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ASX morning brief: Dow sets a record as chips slide, Fed decision lands tonight

Wall Street split on a rotation out of technology as the S&P/ASX 200 opens a Fed-eve session with China data due.

Mixed3 min readBy Swingfolio Research

At a glance

S&P 5007,511-0.57%
NASDAQ26,376-1.15%
Dow52,000+0.64%
Brent79.65+0.87%
AUD/USD0.7071-0.06%

ASX morning brief: Dow sets a record as chips slide, Fed decision lands tonight

Sentiment: mixed ASX 200 futures: softer, SPI tracking the tech-heavy US indices lower

Wall Street split overnight on a rotation out of technology: the Dow climbed 0.64% to a record 51,999.67 while the Nasdaq fell 1.15% to 26,376.34 as the Philadelphia semiconductor index dropped 5.7%, chips sold after a three-session run. SpaceX rallied to become the fifth-most valuable US company, a rare bright spot in a session where seven of the S&P 500's eleven sectors still finished higher. The S&P/ASX 200 carries Tuesday's 8,918 close into a Fed-eve session, with the FOMC's first decision under new Chair Kevin Warsh due tonight and a hold at 3.50% to 3.75% priced near certain.

What drove the overnight session

  • Tech and semiconductor selling: the Philadelphia semiconductor index fell 5.7% and the S&P 500 technology sector dropped 2.3%, the day's biggest laggard, as traders booked profit on chips after three straight up sessions. That is the direct read for ASX tech names WTC.AU and XRO.AU at the open.
  • Rotation into cyclicals: financials rose 1.5% and industrials 0.7%, carrying the Dow to its second straight record close. The same move could steady the big four banks CBA.AU, NAB.AU, WBC.AU and ANZ.AU after they slipped 0.6% to 1.8% on Tuesday.
  • Lower bond yields: the US 10-year Treasury yield fell about 4 basis points to 4.43%, supportive for rate-sensitive REITs and utilities heading into the Fed.
  • Oil near three-month lows: Brent settled around US$79.65, up 0.87% on the session but still near its lowest since March after the US-Iran peace deal unwound the war premium. Cheaper crude eases the fuel-driven inflation the RBA has been fighting, while pressuring energy earners WDS.AU and STO.AU.

Overnight Wall Street

  • S&P 500: 7,511.35 (-0.57%)
  • Nasdaq: 26,376.34 (-1.15%)
  • Dow: 51,999.67 (+0.64%)
  • VIX: 16.41 (+1.30%)

The selling was narrow. Seven of eleven S&P 500 sectors closed higher and NYSE advancers edged out decliners, so this read as profit-taking in the most crowded corner of the market, not a marketwide selloff. On the Nasdaq, decliners outnumbered advancers by roughly 1.4 to 1; that index leans heavily on the chip complex. The VIX rose but at 16.41 stayed low, consistent with rotation, not fear.

Commodities and FX (AU-relevant)

  • Gold: US$4,349.60/oz (-0.11%)
  • Brent: US$79.65 (+0.87%)
  • WTI: US$76.01 (+0.98%)
  • AUD/USD: 0.7071 (-0.06%)

Gold held near its recent highs around US$4,350 after Tuesday's commodity surge, keeping AU gold producers NST.AU and EVN.AU in view. The small bounce in crude changes little: the war premium has drained out of oil since the peace deal. The Australian dollar sat flat at US$0.7071, leaving no fresh currency push for offshore earners either way.

Key themes for ASX open

  • Technology: the Nasdaq's 1.15% drop and the 5.7% semiconductor fall set up a soft start for WTC.AU and XRO.AU, the local names most tied to the global AI trade.
  • Financials: a US financials sector up 1.5% offers a steadier backdrop for the big four banks after Tuesday's retreat from near-record levels.
  • Resources: BHP.AU, RIO.AU and FMG.AU face a China data dump today that will frame iron ore demand expectations.
  • Energy: with Brent near three-month lows, WDS.AU and STO.AU lose the price support that made energy a Tuesday leader.

Economic calendar today

  • China activity data (around 12:00pm AEST): new home prices, industrial output, retail sales and unemployment, the key swing factor for the iron ore majors
  • US FOMC rate decision and Summary of Economic Projections (around 4:00am AEST Thursday), the first under Chair Kevin Warsh

What to watch

  • Whether the rotation that lifted US financials and industrials carries into AU banks, or whether the Nasdaq's tech drag sets the local tone instead.
  • The China activity data at midday, a direct input for the iron ore miners and the broader materials sector.
  • SPI 200 futures are testing their 200-day moving average after breaking below the channel that held since late November, a technical level traders are watching for a deeper unwind.

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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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