US sharemarkets closed sharply lower on Friday, driven by renewed fears of slowing economic growth and persistent inflation – which combine to give us economists’ most dreaded portmanteau, stagflation – exacerbated by fresh tariff threats from the Trump administration.
Australian shares are tipped to go the same way, with futures down more than 1 per cent early this morning.
Big tech falls again
Technology giants led the downturn, with Alphabet Inc falling 4.9%, Apple Inc down 2.7%, Microsoft Corporation losing 3%, and both Meta Platforms Inc and Amazon.com Inc dropping 4.3%.
The Dow Jones slumped by 716 points or 1.7%, the S&P 500 Index shed 2%, and the Nasdaq Composite lost 481 points or 2.7%.
For the week, the Dow dropped 1%, the S&P 500 declined 1.5% and the Nasdaq retreated 2.6%.
A sharper-than-expected rise in core US consumer prices, up 0.4% in February – the largest monthly gain in 13 months – added to concerns.
The annual core Personal Consumption Expenditures (PCE) price index rose to 2.8%, reinforcing expectations that inflation remains above the US Federal Reserve’s target.
Adding to investor unease, Trump reaffirmed plans to implement a 25% tariff on auto imports in early April, pressuring auto stocks.
General Motors Company fell 1.1% while Ford Motor Company lost 1.8%. Lululemon Athletica Inc plunged 14.2% after lowering its full-year forecasts, citing tariff-related uncertainty.
Bond yields fell, with the US 10-year Treasury yield down 12 basis points to 4.25%, and the 2-year yield down 9 basis points to 3.91%.
In Europe, major indices also declined. Germany’s DAX lost 1%, while the FTSEurofirst 300 dropped 0.8%, finishing the week down 1.4%.
London’s FTSE 100 eased 0.1% on Friday but edged 0.1% higher over the week.
ASIC eyes super funds
The Australian Securities and Investments Commission (ASIC) has intensified its scrutiny of superannuation funds over their handling of death benefit claims, highlighting systemic delays, poor service and ineffective processes.
The corporate regulator has already taken legal action against Australian Super and Cbus, accusing them of unreasonable delays in payouts, although both were excluded from the broader review following the commencement of court proceedings.
ASIC’s review uncovered disturbing examples of misconduct, including instances where funds misled grieving claimants and failed to acknowledge procedural shortcomings.
One widow endured a five-month wait for a A$600,000 payment, while another case saw an Indigenous woman wait nearly 5,000 days for A$100,000, with the fund reportedly ignoring her difficulties navigating the process.
While many of the worst-performing funds were not publicly named, REST, Commonwealth Superannuation Corporation and Brighter Super were singled out as the slowest in resolving claims.
REST and Commonwealth Super each failed to resolve 10% of claims within the expected 90-day timeframe.
By contrast, Colonial First State, Commonwealth Bank Super, UniSuper and AMP were noted for more efficient processing.
ASIC chair Joe Longo criticised the lack of oversight, stating that fund boards were “sleepwalking into a crisis” with no performance targets or monitoring in place for claims handling.
Currencies and commodities
Currency markets saw the US dollar weaken. The euro rose to US$1.0844, the Australian dollar touched 63.11 US cents, and the Japanese yen strengthened to JPY149.67.
Oil prices fell on recession concerns. Brent crude dropped 40 US cents to US$73.63 a barrel and Nymex crude slipped 56 US cents to US$69.36 a barrel. However, both benchmarks posted weekly gains of 1.9% and 1.6% respectively.
Gold surged US$53.30 or 1.7% to US$3,114.30 an ounce, marking its eighteenth record high this year as investors sought safe-haven assets. Spot gold traded near US$3,084.
Iron ore rose US7 cents to US$102.43 per tonne, posting a 0.4% weekly gain, while base metals were mixed.
Australian private sector credit and inflation data are due, alongside the Reserve Bank of Australia’s two-day policy meeting.
China will release purchasing managers' indexes (PMIs), and the US will publish the Chicago PMI.