US big tech slides as investors look to smaller firms
The major US banks were also under pressure.
Stocks on Wall Street sank as investors turned their backs on the likes of Amazon and Nvidia, which have been driving the long-running US bull market in recent years, in favour of smaller companies, with the small-cap Russell 2000 index still outperforming the major indices.
US banks continued to lag as a mixed bag of earnings from Bank of America, Wells Fargo and Citigroup rolled in, with a soft lead from JPMorgan Chase and US President Donald Trump’s campaign against credit card rates weighing on the sector.
Meanwhile, oil prices extended their gains as the US mulls intervening in the ongoing unrest in Iran, while the Organization of Petroleum Exporting Countries remain optimistic about the fuel’s demand in the coming year and US stockpiles keep growing.
And Japan’s prime minister Sanae Takaichi will call a snap election in an effort to shore up her parliamentary majority, with more details expected next week.
The great rotation
Stocks on Wall Street tumbled, with the Nasdaq Composite down 1.6% in late trading and the Dow Jones Industrial Average’s 0.6% led by Amazon and Nvidia as investors continue to eschew the big tech players that have been driving gains in recent years for smaller firms. The small-cap Russell 2000 index was largely unchanged in late trading, and has climbed 6.2% so far this year.
Among those micro-caps, High Roller Technologies soared 650% to US$26.41 after the Las Vegas-based online gaming company signed a deal with Crypto.com to launch an event-driven prediction markets offering.
US financials remained soggy with Bank of America falling even as it beat earnings expectations on strong consumer spending, while Wells Fargo declined after falling short of forecasts and Citigroup was knocked by the writedown on the sale of its Russian operations.
JPMorgan Chase’s softer earnings than expected set the tone for the banks, which are reporting at the start of the earnings season, while US President Donald Trump’s campaign to cap credit card interest rates has sapped demand for financial stocks more broadly, with the big four Australian banks and NZX-listed Heartland Group Holdings among those on the red side of the ledger on Wednesday.
Shiny havens
Heightened geopolitical tensions and the White House’s escalating pressure on the Federal Reserve to cut interest rates have stoked demand for precious metals, with gold futures up 0.4% at US$4,619 an ounce at 7am in Auckland, and Wall Street’s fear gauge – the volatility index – jumped 10% to 17.62.
Stock markets were mixed across the Atlantic as miner Glencore – which is exploring a merger with Australia’s Rio Tinto – led the UK’s FTSE 100 index higher, with the British benchmark up 0.5%, while Germany’s DAX 30 fell 0.5% and France’s CAC 40 dipped 0.2%.
Big oil companies followed energy prices higher, with Chevron topping the Dow in the US and BP advancing after the London-listed firm said it will write down the value of its gas and low carbon energy unit by as much as US$5 billion as the energy major walks back its push into renewable projects.
Dark energy
Brent crude oil futures rose 1.1% to US$66.18 a barrel at 7am in Auckland as unrest in Iran continues, with the US withdraws some personnel from an airbase in Qatar as the White House mulls a strike on Iran.
Meanwhile, OPEC said it expects global oil demand to grow at a steady pace through 2027, while US crude inventories grew last week.
“Geopolitical tensions are underpinning prices as market participants wait for a US response to the turmoil in Iran,” Bank of New Zealand senior interest rate strategist Stuart Ritson said in a note. “News that the US is evacuating some personnel from a military base in Qatar added to the concerns.”
The kiwi dollar fell to 90.89 yen at 7am from 91.47 yen yesterday after Japan’s governing support parties said prime minister Sanae Takaichi will call a snap election early in the parliamentary session that starts next month, with more details coming next week.
The local currency traded at 57.42 US cents from 57.48 cents yesterday and rose to 86.03 Australian cents from 85.79 cents.
Australian futures are pointing to a marginally weaker start to the day for the S&P/ASX 200 index when trading opens across the Tasman. No local data are due today, the NZ Debt Management will hold its first government bond tender of the year, auctioning $450 million of 2030 and 2035 notes.
