Wall Street finished its day sharply lower, with a broad sell-off in nearly every sector — particularly materials, technology and industrials.
Markets at 7:25am (AEST):
- ASX SPI 200 futures -0.6pc, ASX 200 (Tuesday’s close) +0.6pc at 5,922
- AUD: 76.01 US cents, 54.35 British pence, 62.13 Euro cents, 82.71 Japanese yen, $NZ1.07
- US: Dow Jones -1.7pc at 24,024, S&P 500 -1.3pc at 2,635, Nasdaq -1.7pc at 7,007
- Europe: FTSE +0.4pc at 7,425, DAX -0.2pc at 12,551, Euro Stoxx 50 -0.1pc at 3,511
- Commodities: Brent crude -1pc at $US73.94/barrel, spot gold +0.5pc at $US1,330/ounce
The Dow Jones plunged by 425 points, or 1.7 per cent, to 24,024. The S&P 500 shed 1.3 per cent, and the Nasdaq dropped 1.7 per cent.
This is the fifth straight day of losses for the Dow, and the S&P has fallen by 1.6 per cent in the year to date.
The Australian share market is closed for Anzac Day.
In currencies, the Australian dollar is hovering just above 76 US cents, but has fallen slightly to 54.4 British pence and about 62.1 Euro cents.
Oil rose above $US75 a barrel to its highest level since November 2014, but then reversed course as US President Donald Trump and French President Emmanuel Macron pledged to try to resolve US-European differences on Iran, easing concerns the United States might reinstate sanctions against Iran.
Big-name US stocks sink
Google’s parent company Alphabet dropped 4.8 per cent, which is almost all of its gains this year.
Alphabet reported a solid quarterly profit on Monday, after the closing bell. But when trading resumed for New York’s Tuesday session, investors sold their Alphabet stocks after focusing more on the company’s rising expenses and shrinking margins.
Apple fell by 1.4 per cent after two of its microchip suppliers gave a downbeat forecast, warning of softer demand for smartphones. The iPhone maker has lost 7 per cent or about $US64 billion in the last three trading days.
Despite posting a strong set of quarterly results, the construction equipment manufacturer Caterpillar sank by 6.2 per cent.
This was after Caterpillar warned steel prices would go up this year, and increase its cost of doing business — despite the company’s beating earnings estimates due to strong global demand.
Diversified industrial manufacturer 3M was the biggest drag on the Dow. Its stocks fell 6.8 per cent after the company posted in-line profits as lower taxes offset a miss in operating profits and the company lowered its 2018 earnings forecast.
Shares of Lockheed Martin Corp, the Pentagon’s largest weapons supplier, fell 6.2 per cent.
The company reported better-than-expected first-quarter earnings and boosted its full-year sales and profit forecast but did not raise its 2018 cash-flow projections.
Yields at a four-year high
US markets were dragged down, in particular, by 10-year Treasury yields hitting the highly anticipated 3 per cent mark for the first time in four years, stoking concerns about higher borrowing rates for companies already facing rising costs.
The 10-year yield, a benchmark for global borrowing costs, has been driven steadily higher by a combination of concerns over inflation, growing debt supply and rising Federal Reserve borrowing costs.
“It makes borrowing costs more expensive for corporations,” said Oliver Pursche, chief market strategist for Bruderman Asset Management in New York.
“This market rally for the last nine years has been driven by low interest rates, accommodating monetary policy and excess liquidity.”
Higher bond yields could also prompt portfolio managers to weigh moving money into more attractive fixed-income securities at the expense of equities.
The stock market had already been spooked by a climb in bond yields earlier in the year, sliding sharply in February.