Australian shares are poised for a softer start, with futures pointing to a weaker open following another volatile session for local equities and mixed signals from global markets.
ASX 200 futures were down 22 points, or 0.3%, to 8636, suggesting the benchmark index will extend its recent losing streak after Wednesday’s sharp sell-off in banking stocks.
The expected decline comes despite another record-setting session on Wall Street, where renewed enthusiasm around artificial intelligence and semiconductor stocks pushed the S&P 500 and Nasdaq to fresh highs.
CBA rout drags ASX lower for fourth straight session
The S&P/ASX 200 fell 40.3 points, or 0.5%, to 8630.4 on Wednesday, marking its fourth consecutive decline and the 16th negative close in the past 20 sessions.
Heavy selling in the banking sector overshadowed gains across the remaining 10 sectors, with Commonwealth Bank suffering its largest one-day decline on record.
CBA shares plunged 10.4% to $153.67 after the lender reported a March quarter cash profit of $2.7 billion that fell short of expectations. Investors also reacted to concerns that proposed budget changes to negative gearing and capital gains tax arrangements could dampen demand for investor housing loans.
The sell-off wiped around $25 billion from CBA’s market value and weighed heavily on the broader financial sector.
National Australia Bank lost 1.5% to $36.86, ANZ dropped 1.6% to $34.57 and Westpac retreated 2.8% to $35.57 after UBS flagged CBA and Westpac as among the most exposed to potential housing policy changes.
Property-linked stocks also came under pressure, with Pexa falling 4% to $11.90 and REA Group slipping 1% to $171.
UBS Global Markets executive director Rob Taubman said investors were reassessing the outlook for credit growth after a particularly strong six months for the banking sector.
“CBA stood out at more risk because of its large investor lending book, and today’s move is really the market realising that exposure in light of the budget changes,” Taubman said.
Miners and gaming stocks provide bright spots
Materials stocks continued to outperform as copper prices surged above US$14,000 a tonne to record highs amid signs of renewed Chinese demand and ongoing supply concerns.
BHP rose 2.9% to a record closing high of $61.52 after also announcing the appointment of former BlueScope Steel chief executive Mark Vassella to its board from June 1.
Rio Tinto gained 1.9% to a record close of $189, while South32 climbed 3.2% to $4.49.
Consumer discretionary stocks also delivered strong gains after Aristocrat Leisure jumped 13.3% to $51.94 following a 9.1% rise in first-half profit and a $1 billion increase to its share buyback program.
Light & Wonder added 4.9% to $115.73.
AI optimism drives Wall Street to fresh highs
US markets pushed higher overnight as investors looked past stronger-than-expected inflation data and instead focused on continued momentum in artificial intelligence-related stocks.
The S&P 500 climbed 0.6% while the Nasdaq advanced 1.2%, both reaching fresh record highs. The Dow Jones Industrial Average edged 0.1% lower.
Communication services and technology stocks led gains, while utilities lagged.
The semiconductor index rebounded 1.7% after Tuesday’s weakness, with Micron Technology rising 4.8% and Nvidia adding 2.3% to US$225.83, giving the AI chip giant a market capitalisation of US$5.52 trillion.
Nvidia also touched a fresh intraday high of US$227.84.
Bank of America reaffirmed Nvidia as its top semiconductor pick, lifting price targets and earnings estimates for several AI-linked chipmakers including Micron and Marvell Technology.
The bank said companies positioned in AI compute, networking and memory should continue to outperform if they remain ahead of infrastructure demand.
Attention is now turning to Nvidia’s quarterly earnings release on May 20.
Cisco Systems surged almost 18% in after-hours trade after delivering stronger-than-expected guidance and unveiling plans to cut thousands of jobs.
Ford Motor jumped 13% after broker commentary suggested the company’s energy storage operations could strike deals with major hyperscale technology companies.
AI cloud group Nebius rallied 16% after reporting an almost eightfold increase in quarterly revenue.
Inflation concerns persist despite market resilience
Economic data showed US producer prices rose 1.4% last month, marking the biggest monthly increase in four years.
The rise was largely attributed to crude oil supply disruptions linked to the closure of the Strait of Hormuz, although investors are increasingly concerned that elevated energy prices are beginning to spread through the broader economy.
Despite the inflation data, US Treasury yields were little changed. The 10-year yield held at 4.47%, while the 2-year yield eased 2 basis points to 3.98%.
European markets gain as miners and chip stocks rally
European shares closed higher overnight, supported by gains in mining and semiconductor stocks despite ongoing geopolitical concerns surrounding the Iran conflict and elevated oil prices.
The pan-European FTSEurofirst 300 index rose 0.9%, while the UK FTSE 100 added 0.6%.
Chipmakers Infineon Technologies and STMicroelectronics each jumped about 10%.
German pharmaceutical company Merck lifted its full-year adjusted operating profit guidance, sending its shares 7.2% higher.
Allianz gained 1% after reporting a 52% increase in first-quarter net profit, while ABN Amro rose 8.6% after exceeding quarterly profit expectations.
Currencies mixed as Aussie dollar edges higher
Currency markets were mixed against the greenback overnight.
- The euro fell 0.3% to US$1.1712.
- The Japanese yen weakened 0.2% to 157.86 per US dollar.
- The Australian dollar strengthened 0.2% to US72.57 cents.
Commodities: Copper surges to record highs as oil eases
Commodity markets remained volatile as supply concerns continued to drive metals prices sharply higher.
- Copper futures climbed 2.3% to fresh record highs, while aluminium surged 5.1% to four-year highs.
- Iron ore futures were little changed, edging 0.2% higher to US$111.28 a tonne.
- Gold futures added 0.4% to settle at US$4,707 an ounce as investors balanced inflation concerns with ongoing geopolitical uncertainty.
Oil prices eased despite tensions in the Middle East, with Brent crude falling 2% to US$105.63 a barrel as traders weighed the economic implications of potentially higher interest rates and focused on high-level trade talks between US President Donald Trump and Chinese President Xi Jinping in Beijing.
Looking ahead
Investors will be watching earnings updates from Xero and GrainCorp today, alongside Melbourne Institute inflation expectations data for May.
In the US, Applied Materials is due to report earnings, while April retail sales figures will also be closely monitored for further clues on the strength of consumer demand and the direction of Federal Reserve policy.