Meanwhile, gold stocks have rallied again as the precious metal’s price continues to hit records. Northern Star Resources rose 2.3 per cent, Evolution Mining jumped 1.9 per cent and Newmont Corporation gained 2.9 per cent.
The gold price has continued to rise to record highs, a trend experts say is probably linked to uncertainty over global trade and the prospect of more interest rate cuts from central banks.
“Because of the trade tensions, a lot of central banks, global central banks, are buying gold and that is being helped by lower interest rates as well as the weakening US dollar,” said Sam Stovall, chief investment strategist of CFRA Research in New York.
“It’s not a reaction to worries about the global economy, but rather political uncertainty.”
The heavyweight financials sector dragged on the bourse, dropping more than 1 per cent after two US regional banks posted heavy loan-related drawdowns, fanning fears of a repeat of the 2023 regional banking crisis. Commonwealth Bank (up 0.1 per cent) was the only one to advance as Westpac declined 0.8 per cent, ANZ fell 0.5 per cent and NAB fell 0.9 per cent.
Shares in markets data provider Iress finished 3 per cent higher after the company said it was engaging with new potential buyers of the business.
The soft day on the ASX comes after Wall Street’s S&P 500 fell 0.6 per cent on Thursday. On Thursday, Australia’s sharemarket hit a record high after a rise in unemployment sparked bets of interest rate cuts as soon as next month from the Reserve Bank. The Aussie dollar was trading at US64.82¢ shortly after 12.30pm AEDT.
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Overnight on Wall Street, concerns about regional banks weighed on market sentiment.
Zions Bancorp tumbled 13.1 per cent after the bank said its profit for the third quarter will take a hit because of a $US50 million ($77.1 million) charge-off related to loans made to a pair of borrowers. Zions said it found “apparent misrepresentations and contractual defaults” by the borrowers and several people who guaranteed the loans, along with “other irregularities”.
Another bank, Western Alliance Bancorp, dropped 10.8 per cent after saying it had sued a borrower, alleging fraud. It also said it was standing by its financial forecasts given for 2025.
Scrutiny is rising on the quality of loans that banks and other lenders have broadly made following last month’s Chapter 11 bankruptcy protection filing of First Brands Group, a supplier of aftermarket vehicle parts. The question is whether the hiccups are merely a collection of one-offs or a signal of something larger threatening the industry. The KBW Bank index fell 3.1 per cent.
Thursday’s swings on Wall Street, where the Dow bounced from an early gain of 169 points to an afternoon loss of 472, fit the pattern of the week for stocks. They’ve been shaky since the end of last week, when Trump shattered a month’s long calm in the US sharemarket by threatening much higher tariffs on China.
The decline on Wall Street erased an early morning gain driven by an encouraging signal about the artificial-intelligence boom.
Taiwan Semiconductor Manufacturing reported a bigger jump in profit for the latest quarter than analysts expected. Chief financial officer Wendell Huang also said TSMC expected “continued strong demand for our leading-edge process technologies” going into the end of the year.
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That’s important for the US sharemarket because TSMC is a critical player at the centre of the AI frenzy, making chips for such companies as Nvidia. And Nvidia and other AI stocks have been central to Wall Street’s surge to record after record this year, even though inflation is still high and the jobs market is slowing.
AI stocks have shot so high that critics worry about a possible bubble, like the one in dotcom stocks that imploded in 2000.
US companies broadly are under pressure to deliver stronger profits after the S&P 500 surged 35 per cent from a low in April. To justify those gains, which critics say made their stock prices too expensive, companies will need to show they’re making much more profit and will continue to do so.
A barrel of US crude gave up an early gain to drop 1.4 per cent to $US57.46. Brent crude, the international standard, fell 1.4 per cent to $US61.06 a barrel.
In the bond market, the yield on the 10-year Treasury sank to 3.97 per cent from 4.05 per cent.
With AAP, AP and Reuters
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