Aussie shares are set to open a tad lower when trade begins today, with ASX futures down 0.2% – just a slight drop following Wall Street's overnight rally-retreat.
Wall Street slips after a good start
US equity markets started the new year with trepidation. After a relatively strong opening, the major indices reversed gains as investors engaged in profit-taking.
There were losses across the board, with the Dow Jones closing out the day down 0.4% to 42,392 points, the S&P 500 slipping 0.2% to 5,869 points and the Nasdaq falling 0.2% to 19,281 points.
It was a volatile session to mark the start of 2025 after a record-breaking year where investors saw substantial annual gains, particularly in technology stocks:
- 12% for the Dow
- 24% for the S&P; and
- a whopping 31% for the Nasdaq.
Overnight, however, Tesla (NASDAQ:TSLA) and Apple dragged the markets lower.
Tesla's shares slumped 6.1% after the company reported disappointing delivery figures for 2024.
It delivered 1.79 million electric vehicles, missing analysts' expectations of 1.8 million and marking its first year-over-year decline in over a decade.
Analysts attributed the drop to Tesla’s aging lineup, weak interest in the Cybertruck, higher borrowing costs and rising competition from rivals like China’s BYD.
The explosion of a Tesla Cybertruck outside one of President-elect Trump’s Las Vegas hotels yesterday wouldn’t have helped matters.
Apple shares (NASDAQ:AAPL) also fell 2.9%, exerting an outsized influence on Wall Street due to its US$3.7 trillion market capitalisation.
Aussie dollar continues to slide
The Australian dollar continued its downward trajectory, briefly dipping to a two-year low of 61.93 US cents overnight before recovering slightly to 62 US cents.
The currency touched 61.84 US cents yesterday, its lowest point since April 2020.
The dollar’s continued decline appears to be driven by a stronger greenback, expectations of higher inflation in the US and China's sluggish economic recovery – our fortunes are still firmly linked to the latter country.
All this points to an interesting year ahead, with mixed signals from the markets, the real-time stress testing of Trump’s economic policies and the Australian dollar's continued weakness – thanks to its China exposure – pointing to a bumpy ride as 2025 opens up.
Signs for investors to watch as they gauge equities, currencies and commodities include further cues on US inflation, Chinese economic recovery, and the state of corporate earnings.