surged 8.8 per cent after securing funding tied to the exercise of listed options, while newly listed BMC Minerals jumped 25 per cent on debut following a heavily oversubscribed IPO.
Despite Friday’s strength, futures are pointing to a softer start today, with the ASX 200 expected to open around 0.6 per cent lower. Attention locally is turning to global labour market data and domestic consumer sentiment, particularly as expectations build that Australian interest rates may remain higher for longer than in the US.
Commodities and currencies
Commodity markets were mixed. Oil prices edged lower, with West Texas Intermediate crude down 0.2 per cent to USD 57.47 a barrel. Gold held onto gains, rising 0.4 per cent to USD 4,299.10 an ounce, while silver pulled back sharply, falling 2.7 per cent to USD 61.85 after recently touching record highs.
In currency markets, the Bloomberg Dollar Spot Index was little changed. The euro held steady at USD 1.1739, while the British pound slipped 0.2 per cent to USD 1.3365. The Japanese yen weakened modestly to 155.88 per US dollar.
Economic Calendar
No major data
This article was written by Calvin Curdie, Rivkin Securities Pty Ltd. Enquiries can be made via [email protected] or by phoning +612 8302 3632.
