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ASX 200 set to open 0.75% lower as a software selloff snaps Wall Street's nine-day climb

SPI futures point about 65 points lower after the S&P 500's nine-day win streak ended. CrowdStrike and Broadcom fell after hours despite beating, and the AUD slipped to 0.7131.

Bearish3 min readBy Swingfolio Research

At a glance

S&P 5007,554-0.74%
NASDAQ26,854-0.89%
Dow50,687-1.21%
VIX16.06+1.84%
AUD/USD0.7131-0.73%

ASX 200 set to open 0.75% lower as a software selloff snaps Wall Street's nine-day climb

Sentiment: bearish ASX 200 futures: -0.75%

The S&P 500 fell 0.74% to 7,553.68 on Wednesday and the Dow dropped 1.21% to 50,687, ending a nine-day winning streak as the US 10-year yield firmed to 4.46% on strong jobs and factory data while software names eased ahead of closing-bell earnings. After the close, CrowdStrike (CRWD.US) sank about 11% and Broadcom (AVGO.US) about 5%, both despite beating, a sell-the-news reaction after the software group's roughly 40% climb from its April lows. SPI futures now point the ASX 200 about 65 points (0.75%) lower toward 8,720, handing back Wednesday's 0.70% gain, with the AUD easing to 0.7131.

What drove the overnight session

  • Software reversal: CRWD.US fell about 11% and AVGO.US about 5% after the bell, both after beating estimates, once the software group had run roughly 40% off its April lows. Negative read for ASX names WTC.AU, XRO.AU and TNE.AU, which were already lower on Wednesday (WTC.AU -2.08%, XRO.AU -3.54%).
  • Yields firmed on US data: the US 10-year rose to 4.46% after April job openings hit a one-year high and May manufacturing beat, trimming Fed-cut odds and pressing the rate-sensitive Dow hardest at -1.21%.
  • AUD lower, USD firmer: AUD/USD fell 0.73% to 0.7131 as US yields rose. USD earners CSL.AU, RMD.AU, CPU.AU and JHX.AU convert offshore revenue into more AUD at the lower rate.
  • Metals eased, oil stayed high: gold held US$4,460/oz (-0.16%), copper eased 0.45% to US$6.478/lb, and Brent slipped 0.32% to US$97.50 yet stayed elevated with US-Iran talks stalled.

Overnight Wall Street

  • S&P 500: 7,553.68 (-0.74%)
  • Nasdaq: 26,854 (-0.89%)
  • Dow: 50,687 (-1.21%)
  • VIX: 16.06 (+1.84%)

Wednesday ended a nine-day S&P 500 advance from record territory. The Russell 2000 fell 1.25%, the widest of the US majors, as the move up in yields hit small caps hardest. Software, communication services and financials led the sectors lower, with closing-bell results from CrowdStrike, Broadcom and Veeva (VEEV.US, down 2.31% in the regular session and lower again after hours) driving the after-hours weakness now showing in US futures (ES -0.44%, NQ -0.61%). The VIX rose to 16.06, a contained level that reads as an orderly pullback from records.

Commodities and FX (AU-relevant)

  • Gold: US$4,460/oz (-0.16%)
  • Brent: US$97.50 (-0.32%)
  • Copper: US$6.478/lb (-0.45%)
  • Iron ore (62% Fe): near US$104/t
  • AUD/USD: 0.7131 (-0.73%)

Metals gave back a little of Wednesday's advance. BHP.AU had closed at a record that session as copper and iron ore firmed, and both eased overnight, so the big miners open without that commodity push. Copper slipped 0.45% to US$6.478/lb and iron ore sits near US$104/t. Gold near US$4,460/oz is roughly flat for the gold names, while Brent at US$97.50 keeps energy revenue firm even after the contract dipped 0.32%.

Key themes for ASX open

  • Tech: the after-hours falls in AVGO.US and CRWD.US point to a soft open for ASX software, with WTC.AU, XRO.AU, TNE.AU and NXT.AU the most exposed after Wednesday's declines.
  • USD earners: AUD/USD at 0.7131 raises the AUD value of offshore revenue for CSL.AU, RMD.AU, CPU.AU, JHX.AU and BXB.AU.
  • Big miners: BHP.AU (+2.43% Wednesday, record close) and RIO.AU (+1.62%) open against copper down 0.45% and iron ore near US$104/t, having led Wednesday's advance.
  • Gold: NST.AU rose 3.23% on Wednesday after a Morningstar note flagged a possible sale of the miner; spot bullion is flat at US$4,460/oz.
  • Energy: WDS.AU and STO.AU trade against Brent at US$97.50, held up by the unresolved US-Iran standoff even as the contract eased on the day.

Economic calendar

  • 22:30 AEST: US weekly initial jobless claims.
  • Light Australian domestic calendar today after Wednesday's softer March-quarter GDP, which lifted hopes the RBA can wait before its next move.
  • Friday: Australian April trade balance at 11:30am AEST, then US May nonfarm payrolls at 22:30 AEST, the week's main event.

What to watch

  • The big miners (BHP.AU, RIO.AU) against a softer tech open, one day after BHP.AU's record close.
  • The AUD's footing near 0.7131 ahead of Friday's US payrolls.
  • ASX breadth, and whether it narrows to materials and energy if software opens weak.

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Disclaimer

This briefing provides market observations and general information only. It is not personal financial advice and does not take into account your objectives, situation or needs. Past performance is not a reliable indicator of future performance. Consider seeking independent advice before acting on any information presented here.

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