United States
Wall Street endured another bruising session overnight as weak jobs data compounded an already grim week for growth stocks and digital assets.
The S&P 500 tumbled 1.3 per cent, extending losses from near-record levels, while the Nasdaq 100 shed 1.4 per cent in what is shaping up to be its worst three-day decline since April. The Dow Jones Industrial Average dropped 1.2 per cent as selling pressure broadened across nine of eleven major sectors.
Software stocks bore the brunt of the carnage, with the iShares Expanded Tech-Software Sector ETF plunging 5.1 per cent. The rout reflects mounting concerns that artificial intelligence disruption could undercut traditional software business models rather than enhance them. What was once viewed as a tailwind for tech valuations has rapidly become a headwind, with investors now questioning whether premium multiples can be justified amid such uncertainty.
Labour market data added to the unease. US companies announced the largest number of job cuts for any January since the depths of the Great Recession in 2009, while applications for unemployment benefits rose more than economists had forecast. Job openings unexpectedly fell to their lowest level since 2020, painting a picture of an economy that may not be as resilient as previously thought.
The weak employment figures lifted expectations for a Federal Reserve rate cut at the June policy meeting, with probability now approaching 50 per cent. Treasury yields declined in response, with the benchmark ten-year falling seven basis points to 4.20 per cent and the two-year dropping eight basis points to 3.47 per cent.
On the corporate front, Alphabet slipped after outlining ambitious AI spending plans that spooked investors despite a revenue beat. Microsoft shed 4.8 per cent while Amazon, which reports after the closing bell, lost 4.2 per cent ahead of its results.
Europe
European equities retreated as the weak US employment data rippled across the Atlantic, compounding a difficult session marked by sector-specific headwinds and central bank deliberations.
The Stoxx Europe 600 fell 1 per cent at the close, with miners among the biggest laggards following a dramatic plunge in silver prices. Glencore sank 7 per cent after Rio Tinto walked away from merger talks, scuttling what would have been a transformative combination in the mining sector. The two companies reportedly failed to agree on valuation terms.
Healthcare giant Novo Nordisk tumbled 7.9 per cent after US telehealth firm Hims & Hers announced plans to offer a cheaper copycat version of the Danish company’s Wegovy weight loss pill. The news capped a brutal week for Novo, which has seen roughly $60 billion wiped from its market value after warning sales could decline by as much as 13 per cent this year.
Defence stock Rheinmetall slumped 6.5 per cent following expectations of analyst downgrades, while Spanish lender BBVA posted its sharpest fall in ten months after reporting higher provisions in Turkey and Mexico.
Central banks dominated the policy calendar. The Bank of England held rates steady but came within a single vote of cutting, as updated forecasts showed inflation falling below target alongside slower growth and rising unemployment. The European Central Bank also kept rates unchanged as officials assess the economic toll from a stronger euro and renewed trade uncertainty.
Technology and media shares outperformed the broader market, providing a rare bright spot amid the widespread selling.
Australia
Australian shares are set for a soft start to Friday’s session, with S&P/ASX 200 futures pointing 67 points, or 0.8 per cent, lower to 8783.
The local market snapped a two-day winning streak on Thursday, with the benchmark index falling 0.4 per cent to 8889.20 as volatility in commodities weighed heavily on the materials sector.
Mining heavyweights bore the brunt of the selling pressure. BHP retreated 3.9 per cent to $50.36, giving back much of its previous session’s gains. South32 shed 4 per cent to $4.60 while copper and silver producer Sandfire tumbled 5.8 per cent to $18.91.
Gold miners were caught in the precious metals downdraft, with Northern Star diving 4.6 per cent to $27.24, Newmont sliding 5.3 per cent to $162.83, and Genesis Minerals dropping 6 per cent to $6.87.
Uranium stocks were among the session’s biggest losers after chipmaker AMD’s weak guidance on Wall Street dented enthusiasm for AI-driven data centre demand. Paladin tumbled 9 per cent to $12.36 and Nexgen Energy fell 9.2 per cent to $16.53.
Investors sought refuge in financials ahead of reporting season. Commonwealth Bank rose 1.4 per cent to $159.28 and ANZ added 1.4 per cent to $37.58, while insurers QBE and IAG each climbed around 2 per cent.
Reserve Bank governor Michele Bullock will appear before the House of Representatives economics committee from 9.30am AEDT, with results expected from News Corp, REA Group and Charter Hall Retail REIT.
Commodities and currencies
Precious metals and cryptocurrency markets experienced dramatic declines overnight.
Bitcoin crashed 12 per cent to around $US63,650, falling below $US64,000 as forced deleveraging and evaporating demand sparked a capitulation in digital assets. The selloff has erased nearly half of bitcoin’s value since its October record high. Silver plunged 16 per cent to $US73.95 while gold shed 3 per cent to $US4,817 an ounce.
Oil prices weakened, with Brent crude falling 2.9 per cent to $US67.46 a barrel and West Texas Intermediate dropping 2.7 per cent to $US63.38.
The Australian dollar slipped 0.5 per cent to 69.63 US cents as the greenback strengthened broadly. The euro eased 0.2 per cent to $US1.1787 while sterling fell 0.8 per cent to $US1.3547 amid increased expectations for Bank of England easing.
Economic Calendar
US:
- Consumer Sentiment 02:00
This article was written by Calvin Curdie, Rivkin Securities Pty Ltd. Enquiries can be made via [email protected] or by phoning +612 8302 3632.
