Markets finish week in the red as rotation trade continues

All three major US indices finished in the red on Friday as the rotation into names that will be the key beneficiaries from easing interest rate policy continued.

The S&P 500 closed down 0.71 per cent. The Nasdaq gave up 0.81 per cent, and the Dow Jones slipped 0.93 per cent.

On a weekly basis the S&P 500 and Nasdaq slipped 1.97 per cent and 3.65 per cent respectively as the shift away from the megacap AI beneficiaries was the theme of the week. However, the Dow Jones added 0.72 per cent for the week and the small cap Russell 2000 index finished 1.68 per cent higher for the week as the rotation out of tech and into the rate sensitive sectors continued.

Turning to US sectors, Energy and Technology were the worst performers, falling 1.29 per cent and 1.27 per cent respectively. The best performing sector was Healthcare, which closed up 0.5 per cent.

In company news, shares in cybersecurity group CrowdStrike fell as much as 15 per cent before paring losses, following a major IT failure which impacted businesses around the world and grounded flights.

Investor focus will now turn to earnings releases from some of the megacap tech names, with Alphabet and Tesla both due to release their quarterly earnings after the market closes on Tuesday (Wednesday AEST). Investors will have to wait until the following week for Microsoft, Meta, Amazon and Apple to report. Nvidia reports in late August.

In commodities news, gold briefly traded below US$2400 an ounce, oil fell 3 per cent to trade below US$83 a barrel and iron ore slid 1 per cent.

Futures

The SPI futures are pointing to a 0.84 per cent fall.

Currency

One Australian dollar at 8.10am was buying 66.91 US cents.

Commodities

Gold has lost 2.34 per cent. Silver has lost 3.06 per cent. Copper has dropped 1 per cent. Oil has lost 3.25 per cent.

Figures around the globe

European markets closed lower on Friday. London’s FTSE dropped 0.6 per cent, Frankfurt lost 1 per cent, and Paris closed 0.69 per cent lower.

Turning to Asian markets, Tokyo’s Nikkei lost 0.16 per cent, Hong Kong’s Hang Seng fell 2.03 per cent, while China’s Shanghai Composite closed 0.17 per cent higher.

The Australian share market closed 0.81 per cent lower at 7971.59.

Sources: Bloomberg, FactSet, IRESS, TradingView, UBS, Bourse Data, Trading Economics, CoinMarketCap, Marketech.

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