The Australian sharemarket is expected to open lower on Friday after disappointing US technology earnings and a sharp rise in oil prices triggered a broad global sell-off.
ASX futures were down 61 points, or 0.7%, at 5am AEST, pointing to a weaker start for the S&P/ASX 200.
ASX pares gains as jobs data lifts rate expectations
The Australian sharemarket surrendered most of its early gains on Thursday after stronger-than-expected employment figures reinforced expectations that the Reserve Bank of Australia (RBA) could raise interest rates at its August meeting.
The S&P/ASX 200 closed 16 points, or 0.2%, higher at 8,439, after rising as much as 1.2% earlier in the session. Six of the index’s 11 sectors finished in negative territory.
Employment surged in June, extending the previous month’s gains and highlighting continued resilience in the labour market.
The unemployment rate held steady at 4.4%, in line with forecasts, as the participation rate increased. The underemployment rate rose to 6.5%.
“The jobs report was marginally stronger than we expected,” AMP economist My Bui said.
“We think [the RBA] will hike in August with inflation too far from target band” and amid upside risks including a second-round fuel impact, she said.
The RBA’s next monetary policy decision is scheduled for August 11.
Banks and resources support the market
The major banks advanced, with Commonwealth Bank gaining 0.4%, Westpac up 0.8%, National Australia Bank rising 1.4% and ANZ adding 0.6%.
Mining heavyweights also strengthened. BHP rose 1.5%, Rio Tinto gained 0.5% and Fortescue advanced 1%.
Gold producers Northern Star Resources and Evolution Mining each climbed 1.9%, while Woodside Energy rose 0.5%. Coal producers Yancoal Australia and Whitehaven Coal gained 1.5% and 2.2%, respectively.
Santos closed flat after cutting second-quarter production guidance due to ramp-up challenges at its Barossa and Pikka projects and the timing of cargo receipts.
James Hardie Industries jumped 6.1% after reporting stronger-than-expected June-quarter sales of between US$1.45 billion and US$1.48 billion.
Origin Energy added 0.8% after confirming that a cyberattack had exposed some customer information, including names, addresses and partial credit card and bank account details.
Technology stocks retreat
Technology stocks were among the weakest performers after results from Alphabet and Tesla raised concerns about the cost of expanding artificial intelligence infrastructure.
WiseTech Global fell 7%, Xero dropped 5%, Life360 declined 5.5% and TechnologyOne lost 3.7%.
The Australian dollar was trading at US70.03 cents late in the local session.
Wall Street hits multi-week lows
US sharemarkets fell sharply on Thursday as disappointing Big Tech earnings reignited concerns over heavy spending on artificial intelligence, while surging oil prices added to inflation fears.
The Dow Jones Industrial Average fell 1%, the S&P 500 dropped 1.2% and the Nasdaq Composite tumbled 2.2%.
The Nasdaq briefly touched its lowest level in more than two months and traded more than 7% below its early-June record high.
Alphabet shares fell almost 7% after investors focused on increased spending plans and the company’s first quarter of negative free cash flow.
Tesla plunged more than 15% after reporting negative free cash flow for the first time in more than two years.
Lockheed Martin bucked the weakness, gaining 10.5% after lifting its 2026 sales and profit forecasts, while Thermo Fisher Scientific rose 8.8% after upgrading its annual profit outlook.
US Treasury yields increased as rising oil prices fuelled expectations of renewed inflation and additional interest rate hikes.
The US 10-year Treasury yield rose 4 basis points to 4.70%, its highest level in about 18 months, while the two-year yield climbed 5 basis points to 4.35%.
European markets slide on earnings and rate concerns
European sharemarkets recorded their steepest one-day decline in more than two weeks as disappointing company earnings, elevated crude prices and hawkish central bank commentary weighed on sentiment.
The pan-European FTSEurofirst 300 index fell 1.2%, while the UK’s FTSE 100 declined 0.7%.
The European Central Bank left interest rates unchanged, although comments from president Christine Lagarde were interpreted as leaving the door open to a potential September increase.
The food and beverage sector dropped 4.1%. Nestlé shares plunged almost 8%, marking their largest decline since 1989, despite the company raising its full-year organic sales guidance.
Technology stocks fell 2.9%, led by an 18% decline in STMicroelectronics (NYSE:STM) after the chipmaker forecast third-quarter revenue below market expectations.
US dollar strengthens against major currencies
The US dollar advanced as investors sought safe-haven assets amid equity market weakness and escalating geopolitical risks.
- The euro slipped 0.3% to US$1.1376.
- The Japanese yen fell 0.4% to ¥163.86.
- The Australian dollar declined 0.5% to US69.65 cents.
Oil surges above US$100 a barrel
Global oil prices climbed to their highest levels in almost two months after Yemen’s Iran-backed Houthi rebels said they had attacked two Saudi oil tankers in the Red Sea.
Brent crude futures surged 7% to settle at US$100.69 a barrel as concerns grew over further disruptions to global energy supplies.
Base metals were mixed.
- Copper fell 2.3% as rising energy costs clouded the global economic outlook, while aluminium gained 0.1% amid tight supply conditions.
- Gold futures retreated from a two-week high, falling 2.4% to US$4,050 an ounce as higher energy prices reinforced concerns about inflation and future interest rate increases.
- Iron ore futures rose for the first time in three sessions, gaining 0.1% to US$98.47 a tonne as elevated shipping costs provided some support.
Looking ahead
In Australia, investors will be watching a quarterly update from Regis Resources and the release of the July Composite PMI.
In the US, Exxon Mobil, American Express, NextEra Energy and Verizon are scheduled to report second-quarter earnings.
US Composite PMI and new home sales data will also be released.