ASX Futures point lower after Wall Street tech rout

Australian shares are set to open lower on Wednesday, tracking sharp losses on Wall Street as a heavy sell-off in software stocks dented global risk appetite. ASX 200 futures were down 20 points, or 0.2%, at 8,794, despite the Australian dollar rebounding above US70¢ in offshore trade.

The local market finished higher on Tuesday, although it eased from early highs after the Reserve Bank lifted official interest rates for the first time since 2023 and warned inflation would remain outside its target band for some time.

The S&P/ASX 200 gained 0.9%, or 78.5 points, to close at 8,857.1, after being up as much as 1.2% earlier in the session. Mining and technology stocks led gains, while utilities were the only sector to finish lower.

US: Tech and software stocks dragged lower by AI fears

US sharemarkets fell sharply as investors reassessed valuations across the software sector amid rising concerns that rapid advances in artificial intelligence could intensify competition and compress margins. Losses accelerated after reports the US Navy shot down an Iranian drone in the Arabian Sea, adding a geopolitical overlay to an already fragile session.

The S&P 500 software and services index dropped 3.8%, marking its fifth straight daily decline. Salesforce, Adobe, Synopsys, Datadog and Atlassian each fell around 7%, while Intuit slid 10.9%. The sell-off followed the launch of a new legal tool for Anthropic’s Claude AI chatbot, which reignited fears of disruption across established software business models.

Palantir Technologies bucked the trend, surging 6.9% after strong earnings reinforced optimism around AI-linked demand. Walmart rose 2.9% to become the first retailer to reach a US$1 trillion market valuation. PepsiCo gained 4.9% after announcing price cuts on key brands, while Pfizer slipped 3.3% despite beating quarterly profit expectations and Merck climbed 2.2%.

Paypal plunged 20.3% after forecasting 2026 profit below market expectations, while Gartner slumped 20.9% after issuing weaker-than-expected full-year guidance.
The Dow Jones fell 167 points, or 0.3%, the S&P 500 dropped 0.8%, and the Nasdaq slid 1.4%.

US bond markets were little changed as traders weighed possible future shifts in Federal Reserve policy. The US 10-year Treasury yield edged down 1 basis point to 4.27%, while the 2-year yield held near 3.57%. Fed Governor Stephen Miran said the lack of strong price pressures suggested rates would need to be lowered again this year.

Europe: Resources lift, media stocks slump

European sharemarkets delivered a mixed performance. Basic resources stocks were the standout, rising 4.2% as precious metals rebounded, with shares in global silver producer Fresnillo jumping 6.4%.

In contrast, media stocks fell 5.9% in their biggest one-day drop in around 6 years. The FTSEurofirst 300 index edged up 0.1%, while the UK’s FTSE 100 slipped 0.3%.

Currencies and commodities: Aussie steadies as gold and oil surge

Currency markets were mixed against the US dollar.

• The euro rose from US$1.1780 to US$1.1827 and was near US$1.1820 at the US close.
• The Australian dollar eased from US70.49¢ to US69.82¢ before recovering to around US70.20¢.
• The Japanese yen weakened to near JPY155.75 per US dollar.

Oil prices climbed more than 1% after heightened tensions in the Middle East raised concerns about supply risks.

• Brent crude rose US$1.03, or 1.6%, to US$67.33 a barrel.
•  US Nymex crude gained US$1.07, or 1.7%, to US$63.21.

Base metals advanced strongly, led by copper, which surged 4.5% after reports China plans to increase stockpiles. Aluminium added 3%.

Gold futures jumped US$282.40, or 6.1%, to US$4,935 an ounce, marking the biggest daily rise since November 2008, supported by bargain hunting and strong underlying fundamentals. Spot gold was near US$4,952 at the US close, while silver climbed 4.8% to US$83.23 an ounce.

Iron ore eased, with futures down US50¢, or 0.5%, to US$102.16 a tonne as subdued steel demand ahead of the Lunar New Year weighed on sentiment.

Looking ahead

In Australia, S&P Global services PMI data is due, while RBA official Brad Jones is scheduled to speak. Amcor, Centuria Office REIT and Pinnacle Investment Management release earnings, and Nufarm hosts its AGM.

In the US, attention turns to the ADP employment report and the ISM services index, with earnings due from Alphabet, Eli Lilly and Qualcomm.