Wall Street falls, ASX set to slide; Oil prices jumps on US-Iran tensions
Stan Choe
While US stock market indices are declining, oil prices are rising due to concerns about a possible conflict between the US and Iran.
The S&P 500 fell 0.4 percent and was potentially heading for its first loss in four days. The Dow Jones lost 283 points, or 0.6 percent, while the Nasdaq composite fell 0.4 percent.
The Australian share market is poised to fall, with futures pointing to a decline of 52 points, or 0.6 per cent, at the open at 4.58am AEDT. The ASX gained 0.9 per cent on Thursday. The Australian dollar was trading at 70.51¢ at 5.12am AEDT. The reporting season continues with QBE Insurance and Guzman y Gomez among the companies with due dates.
Booking Holdings fell 7.1 percent, one of the market’s sharpest losses, even though the company behind the Booking.com, Priceline and OpenTable brands on Wall Street posted a profit last quarter that beat analysts’ expectations.
Its shares have been under pressure due to concerns that rivals powered by artificial intelligence technology could disrupt the industry and at some point take away customers. It has lost about a quarter of its value so far this year.
Such concerns are also being felt in the U.S. stock market, hitting industries ranging from software to legal services to trucking logistics. Investors are so suddenly and aggressively punishing the stocks of companies seen as threatened by artificial intelligence that analysts liken it to a “strike first, ask questions later” mentality.
Carvana lost 9.4 percent of its value in the latest quarter, despite reporting stronger profits than analysts expected. Investors may be paying more attention to how much profit the auto retailer makes per vehicle sold, which was lower than expected.
Walmart, meanwhile, pushed and pulled the market after facing a modest loss, erasing an early 2.7 percent gain. The retail giant achieved stronger results than analysts expected in the last quarter, but gave a profit forecast for next year that fell short of estimates. It last gained 0.3 percent.
Deere helped limit the market’s losses, surging 12.1 percent after the machinery maker reported higher profits than analysts expected. CEO John May said he was seeing a continued recovery in demand from construction and small agricultural customers, although global, large agricultural customers still felt pressure.
Some of the biggest gains in the S&P 500 came from stocks of oil companies, which rose along with crude oil prices. While the benchmark US crude oil increased by 2.6 percent to 66.71 dollars a barrel, Brent crude oil increased by 2.2 percent to 71.88 dollars.
Prices rose on concerns about a possible military conflict between the United States and Iran. President Donald Trump is increasing pressure on Iran, home to some of the world’s largest oil reserves, over its controversial nuclear program. If a conflict breaks out, global oil flows could be restricted.
Occidental Petroleum rose 8.2 percent after reporting a stronger profit than analysts expected in the latest quarter.
In the bond market, Treasury yields remained relatively stable following a report that the number of U.S. workers applying for unemployment benefits decreased last week. This could be a sign that the pace of layoffs is slowing.
A solid labor market may allow the Fed to wait longer before resuming interest rate cuts. Fed officials stated in their last meeting that they wanted to see inflation fall further before supporting interest rate cuts this year.
Continuing to rise in oil prices will push inflation upwards.
The yield on the 10-year Treasury note fell to 4.08 percent from 4.09 percent at the end of Wednesday.
Other U.S. economic reports said manufacturing growth in the mid-Atlantic region accelerated, but potential homebuyers across the country didn’t sign many contracts for purchases in January. The US trade deficit also widened more than economists expected in December.
Following the good performance in foreign stock markets in Asia, indices in Europe fell.
In South Korea, the Kospi rose 3.1 percent as trading resumed after the Lunar New Year holiday. Hong Kong and Shanghai markets remained closed.
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