Australian shares to fall after Wall Street slide
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The news: The Australian sharemarket is set to drop in early trading after all three major indices on Wall Street ended sharply lower, with investor confidence undermined by lacklustre results from Alphabet and Tesla.
The numbers: The Dow Jones index ended 1.25% lower, the broader S&P 500 lost 2.31% in its worst day since December 2022 and the tech-heavy Nasdaq tumbled 3.64% in its worst session since October 2022. In the local market, ASX 200 futures were down 75 points or 0.95% at 7,848 points at 7:00am AEST on Thursday.
The context: US stocks fell after investors digested the disappointing results from two of the Magnificent Seven stocks that have headlined the stocks rally over the last year.
Tesla shares slumped 12.3% after the electric-vehicle maker reported its lowest profit margin in more than five years, while Google parent Alphabet dropped 5% as investors focused on an advertising-growth slowdown.
Their losses underscored the high earnings bar for the so-called Magnificent Seven, a set of megacap tech stocks that have notched double- and triple-digit percentage gains in 2024, riding on optimism around AI adoption and expectations of an early start to the Federal Reserve's interest-rate cuts.
As stocks tumbled, the Cboe Volatility Index, known as Wall Street's fear gauge, closed at its highest since 19 April.
The source: Reuters
