Australian shares are set to open lower after global tech stocks were sold off overnight, on concerns that interest rates may have to rise sooner than expected.
ASX futures had dropped 0.4 per cent (to 7,009 points), by 8:30am AEST.
The Australian dollar fell to 77.1 US cents (down 0.6 per cent).
On Wall Street, the Nasdaq Composite suffered its biggest drop in six weeks, as investors dumped megacap growth stocks to seek shelter in more defensive parts of the market.
Highly valued technology-related companies including Microsoft, Alphabet (Google’s parent company), Apple, Amazon and Facebook were sold off across the board.
ANZ profit surges
Meanwhile, ANZ has revealed that its statutory profit jumped to $2.9 billion for the half-year ending March 31.
The bank released $491 million that it had set aside to cover potential COVID-19 losses, and said this was one of the “key drivers” of its much improved result.
Its profit went up 45 per cent (compared to the second-half of last year).
However, it was an even bigger rise (90 per cent) over the first-half of 2020 – as its profits were hit by huge credit loss provisions at the beginning of the pandemic.
ANZ’s preferred measure, cash profit from continuing operations, lifted 28 per cent compared to the second-half, to $3 billion.
The bank’s chief executive Shayne Elliott said ANZ was now “the third largest home lender in the [Australian] market”, after it made around 92,000 new home loans during the period – and that it was the “leading lender in New Zealand” (with 42,000 loans in the booming property market across the ditch).
It will also pay shareholders a much higher interim dividend of 70 cents per share (fully franked), which is a 180 per cent increase over last year’s (25 cents).
Risk of economy starting to ‘overheat’
Comments by US Treasury Secretary Janet Yellen on the potential need for rate hikes further exacerbated the tech sell-off, as investors worried higher rates would weigh on valuations of growth companies.
“It may be that interest rates will have to rise somewhat to make sure that our economy doesn’t overheat, even though the additional spending is relatively small relative to the size of the economy,” she said at a virtual event by The Atlantic.
Reuters: Jonathan Ernst
)This led to the tech-heavy index closing 1.9 per cent lower (at 13,634 points), while the S&P 500 lost 0.7 per cent (to 4,165). The Dow Jones index was practically flat, having risen by 20 points (to 31,1433).
European tech stocks plunged 3.8 per cent, in their worst day since late October. The worst-performing European market was Germany’s DAX, which shed 2.5 per cent due to its high composition of tech stocks.
“Wall Street won’t find out if the Fed is making a policy mistake until several months down the road and that is making some traders nervous,” Edward Moya, senior market analyst at Oanda, wrote in a note.
Mr Moya said investors were also concerned the latest monthly US jobs data (out later this week) would show an improvement in the labour market, and signal rising inflation.
“After Friday’s nonfarm payroll report, investors will see a clear path for the US economy to recover the remaining lost jobs due to COVID and noticeably hear more companies talk about raising prices.”
Fiscal stimulus, rapid vaccinations and the Federal Reserve’s accommodative stance have spurred a strong rebound in the US economy and pushed Wall Street to record highs this year.
The so-called “pandemic winners,” however, have recently started to fall out of favour.
Cryptocurrency ether powered to another record peak, nearing $US3,500, before paring gains to trade 5.4 per cent lower.
Palladium prices soared to record highs, fuelled by concerns about short supplies of the auto-catalyst metal as demand gradually improves.
Oil prices rose after more US states eased pandemic-related lockdowns and the European Union sought to attract travellers, though soaring COVID-19 cases in India capped gains.
Brent crude futures jumped 2.7 per cent (to $US69.35 a barrel).
Spot gold fell 0.8 per cent (to $US1,778.91 an ounce) after Dr Yellen said interest rates may need to rise.
ABC/Reuters
