Another big drop is ahead for the ASX today (Monday) after Wall Street plummeted on Friday.
The ASX 200 is expected to decline by 115 points this morning following Friday’s near-panic sell-off, which wiped $50 billion from valuations and left the market down 2.1% at 7,943.20.
The 171.50-point fall on Friday was not as severe as an earlier drop of almost 190 points during the session.
Despite Friday’s dramatic slide, the ASX 200 still managed a tiny 0.28% gain for the week. This is in stark contrast to Wall Street, where all major indices suffered heavy losses, with the Nasdaq down 3.35% for the week, returning to levels last seen in late May and firmly in correction territory.
Like Wall Street and other markets, Friday’s sell-off occurred after recent record highs, and the selling exhibited all the signs of profit-taking by investors eager to sell and move their cash into bonds temporarily.
The ASX had peaked above 8,100 points on Thursday following the Fed’s indication of a potential rate cut in August. However, this was quickly forgotten amid Friday’s chaotic trading on Wall Street.
For once, the absence of megatech stocks benefited Australia on Friday and will likely provide some support today. The loss of confidence in AI on Wall Street could be reignited in late August when Nvidia reports its latest quarterly results. This is similar to last year when Nvidia's announcement of booming demand for AI chips ignited the market.
Unlike Wall Street, where bank shares were pummeled (Bank of America fell more than 4.8% on Friday and over 10% for the week, exacerbated by selling from major shareholder Berkshire Hathaway), Australian bank shares declined but to a lesser extent.
JPMorgan Chase, America's largest bank, lost more than 4% on Friday and over 6% for the week.
Commonwealth Bank remained Australia's most valuable company at close on Friday, with a market capitalization of nearly $222 billion, despite a 2.8% decline on Friday and a 1% loss for the week.
NAB fell 4% on Friday and more than 3.3% for the week, ending with a market cap of just over $113 billion.
Westpac maintained a value above $100 billion at Friday's close, having surpassed this level earlier in the week. Westpac shares lost 2.5% on Friday but finished the week up a small 0.62%.
ANZ shares dropped 1.8% on Friday, reducing its market cap to $86 billion for a weekly loss of 2.25%.
Macquarie lost 2.1% on Friday but still managed a tiny 0.1% gain for the week, bringing its value to just under $79 billion. This outperformed its US counterpart, Goldman Sachs, which lost nearly 6% on Friday alone and for the week.
BHP shares eased 1.2% on Friday, despite rising iron ore prices, and ended the week down just 0.6%. Its market value closed at $213 billion.
Rio Tinto shares fell 0.8% for the day but finished up 1.5% for the week, with its value rising to just over $167 billion. Fortescue shares plummeted 8.4% following a sell-off by major shareholder Capital Group of Los Angeles.
CSL shares quietly ended the week down 1.4% at nearly $148 billion.
Eurozone shares plunged 4.2%, and Japanese shares fell 4.7%, partly due to the Bank of Japan's unexpected hawkish stance after decades of ultra-loose monetary policy.
The Bank of Japan is attempting to weaken the yen, which had appreciated rapidly against the US dollar. Previous government interventions failed to curb yen strength, leading to the rate hike decision.
Chinese shares declined 0.7% amid uncertainty about the country's growth outlook and a lack of decisive policy stimulus.
The 10-year Chinese government bond yield dipped below 2.12% on Friday, setting another all-time low at 2.1185%. This will likely disappoint the People's Bank of China and the government.
Important Chinese trade and inflation data will be released this week, which could further impact market confidence in the economy.
