The Australian sharemarket is set to open sharply lower after Wall Street retreated from its record highs, with the Nasdaq plunging as concern about tighter US restrictions on chip sales to China triggered a selloff in the megacap tech stocks that have powered the bull market.
ASX futures dropped 44 points, or 0.6 per cent, to 7985 as of 6.53am AEST, flagging losses on the local market are likely to take the S&P/ASX 200 back below the 8000 mark this morning. The benchmark index hadas part of a chip clampdown against China weighed on chipmakers, sending the Philadelphia Semiconductor index spiralling 6.8 per cent, and giving the tech-heavy Nasdaq its worst day since December 2022.
“This news on the chip front is the kind of UFO that could indeed create the kind of selling that could be the catalyst for a tradable correction in the stock market,” said Matt Maley at Miller Tabak + Co. “Broad indices have become very overbought.”Wednesday’s action on Wall Street reprised a recent trend in which capitalisation-weighted indexes performed far worse than the average stock, a consequence of weakness in the megacaps that dominate them.
The bond market saw small moves. The Federal Reserve’s Beige Book showed slight economic growth and cooling inflation. The most-notable Fed speaker overnight was Governor Christopher Waller, who said the US central bank is getting “closer” to cutting rates, but is not there yet.
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