Losses in the US on Friday will impact today’s market open, with ASX 200 futures trading 67 points lower, down -0.99% as of 8:20 am AEST.
The S&P 500 and Nasdaq stumbled into correction territory as war in the Middle East continued to strike fear into the hearts of investors, who have turned their attention to gold, which jumped past US$2,000.
“The ASX200 finished 73 points (-1.07%) lower last week at 6,826, taking its lead from falls on Wall Street, but also impacted by the release of hotter-than-expected Q3 Australian inflation and hawkish RBA communique,” IG markets analyst Tony Sycamore said.
“With two sessions left, the ASX200 is down 3.15% in October, following falls of -3.51% in September and -1.42% in August. The index is almost 10% below its January 7,567 high, excluding dividends.
“The worst-performing sectors last week were the Real Estate (-4.48%), IT (-3.71%) and the Communication (-2.46%) sectors. The Materials (-0.87%) and the Utilities (+1.73%) sectors were the only two to finish the week in positive territory.”
What happened last week?
Here's what we saw (source Commsec):
US markets
Were mixed on Friday. The tech-heavy Nasdaq index ended higher due to a boost from Amazon.com (NASDAQ:AMZN). Shares of the e-commerce giant jumped 6.8% after reporting its cloud business growth is stabilising and predicted a revenue increase over the holiday season. Intel (NASDAQ:INTC) surged 9.3% following the chipmaker's consensus-beating quarterly report.
The Dow Jones index was pressured by a 3.6% decline in JPMorgan Chase (NYSE:JPM) after CEO Jamie Dimon said he planned to sell 1 million shares next year. Chevron (NYSE:CVX) dropped 6.7% after the oil and gas company reported lower third-quarter profit. Exxon Mobil (NYSE:XOM) fell 1.9% after it posted a 54% year-on-year drop in profit. Ford Motor (NYSE:F) sank 12.2% after it withdrew its full-year forecast due to "uncertainty" over the pending ratification of its deal with the United Auto Workers union.
- The Dow Jones index fell by 367 points or 1.1%.
- The S&P 500 index shed 0.5%, entering correction territory, down 10.3% from its July 31 closing high.
- The Nasdaq index rose by 47 points or 0.4%.
- For the week, the Dow fell 2.1%, the S&P 500 slid 2.5% and the Nasdaq lost 2.6%.
European markets
Fell to near seven-month lows on Friday. Healthcare was the worst performing sector as it fell 2.9%. French drug maker Sanofi (EPA:SASY) sank 18.9% as it abandoned a target for a 32% operating profit margin for 2025 to focus on "long- term profitability".
Electrolux shares dropped 13.6% after the Swedish home appliances maker missed quarterly core profit estimates. UK lender NatWest fell by 11.6% on a profit outlook downgrade as Britain's Financial Conduct Authority (FCA) probes its handling of a decision to close former Brexit Party leader Nigel Farage's accounts.
- The continent-wide FTSEurofirst 300 index fell by 1% on Friday and was also down 1% for the week.
- In London, the UK FTSE 100 slid 0.9% on Friday, dropping 1.5% over the week.
Currencies
Were stronger against the US dollar in European and US trade.
- The Euro rose from US$1.0534 to US$1.0596 and was near US$1.0565 at the US close.
- The Aussie dollar lifted from US63.31 cents to US63.67 cents and was near US63.35 cents at the US close.
- The Japanese yen firmed from 150.27 yen per US dollar to JPY149.45 and was near JPY149.60 at the US close.
Commodities
Global oil prices climbed almost 3% on Friday on worries that tensions in Israel and Gaza could spread into a wider conflict that could disrupt global crude supplies.
- The Brent crude price rose by US$2.55 or 2.9% to US$90.48 a barrel.
- The US Nymex crude price added US$2.33 or 2.8% to $85.54 a barrel.
- For the week, Brent shed 1.8% and the Nymex fell 3.6%.
Base metal prices climbed on Friday.
- The copper futures price rose by 1.8% as profits at China's industrial firms extended gains for a second month in September.
- The aluminium futures price lifted 1.3%.
- Copper was up 2.6% for the week with aluminium 2.1% higher.
- The gold futures price rose by US$1.10 or 0.1% to US$1,998.50 an ounce. Spot gold was trading near US$2,006 an ounce at the US close. Bullion was up 0.2% for the week.
- Iron ore futures lifted US10 cents or 0.1% to US$118.55 a tonne but were down 0.1% over the week.
What's next for the Australian stock market?
Wealth Within chief analyst Dale Gillham takes a look at what investors can expect from the Australian market over the coming weeks.
"There are only two things you can control in the stock market, when you buy and when you sell, the rest is up to the market. In my decades of analysing the All Ordinaries Index, the one thing I know for certain is that it always proves who is in charge and provides us with lessons, which is what is occurring right now, and you may wonder why.
"The stock market is cyclical, which means if we study its historical data, it can provide a good indication of where it might head in the future. However, we cannot predict volatility, which arises from a variety of circumstances such as COVID-19 or the 9/11 attack on the World Trade Centre. As to what is occurring right now, I believe world markets are nervous about what is unfolding in Gaza, which means they are reducing their exposure to risk.
"As I have mentioned a few times in the past couple of weeks, the Australian stock market could fall below the 7,000-point support level, which occurred last week, with the market falling to 6,966 points.
"So where to from here? While I may be overly bullish, I still believe the end of the move-down is very close. Once again, I continue to urge everyone to remain patient to use a stop loss on your stocks."
What about small caps?
The S&P ASX Small Ordinaries finished 0.30% higher on Friday to 2.579.70, but was down 1.87% over the week.
It has been relatively busy on the news front this morning. You can read about the following and more throughout the day.