It’s that time of year, when tumbleweed blows around the markets as Christmas enforces a pause on investors.
What we can discern is that the ASX will probably open weakly today, with ASX futures down 0.4% to 8,228 points early this morning.
Sombre tone set by Wall Street
With sentiment cautious and trading volumes thin, the Australian market is set to reflect the sombre tone set by Wall Street as it enters the final trading days of 2024, where profit-taking in an illiquid market led to losses across major indices.
The Dow Jones dropped 333 points (0.78%), while the S&P 500 and Nasdaq fell by 1.1% and 1.5% respectively.
A sharp decline in Big Tech stocks drove losses, with Tesla falling 5% and Amazon, Alphabet, Microsoft and Nvidia shedding around 2% each.
This sell-off came despite an otherwise strong year for US equities, particularly for the aforementioned ‘magnificent seven’ group of high-performing technology firms.
These stocks have, at least thus far, propelled markets higher as enthusiasm for artificial intelligence (AI) applications reaches fever pitch ahead of the tech-bro stacked and backed incoming Trump administration.
Analysts, however, continue to caution that the market’s heavy reliance on this group leaves equities vulnerable to volatility.
Low trading volumes, typical of the holiday period, amplified the downward momentum, as investors sought to lock in profits ahead of year-end.
Treasury yields also climbed, with the 10-year yield surpassing 4.6%, further pressuring equities.
Crypto down too
Cryptocurrency markets mirrored the equity retreat, with Bitcoin dropping to approximately US$94,000 from its December peak of over US$106,000, as traders unwound positions.
Looking ahead, market analysts expect equities to outperform bonds in 2025, despite recent volatility.
Some investment analysts think that maintaining equity exposure into the new year is a prudent strategy for inflation protection.
Market snapshot
- ASX 200 futures: -0.4% to 8,228 points.
- Australian dollar: -0.1% at 62.09 US cents.
- S&P 500 (Friday): -1.1% to 5,970 points.
- Nasdaq (Friday): -1.5% to 19,722 points.
- FTSE (Friday): +0.2% to 8,150 points.
- EuroStoxx (Friday): +0.7% to 508 points.
- Spot gold: -0.7% t0 $US2,615.54/ounce.
- Brent crude: +0.7% to $US73.75/barrel.
- Bitcoin: -0.7% to $US93,721.
Source: ABC