Markets Overview
- ASX SPI 200 futures little changed at 8,577.00
- S&P 500 down 0.9% to 6,738.98
- Dow Average down 0.3% to 47,980.01
- Aussie down 0.4% to 0.6604 per US$
- US 10-year yield little changed at 4.1489%
- Australia 3-year bond yield rose 2.3 bps to 4.13%
- Australia 10-year bond yield rose 2 bps to 4.75%
- Gold spot up 0.8% to $4,336.05
- Brent futures up 1.5% to $59.82/bbl
Economic Events
- 10:30: (AU) Australia to Sell A$1.5 Billion 84-Day Bills
- 10:30: (AU) Australia to Sell A$1.5 Billion 140-Day Bills
- 10:30: (AU) Australia to Sell A$1 Billion 154-Day Bills
- 11:00: (AU) Dec. Consumer Inflation Expectation, prior 4.5%
Asian stocks were headed for early declines as global markets fell into a familiar, risk-off pattern with tech concerns weighing on stocks and Bitcoin, supporting short-dated Treasuries and precious metals.
Equity index futures for Japan, Australia and Hong Kong fell early Thursday in Asia. The tech-heavy Nasdaq 100 dropped 1.9% Wednesday with Nvidia Corp. down 3.8% to its lowest since September. The S&P 500 slumped 1.2% to levels not seen in three weeks, breaching its 50-day moving average — a key technical marker.
The heavy selling in tech was a sign investors are further questioning whether companies at the vanguard of the AI boom can keep justifying lofty valuations and ambitious spending. Bucking the narrative late Wednesday in the US, Micron Technology Inc., the largest US maker of computer memory chips, gave an upbeat forecast, supporting its shares in after-hours trading.
“AI remains the market’s defining investment theme, but signs of fatigue are emerging,” said Jack Ablin at Cresset Capital Management. “Sector valuations are elevated, infrastructure spending is unprecedented, and enthusiasm mirrors past speculative cycles.”
Bitcoin was caught in the souring sentiment, trading back down around $86,000 after earlier breaching $90,000 on Wednesday.
Tech selling combined with comments from a Federal Reserve official supporting the case for rate cuts to bid up two- and five-year Treasuries, popular havens. US long bonds sold off, sending the 10-year yield one basis point higher to around 4.15% Wednesday, supporting the dollar.
In commodities, gold and silver soared with the latter posting one of its best daily gains of the year to reach a new high. Oil bounced off a recent low against the backdrop of escalating geopolitical risk involving Russia and Venezuela.
The sharp moves across asset classes suggested traders may be in for a busy holiday season, when thin liquidity can exacerbate market moves. In December 2018, interest rate and trade policy uncertainty wiped almost 10% from the S&P 500.
As the year draws to a close, a clearer narrative has emerged in recent weeks: the mega-cap technology stocks that have powered this bull run may be losing their ability to carry the market on their own, according to Fawad Razaqzada at Forex.com.
“Confidence in the sector is being challenged, particularly over whether stretched valuations and heavy spending on artificial intelligence can still be justified,” he said.
Traders also geared up for Thursday’s inflation reading amid a dose of skepticism as the consumer price index runs the risk of being less reliable than usual due to government-shutdown disruptions.
In Asia, the yen was steady early Thursday with the Bank of Japan expected to raise interest rates Friday to the highest level in three decades.
Elsewhere, New Zealand’s economy rebounded more than economists had forecast in the third quarter, with falling interest rates helping drive output after a second-quarter contraction.
Meanwhile, China Vanke Co., once the nation’s biggest homebuilder, lurched closer toward what would be one of the country’s largest-ever debt restructurings.
