The Australian stock market is set to fall in early trading after a powerful week of gains, setting two new record highs above 8,000 points before the bears moved in, with profit-taking set to cut the momentum out from under the ASX.
ASXFutures point to a 44-point or 0.6% drop in early trading, perhaps also reflecting a mixed performance on Wall Street.
US and European markets
(source: Commsec)
Escalating trade conflict between the US and China drove semiconductor stocks down, taking the S&P500 and Nasdaq indexes with them.
Tech stocks are also out in the cold at present, as massive gains earlier in the year draw sell-downs.
The Philadelphia SE Semiconductor index experienced its biggest single-day drop in response, falling a full 6.8%. Nvidia copped a 6.62% drop in stock, AMD (NASDAQ:AMD) a startling 10.21% and Broadcom (NASDAQ:AVGO) a 7.91% loss.
The Dow Jones side-stepped the worst of the pain with a boost from blue chip Johnson & Johnson (NYSE:JNJ), which jumped 3.7% on strong revenue and higher-than-expected profit on drug sales.
The Dow hit a new record high, adding 244 points or 0.6%, while the Nasdaq tumbled 2.8% or 512 points and the S&P500 slipped 1.4%.
Tech stocks in Europe were similarly affected by the semiconductor furore with the technology sub-index shedding 4.5%, its biggest loss since December 2022.
Foremost global computer chips supplier ASML (AS:ASML) dropped 10.9%.
The FTSE300 fell by 0.5% but the UK FTSE100 gained 0.3% as British annual consumer price inflation held steady in June at 2%, despite analyst predictions of a drop to 1.9%.
Currencies and commodities
The US dollar had a mixed session overnight.
The Euro gained from US$1.0894 to near US$1.0940 at the US close, the Aussie fell from US67.54 cents to near US67.30 cents and the yen lifted from 58.05 yen per US dollar to near JPY156.30.
Oil rose 2% overnight, buoyed by a larger-than-expected fall in US crude inventories after shedding 1.39% yesterday. US inventories fell by 4.9 million barrels, a far cry from the 30,000-barrel decrease predicted.
Brent rose 1.6% to US$85.08 per barrel and US Nymex lifted 2.6% to US$82.85 per barrel.
Base metal prices fell, with copper futures dropping 1% due to concerns over weak demand in China and rising inventories. Aluminium futures slightly decreased by 0.1%.
Iron ore futures fell by US45 cents (0.4%) to US$108.94 per tonne, impacted by weak seasonal demand from China and increasing global supply.
Gold futures declined by US$7.90 (0.3%) to US$2,459.90 per ounce, influenced by a weaker US dollar and expectations of US interest rate cuts. Spot gold traded near US$2,458 per ounce at the US close.
On the small cap front
The ASX Small Ordinaries followed the ASX200 up yesterday, gaining 1.06% or 32.2 points to 3,087.60.
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