Australian shares are anticipated to experience a decline of 1.8% following a sharp downturn in US markets. This drop was triggered by slower US economic growth data, which heightened concerns about the Federal Reserve's delay in cutting interest rates.
ASX futures fell by 144 points, or 1.78%, to 7925 overnight, with earlier losses exceeding 2.1%. The Australian dollar also weakened, slipping below US65¢.
In the US, major indices posted notable losses. The Dow Jones Industrial Average dropped 1.2% to 40,347.97, the S&P 500 retreated 1.4% to 5,446.68, and the Nasdaq Composite fell 2.3% to 17,194.15. Nvidia (NASDAQ: NVDA) saw a significant decrease of 6.7%, and Tesla (NASDAQ: NASDAQ:TSLA) declined by 6.6%, contributing to the downturn in tech stocks. Notably, Meta Platforms (NASDAQ: META) surged by 4.8% after reporting better-than-expected quarterly results. Conversely, Amazon (NASDAQ: NASDAQ:AMZN) fell following its earnings report, and Atlassian (ASX : TEAM) experienced a sharp decline of more than 12% after its financial results were disclosed.
The NYSE Fang + Index, which tracks major technology and internet stocks, dropped 2.7%. The volatility index (VIX) surged 13.6%, reaching its highest level in over nine months. Bitcoin briefly fell below US$63,000 before recovering.
US Treasury yields fell in response to a lower-than-expected reading on the Institute for Supply Management’s (ISM) manufacturing Purchasing Managers’ Index (PMI), which dropped to its lowest level since November. This data suggested a softening economy and contributed to a decline in bond returns. The prospect of policy easing in both the US and UK further impacted financial markets.
Oil futures, which had seen earlier gains, reversed course as concerns about a widening Middle East crisis following the killing of a Hamas leader in Iran did not significantly disrupt global supply. Brent crude futures ended 1.6% lower at US$79.52 per barrel, while West Texas Intermediate crude fell 2.1% to US$76.31 per barrel.
Stocks to Watch - ResMed (ASX: RMD): The company, known for its sleep apnoea devices, reported a 9% increase in revenue, reaching US$1.2 billion (AU$1.85 billion) for the last quarter of fiscal 2024. Quarterly dividends rose by 10% to US$0.53 per share.
- Block (ASX: SQ2): The fintech firm has upgraded its full-year guidance and announced a new US$3 billion share buyback plan, driven by strong performance in its buy now, pay later segment.
- Sky City Entertainment Group (ASX: SKC): The Auckland casino will close its gambling area for five days in September due to non-compliance with regulatory requirements.