Markets Overview

  • ASX SPI 200 futures little changed at 7,280.00
  • Dow Average up 0.5% to 35,225.18
  • Aussie up 0.1% to 0.6779 per US$
  • U.S. 10-year yield rose 10.3bps to 3.8503%
  • Australia 3-year bond yield rose 12 bps to 3.91%
  • Australia 10-year bond yield rose 8.3 bps to 3.95%
  • Gold spot down 0.4% to $1,969.51
  • Brent futures up 0.3% to $79.68/bbl

Economic Events

US equities and Treasuries fell Thursday as investors digested a round of disappointing tech earnings and fresh signs of labor-market resiliency that could support another hike in interest rates this year.

The tech-heavy Nasdaq 100 fell 2.3%, with Netflix Inc. notching its biggest decline of the year after a disappointing revenue forecast. Tesla Inc. slid after profitability shrank in the second quarter. And the yield on 10-year Treasuries rose 10 basis points as an unexpected drop in weekly initial jobless claims prompted traders to price in higher odds of a quarter-point rate hike beyond the Federal Reserve’s meeting next week.

The losses are hitting the pause button on this year’s blistering stock rally that’s seen the S&P 500 rise 18%, and the Nasdaq 100 gain 41%, against a shaky economic outlook during the Fed’s aggressive tightening campaign.

“In the last 24 hours alone there has been talk of a worsening of the conflict in Ukraine, a further slowdown in China and major US banks facing significant real estate losses,” Lewis Grant, senior portfolio manager at Federated Hermes, wrote in a note. “Each of these threats, along with uncountable unknowns, has the potential to halt the sentiment rebound in its tracks.”

On Wednesday, wheat prices had surged following an escalation of tensions between Russia and Ukraine in the Black Sea. Goldman Sachs Group Inc. had reported a plunge in profits. And early Thursday, China had stepped up its support for the yuan amid a ramp up in rhetoric to bolster business confidence.

Against such a backdrop, returns on the back of a handful of tech stocks are “overdone” and may be the precursor to a downturn, Aegon Asset Management strategist Cameron McCrimmon warned.

“The breadth of returns on the S&P 500 has become increasingly narrow, driven by a few mega-cap tech stocks on AI optimism, which is a classic sign of an ageing bull,” McCrimmon wrote in a note.

The sentiment was echoed by Louise Goudy Willmering, a partner at Crewe Advisors.

“To be just driven simply by a few names in technology is not great,” Goudy Willmering said by phone. “Earnings will definitely determine where we go from here as we look into the third and fourth quarters.”

In Europe, tech stocks including ASML Holding NV slumped after Taiwan Semiconductor Manufacturing Co. cut its outlook despite the boom in AI development. Meanwhile, equities in Asia including Japan, Hong Kong and mainland China fell.

Elsewhere, the dollar reversed losses to trade stronger against major peers. Gold declined and the price of oil wavered.

Other News

Australia and New Zealand broke sporting attendance records Thursday, after more fans packed into the opening two matches of the Women’s World Cup than any other female sporting event in those countries.

More than 100,000 people attended the two stadiums in Sydney and Auckland, setting new all-time highs for women’s matches in both countries, despite a fatal shooting in downtown Auckland earlier that prevented organizers opening a fan zone area. New Zealand Prime Minister Chris Hipkins, his deputy, Carmel Sepuloni and the nation’s sports minister, Grant Robertson, were among the crowd watching as their country beat Norway.

Meantime, Australian Prime Minister Anthony Albanese and the head of the nation’s largest bank, Commonwealth Bank of Australia Chief Executive Officer Matt Comyn, watched the other host nation get the better of Ireland from the sold-out stadium in Sydney.

This World Cup will “become a watershed moment in global women’s sports – not only from an attendance perspective, but way beyond that, when it comes to developing the game globally and celebrating female empowerment,” said Sarah Bareman, chief women’s football officer at FIFA.

The most anticipated female sporting event ever plays out over 64 matches until the final in Sydney on Aug. 20, with the US vying for its third straight championship. While the sport’s soaring popularity has helped it make big strides in player pay, snags over TV deals have plagued the run-up to this year’s competition.

Over 42,000 people were at Eden Park, the biggest crowd to ever watch a football match in New Zealand. Fans faced heightened security after a gunman Thursday morning killed two people and exchanged fire with police before being found dead on a building site in downtown Auckland, close to hotels where a number of World Cup teams are staying.

In Sydney, 75,784 watched Australia defeat the Republic of Ireland. Last year’s men’s tournament in Qatar saw around 67,000 attend the opening night.

Phillipa Harrison, managing director at Tourism Australia, expects the event itself to contribute about A$169 million ($115 million) to the Australian economy. Overseas TV viewers, however, may provide a more lucrative income longer term.

“The real opportunity here is that over a billion people are watching the event and might potentially come and visit Australia,” she said. “It gives Australia a moment in the spotlight.”

Next up on Friday, Nigeria takes on Canada in Melbourne, the Philippines plays Switzerland in Dunedin, while Spain and Costa Rica will contest the evening match in Wellington.