The overnight sell-off on Wall Street is expected to infect Australian investor sentiment today and reverse the gains of recent days, with ASX futures – down 2 points to 7,425 early this morning – pointing to a flat market.
The giant US tech stocks were uniformly in the red, causing the Nasdaq to slump 1.7%, while its counterparts the Dow (-0.7%) and the S&P 500 (-1.1%) didn’t fare much better.
Tesla was down as much as 6.3%, while chipmaker Nvidia (-5.9%), BHP (-0.3%), Rio (-0.8%), Atlassian (NASDAQ:TEAM) (-3.8%), Apple (-2%), Amazon (-1.6%) and Alphabet (-2.5%) all recorded losses.
Ford shares fell 2.9% on news it would be slashing prices and ramping up production of its Mustang Mach-E crossover, while Johnson & Johnson (NYSE:JNJ) slid 3.7% after a loss in the US federal appeals court in its long-running talcum powder cancer issue.
Energy and information tech shares were the big losers, pacing all 11 S&P 500 industry sectors lower.
The spectre of another round of interest rate rises from three central banks is no doubt weighing heavily on the markets, with the US Federal Reserve, the European Central Bank and the Bank of England all widely expected to hike rates again this week.
Europe shaky
European markets were down following data showing that Spanish inflation was running at a higher-than-expected 5.8% in January, the first increase in six months, due to higher fuel prices.
A contraction in Germany's gross domestic product (GDP), which slumped 0.2% in the December quarter, prompted concerns about a recession.
The lift in eurozone bond yields weighed on rate-sensitive stocks with technology sector shares down 1.7%.
The continent-wide FTSEurofirst 300 index was down 0.2%, though the UK FTSE 100 index added 0.3% following news of a new CEO for consumer goods giant Unilever (+1.3%).
Still in the UK, PM Rishi Sunak looks to be on the back foot over his handling of the sacking of Nadhim Zahawi as Tory Party chairman on Sunday. We’ll see how that plays out on the markets before long.
Streaming services wary of Cultural Policy
The Australian Government has announced its first major arts policy for a decade with its new National Cultural Policy, which, among other things, aims to reintroduce a mandatory percentage of Australian content into the things that assail our eyes and ears – no mean feat in the age of content streaming and complex broadcast and subscription streaming rules.
Australian production companies are lobbying for a 20% target, to ensure that investment flows back into the local industry – but the big streaming services are gearing up for a battle.
A spokesperson for Netflix Australia told the ABC, the company welcomes the regulation but is keen to ensure it works for the sector.
"We don't oppose regulation, but do want it to be sustainable, equitable and evidence-based," they said.
Not least of the government’s problems is defining ‘Australian content’, which was broadly set by the previous government as ‘produced under the control of Australians’.
The streaming services argue that the definition needs to be broad and flexible, so that an international production set on our soil might be considered Australian.
Renewables not keeping pace with closures
As coal-fired power stations around the country are retired, experts say there is a mismatch between the pace of closures and the speed at which renewable alternatives are being brought online.
University of NSW senior research associate Dylan McConnell said Australia was lagging behind the rate required to adopt the renewable energy capacity needed to replace the coal power being shut down.
McConnell’s research showed that renewable energy output has been growing since 2018 at an average of 7.5 terawatt hours a year – equivalent to around 4% of demand in the national electricity market servicing the eastern states.
He said this needed to more than double to 15.7 terawatt hours by the end of the decade under the Australian Energy Market Operator's central plan.
In other news
Global oil prices continued a losing streak yesterday, slumping by roughly 2%.
Competing for attention were the impending rate rises in Europe and America and signs of strong Russian imports weighing against Middle East tensions over a drone attack in Iran and the promise of higher Chinese demand.
Brent crude fell US$1.76 or 2% to US$84.90 a barrel, while US Nymex crude dropped US$1.78 or 2.2% to US$77.90 a barrel.
Base metal prices took a hit overnight, with the copper futures price falling 0.4% as investors contemplated Chinese demand ahead of data from its manufacturing sector.
Aluminium futures were down 1.7%.
Gold futures tumbled US$6.50 or 0.3% to US$1,922.90 an ounce, while spot gold was trading near US$1,922 an ounce at US close.
On a positive note, iron ore futures rose 38 US cents or 0.3% to 7-month highs of US$123.08 a tonne as Chinese stockpiles fell.