ASX set to drop after tech stocks fall on Wall Street

On Wall Street, tech stocks fell as rising Treasury yields weighed on sentiment, while markets digested prospects for growth and inflation from China’s rollback of COVID-19 isolation measures.

The tech-heavy Nasdaq 100 underperformed major benchmarks. Tesla led losses as a report of a plan to temporarily halt production at its China factory rekindled fears about demand risks. Apple touched its lowest since June last year amid the slump in big tech. But the blue-chip Dow Jones Industrial Average outperformed, with gains in stocks such as Caterpillar and Boeing.

The S&P 500 traded off session lows, buoyed by gains in commodity-related stocks with oil in New York trading near $US80 a barrel. Southwest Airlines led declines in airline stocks after cancelling flights in a huge winter storm that battered the US.

The yield on 10-year Treasuries advanced 0.09 per cent to 3.84 per cent.

Investors are hoping for a year-end rally to help mitigate what has otherwise been a brutal run for risk assets. The S&P 500 is down almost 20 per cent. Asian and global stocks still remain down by a similar amount in the worst annual drop since 2008. The 10-year Treasury yield is near 3.8 per cent, up from 1.5 per cent at the start of the year, as the US Federal Reserve embarked on an aggressive battle against inflation. Bitcoin held below $US17,000 after starting this year at more than $US47,000.

“We may get a pivot later on next year from the Federal Reserve where they actually start cutting rates, but that’s going to happen when the situation is going to become much more dire than it is now,” Matt Maley, chief market strategist for Miller Tabak + Co, said on Bloomberg TV. “If we just have this slow grind lower, the Fed’s going to keep interest rates at high levels even if they stop raising rates in any kind of way.”

Elsewhere in markets, the outlook for demand from China as the economy reopens boosted the price of oil on Tuesday (Wednesday AEDT) as did freezing weather across the US, which prompted refinery closures.

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Market highlights

ASX futures were down 51 points, or 0.7 per cent, at 7049 about 6am AEDT.

  • AUD +0.2% at US67.41¢
  • Bitcoin -1.1% at $US16,628
  • Dow +0.3% S&P 500 -0.3% Nasdaq -1.2%
  • FTSE +0.1% DAX +0.4% CAC +0.7%
  • Gold +1.0% at $US1816.89 an ounce
  • Brent oil +1.5% to $US85.15 a barrel

United States

The S&P 500 was little changed as of 12.11pm New York time. The Nasdaq 100 fell 0.8 per cent. The Dow Jones Industrial Average rose 0.5 per cent.

The MSCI World index was little changed.

Europe

The equities market in London remained closed on Tuesday. Germany’s 10-year yield advanced 0.12 per cent to 2.52 per cent. Britain’s 10-year yield was little changed at 3.64 per cent.

Commodities

West Texas Intermediate crude rose 1.7 per cent to $US80.93 a barrel. Gold futures rose 1.4 per cent to $US1828.80 an ounce. Iron ore surged to its highest since early August.

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