ASX set to fall as Wall Street slumps; Westpac profit rises
Stan Choe
Updated ,first published
US stocks are falling as the market becomes further divided between perceived winners and losers due to the shift towards artificial intelligence technology.
The S&P 500 fell 1 percent after erasing an early gain that brought it just below its all-time high. The Dow Jones Industrial Average was down 494 points, or 1 percent, and the Nasdaq composite was 1.5 percent lower.
The Australian share market is poised for a decline, with futures at 5.04am AEDT pointing to a 90-point, or 1 per cent, drop at the open. The ASX rose 0.3 per cent on Thursday. The Australian dollar was weaker at 70.83¢ at 5.16am AEDT.
As the reporting season continues with Nick Scali and Cochlear among those to arrive, Westpac has issued a trading update.
The banking giant said it made a net profit of $1.9 billion in the December quarter, which was 5 percent above the quarterly average in the September half. Amid stiff competition in retail banking, Westpac said its net interest margin, which compares its financing costs to the fees it charges customers, fell 3 basis points to 1.79 per cent. The Sydney-based bank said there was a decline in bad loans; This trend was also seen at the Commonwealth Bank.
Westpac chief executive Anthony Miller said: “We are optimistic about the outlook for the economy and expect demand for both commercial and household loans to remain resilient. Our strong financial fundamentals provide us with the stability and capacity to support our employees, customers, shareholders and the wider economy.”
On Wall Street, AppLovin fell 18.1 percent in the latest quarter despite reporting stronger profit than analysts expected. Like other software companies, it has been under pressure lately over concerns that artificial intelligence could disrupt its business while fundamentally changing the way people use the internet.
AppLovin CEO Adam Foroughi pushed back on such concerns in a conference call with analysts, saying indicators showed his company was in good shape. “There is a real disconnect between market sentiment and the reality of our business,” he said.
Despite this, the stock worsened its first-year loss and ended the day at 32.2 percent.
Cisco Systems fell 11.5 percent last quarter, even though analysts’ profit and revenue expectations were uniformly high. The tech giant said it may make less profit per dollar of revenue this quarter than it did last quarter.
Analysts said this could be an indication of the higher prices for computer memory that everyone is having to pay amid the AI-driven frenzy.
More generally, questions are growing about whether businesses that spend heavily on AI will be able to achieve high enough profits and productivity to make their investments worth it.
Meanwhile, companies serving customers with large AI budgets are also benefiting.
Equinix, for example, rose 11.8 percent even though the digital infrastructure company’s last-quarter results fell short of analysts’ expectations. It gave financial forecasts for 2026 that beat analysts’ expectations, and CEO Adaire Fox-Martin said “demand for our solutions has never been higher.”
The company’s data centers are helping power the world’s transition to artificial intelligence.
Outside of tech, McDonald’s rose 2 percent after reporting stronger profit than analysts expected in the latest quarter. The restaurant chain credited moves to increase its value and affordability, including lowering prices on some U.S. combo meals in September.
Meanwhile, Walmart’s 3.2 percent rally has been one of the strongest forces pushing the S&P 500 index upward. Losses from earlier in the week were erased after a report found that spending at U.S. retailers generally stalled in December.
In the bond market, Treasury yields fell last week following a report that slightly more U.S. workers were applying for unemployment benefits than economists expected.
Still, the figure was lower than the previous week; This is a sign that the pace of layoffs may be accelerating. This also follows a surprisingly strong report on the job market on Wednesday; This report stated that the unemployment rate in the country increased last month.
A strengthening job market could force the Federal Reserve to pause interest rate cuts, even as President Donald Trump loudly and aggressively calls for lower interest rates. This is because lower rates, while stimulating the economy, can also worsen inflation.
All of this raises risks for the report on U.S. consumer inflation to be released on Friday. Economists expect it to show inflation slowing to 2.5 percent last month from 2.7 percent in December.
Sales of previously occupied homes fell more than economists expected last month, weighing on yields, a separate report published Thursday said.
The yield on the 10-year Treasury note fell to 4.12 percent from 4.18 percent at the end of Wednesday.
In foreign stock markets, South Korea’s Kospi rose by 3.1 percent, thanks to the gains of Samsung Electronics, SK Hynix and other technology stocks. Movements were more modest in other Asian markets and Europe.
Hong Kong’s Hang Seng index fell 0.9 percent, while France’s CAC 40 index rose 0.3 percent.
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