United States
A tech rout hammered Wall Street overnight, with the S&P 500 sliding 1.2 per cent to fall below its 50-day moving average for the first time in months. The Nasdaq 100 tumbled 1.9 per cent, led lower by Nvidia, which dropped 3.8 per cent. The Dow Jones Industrial Average fell 0.5 per cent.
The selloff accelerated after news that Blue Owl Capital, a longtime partner in Oracle’s rapid AI infrastructure buildout, opted not to contribute equity for a data centre in Michigan. While the project is largely moving forward, the news was enough to rattle investors already nervous about lofty tech valuations. Oracle shares plunged about 5.5 per cent, extending a brutal stretch that has seen the stock tumble around 22 per cent from its recent high.
Tesla was the worst performer among the megacaps, sliding more than 4 per cent despite being near 20 per cent above its November low. Six of the seven “magnificent” tech giants finished lower, with Microsoft the only one to edge higher.
The UBS US AI Winners Index tumbled 3.3 per cent, underscoring the growing concern over whether the sector can keep justifying its ambitious spending and stretched valuations.
Bonds bounced from session lows after Fed Governor Christopher Waller signalled support for further rate cuts, saying monetary policy settings are up to 100 basis points above neutral. Waller, who is under consideration to be the next Fed chair, was expected to meet with President Donald Trump on Wednesday. The yield on 10-year Treasuries was little changed at 4.15 per cent.
The market is now entering what analysts describe as a rotation period rather than a correction, with money flowing out of overvalued tech stocks into energy, consumer staples and healthcare. Since the near-term low on November 20, the small-cap Russell 2000 has gained about 8 per cent while the Magnificent Seven index rose just 4.5 per cent.
In late trading, Micron Technology gave an upbeat forecast, which may provide some relief when markets reopen.
Europe
European stocks erased early gains to finish flat as chip and electrification stocks came under pressure on the same AI concerns roiling Wall Street.
ASML tumbled 3.8 per cent after reports that Chinese scientists have reverse-engineered the company’s extreme ultraviolet lithography machines. Schneider Electric fell 3.4 per cent, Siemens dropped 2 per cent, and ABB lost 1.9 per cent on concerns about a potential slowdown in data centre buildout.
UK firms outperformed after inflation slipped to its lowest level in eight months, all but sealing an interest rate cut at the Bank of England on Thursday.
Banks rallied to a fresh 2008 high, led by HSBC which gained 2.7 per cent to a record after an upgrade highlighting the strength of its Hong Kong business. Societe Generale jumped 3.9 per cent.
Defence stocks bucked the broader industrial weakness after Germany approved a landmark €50 billion in military purchases. Rheinmetall rose 1.7 per cent, BAE Systems added 1 per cent, and Kongsberg climbed 2.4 per cent after winning a contract for navigation systems from the German Navy.
Miners were boosted by rising copper, gold and iron ore prices, with Rio Tinto up 1.6 per cent and Anglo American gaining 1.8 per cent.
Diageo agreed to sell its majority stake in East African Breweries to Japan’s Asahi Group Holdings for $US2.3 billion as the struggling UK distiller streamlines operations.
Australia
The local market faces a subdued open, with S&P/ASX 200 futures pointing to a marginal decline. ANZ and Elders are holding annual meetings today.
ANZ chairman Paul O’Sullivan faces a showdown with shareholders after proxy votes showed 32.36 per cent voted against the bank’s remuneration report, delivering a “second strike” in a pre-Christmas blow to the board. Major proxy firms ISS and CGI Glass Lewis had called for investors to vote down the pay report on the basis that former CEO Shayne Elliott should have had more of his entitlements stripped away. However, 97.73 per cent of shareholders voted against spilling the board.
Bendigo Bank has been hit with actions from both APRA and AUSTRAC after revelations that four people were arrested over suspicious activity at one of its branches. The regional lender will have to hold an additional $50 million in capital to offset concerns the issues found at Community Bank Pinewood may be more widespread.
Netwealth has agreed to pay more than $100 million in compensation to over 1,000 Australians who invested their superannuation in the First Guardian Master Fund, admitting it contravened the Corporations Act by failing to obtain sufficient information about the investment.
Bapcor chief executive Angus McKay has resigned after less than 18 months in the role, with ex-Jaycar boss Chris Wilesmith appointed as his replacement.
APA Group agreed to sell its 20 per cent equity interest in the owner of the Allgas gas distribution network to Stonepeak affiliates for $64 million.
Treasury Wine Estates faces a wave of rating changes ahead of its investor conference call, with Citi upgrading to neutral while JPMorgan, Jefferies and RBC all cut their recommendations.
Commodities and currencies
Oil prices rebounded as geopolitical tensions escalated sharply. President Trump ordered a blockade of sanctioned oil tankers entering and leaving Venezuela, following the seizure of an oil tanker last week and the deployment of warships near the country’s coastline.
Venezuela exported about 950,000 barrels per day of crude and fuel in November, including roughly 780,000 barrels per day of crude oil. West Texas Intermediate crude rose 2.9 per cent to US$56.88 per barrel, while Brent climbed 1.5 per cent to US$59.78.
Gold rose toward record levels, up 0.8 per cent to US$4,336.48 an ounce, as investors sought safe-haven assets. Platinum hit a 17-year high amid tight supply. Silver surged 5.3 per cent to US$66.44 per ounce.
Copper led base metals higher, supported by elevated imports into China and expectations of increased US demand tied to AI infrastructure investment. Iron ore rose 1 per cent to US$103.60 per tonne.
The Australian dollar dropped 0.4 per cent to US66.04 cents. The greenback strengthened 0.2 per cent, while the euro was steady at US$1.1741. The yen weakened 0.6 per cent to 155.70 per dollar.
Bitcoin fell 2.1 per cent to around US$85,795, while Ethereum tumbled 4.2 per cent to US$2,826.
Economic Calendar
US:
- Initial Jobless Claims 00:30
- CPI YoY 00:30
EU:
- ECB Deposit Facility Rate 00:15
- ECB Main Refinancing Rate 00:15
- ECB Marginal Lending Facility 00:15
This article was written by Calvin Curdie, Rivkin Securities Pty Ltd. Enquiries can be made via [email protected] or by phoning +612 8302 3632.
