Tech rout continues on Wall St ahead of Alphabet, Amazon earnings

The tech rout on Wall Street ran for another day as investors remain wary about the impact of artificial intelligence disruption on software and data firms ahead of earnings from Google-parent Alphabet and Amazon, while a jump in sales for chipmaker Advanced Micro Devices failed to meet hyped up expectations.

Drugmaker Eli Lilly & Co rallied after demand for its weight-loss treatments Zepbound and Mounjaro underscored its rising profit and highlighted its contrasting fortunes with Denmark’s Novo Nordisk, which is facing a double-digit decline in sales this year.

Australian futures are pointing to a soft start to the trading day for the S&P/ASX 200 index when trading opens across the Tasman, while New Zealand’s S&P/NZX50 index is up 0.3% in the final session of the shortened week, with the local market closed for Waitangi Day on Friday.

Meanwhile, US President Donald Trump’s efforts to challenge China’s dominance in critical minerals stepped up with the White House agreeing to work with Japan, Mexico and the European Union to develop the sector.

AI encroachment

Stocks on Wall Street were broadly weaker, with the Nasdaq Composite sliding 2.3% in late trading as investors continue to cool on tech companies after AI firm Anthropic’s expansion into providing a tool for legal users prompted a rethink on software and data companies.

Some of the companies harder hit yesterday such as Intuit and Adobe clawed back their losses, while Palantir Technologies reversed its gains from a record quarterly result earlier this week.

Meanwhile, AMD slumped 17% after the chipmaker’s 39% jump in quarterly sales might’ve beaten analysts’ expectations but failed to impress investors, weighing more broadly on the likes of Nvidia, Broadcom and Intel.

The Dow Jones Industrial Average fared better, nudging up 0.1% in late trading, with pharmaceutical firm Amgen and Post-it note maker 3M leading the blue-chip index higher.

Earnings from Google-parent Alphabet are due after the bell in the latest gauge of the mammoth spending on AI infrastructure, while Amazon’s result is due on Thursday in the US.

Drugmaker Eli Lilly was among the day’s gainers, up 9.8% in late trading after soaring sales of its weight-loss drugs underpinned a stronger result than analysts predicted. The US firm has outperformed its Danish rival Novo Nordisk, which this week warned sales and profit will likely fall as much as 13% this year as the recent White House deal pushes down prices for its drugs such as Ozempic and Wegovy.

Critical friends

US President Donald Trump continued to shore up a coalition of like-minded nations on critical minerals, which are dominated by China, with Mexico, the EU and Japan signing up to coordinate on identifying the minerals needed for certain industries and developing policies to encourage the mining and processing of those minerals.

New Zealand this week committed to exploring future opportunities to expand cooperation with the US on critical minerals.

Stock markets across the Atlantic were mixed, with the UK’s FTSE 100 up 0.9% and France’s CAC 40 gaining 1% while Germany’s DAX 30 falling 0.7%.

The European Central Bank and Bank of England are due to review monetary policy in the coming days, with neither expected to move their benchmark rates.

The downbeat tone is set to continue into the antipodes, with Australian futures pointing to a 0.6% for the ASX200 when trading opens across the Tasman. New Zealand’s NZX50 has gained 0.3% so far in the shortened week, with the local market closed on Friday for the Waitangi Day holiday.

Local tech firms Gentrack, Vista Group International and Serko were at the bottom of the leaderboard yesterday, when they joined the global tech selloff.

The kiwi dollar fell to 59.92 US cents at 7am in Auckland from 60.32 cents yesterday against a broadly stronger greenback after the Institute for Supply Management’s services gauge showed US activity growing at a faster clip than anticipated.

Figures from property consultancy Cotality showed New Zealand house prices were down 1% in January from a year earlier.

Reporting by Paul McBeth. Image from Larry Nalzaro on Unsplash.