Investing.com - Australian shares opened 0.5% lower on Wednesday after almost reaching an all-time high in the previous session. This downturn comes in the wake of a sell-off of the so-called Magnificent Seven in New York, which has led to a more volatile start to the year for global markets.
Bond yields have seen a significant increase as traders adjust their expectations for major central banks to shift towards rate cuts.
Apple's (NASDAQ:AAPL) recent downgrade by Barclays (LON:BARC) has triggered a substantial loss in the New York market. Barclays analysts, headed by Tim Long, lowered their rating on Apple to underweight and decreased their price target from $US161 to $US160, suggesting a potential 17% drop over the next year. This downgrade led to Apple's shares falling by 3.6% on the day, recovering slightly from an earlier 4% loss.
The NYSE Fang + Index was pulled down by 2.4% due to Apple's decline. Other tech giants such as Netflix Inc (NASDAQ:NFLX), NVIDIA Corporation (NASDAQ:NVDA), and Meta Platforms Inc (NASDAQ:META) also experienced losses of 3.8% and over 2%, respectively.
Smaller tech companies also suffered losses. LYFT Inc (NASDAQ:LYFT) plummeted by 7.9%, Block Inc (NYSE:SQ) lost 6.6%, and Advanced Micro Devices Inc (NASDAQ:AMD) dropped by 6%. Other tech firms including Uber Technologies Inc (NYSE:UBER), Intel Corporation (NASDAQ:INTC), Zscaler Inc (NASDAQ:ZS), and Atlassian Corp Plc (NASDAQ:TEAM) each saw declines of at least 4.2%.
Market highlights:
ASX 200 Futures were down by 77 points or 1% to 7539 as of 8am AEDT
AUD decreased by 0.8% to 67.59 US cents
Bitcoin increased by 3.2% to $US44,952 at 8.32am AEDT
Brent crude oil dropped by 1.3% to $US76.07 a barrel
Iron ore rose by 2.2% to $US141.75 a tonne
10-year yield: US 3.94%, Australia 4%, Germany 2.06%
Driving the market's recent behaviour is a shift in traders' expectations regarding the speed at which central banks will cut interest rates this year. This shift was evident on the first trading day of 2024 as global bond yields initially surged and then pared losses.
Looking forward, Goldman Sachs (NYSE:GS) has projected that the S&P 500 index will grow by 5% to $US237 in 2024 and that the index will reach 5100 by the end of the year, supported by lower real yields owing to decreasing inflation and Federal Reserve easing.
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