Wall Street closed the week, maybe not in a blind panic, but there was certainly a disquieting dumping of stocks as investors fled to the exits and the weekend.
All three key indices fell sharply, the tech-centric Nasdaq fell the hardest and is down almost 8% from its record high of just three weeks ago.
- S&P 500: 1.8%
- Dow: -1.1%
- Nasdaq: 2.9%
The dump saw the global MSCI down 1.5% for the day, while the pan-continental Eurostoxx 600 fell a comparatively modest 0.4%.
The tech-lite ASX is unlikely to be as affected by anxieties over cash-burning AI investments as Wall Street was on Friday.
When trading closed on Saturday morning (AEDT) ASX 200 futures were flat, or to be precise 4 points (0.04%) lower.
The tech rout was sparked by disappointing quarterly results from Intel and Amazon released late on Thursday.
While Amazon pared losses as the session progressed, Intel shares cratered, down almost 30%.
Chip stocks veered sharply lower, with Nvidia down more than 4%.
The broader chips index shed 7.2%, slumping to a monthly loss of more than 15%. Server makers Dell and HP dropped 10.8% and 9.6%, respectively.
“It’s fair to say that this week, not just today, has been very much about the future of AI and what that’s going to look like, whether there will be a positive return on investment and if so, how quickly,” Wealthspire adviser Oliver Pursche told Reuters.
“Companies that are performing and meeting the very lofty expectations that have been set are doing well,” Mr Pursche said.
“Those that are falling short and seem to be missing the mark or not executing as expected are getting punished.”
On the subject of being punished, cryptocurrency related firms all got walloped on the news that hackers nicked a lazy $US6.3 billion ($9 billion) worth of various stable coins, such as Bitcoin and Ethereum, while no-one was looking at the world’s biggest crypto exchange Binance.
Listed crypto firms Coinbase, Strategy and Robin Hood all fell between 7 and 11%. All said they were safe, but they would say that.
Putting aside the Binance contretemps, it’s worth noting that hackers have made off with about $US3 billion in crypto in around 150 incidents.
US Treasuries were one of the beneficiaries of the tech rout as investors decided they were a safer bet at the moment, which is saying something.
The benchmark 10-year yield closed the month with its biggest monthly drop in nearly three years.
Gold, once also considered a safe haven, didn’t benefit from the conniptions — indeed, it slumped (-3.5%) to a one-year low, along with other precious metals. Silver shed 6.5% and palladium shed 3.0%.
“The sky is falling,” independent metals trader Tai Wong told Reuters with a dramatic flourish.
“Metals will not be able to escape the gravity well of a nasty stock correction. Earnings have been the foundation of the AI rally and now that pillar is showing some cracks.”
Oil seems to be blithely ignoring Mr Wong’s “gravity well”. The key benchmarks both gained more than 2% on Friday.
- Brent crude futures: +2.4% to $US117.64/barrel
- WTI crude futures: +2.1% to $US113.43/barrel
For the month, Brent finished almost 14% higherwhile WTI rose even more, up 15%.
On Friday, a tanker in the Strait of Hormuz was hit by explosive devices, believed to be limpet mines attached by a small boat, according to UKMTO, the British maritime security service.
It is believed to be the first successful use of limpet mines since the war began in February. Probably not the last either.
With Reuters
Source: www.abc.net.au
