Joseph BanquoAs 2024 draws to a close, the Australian sharemarket is poised for a downturn, mirroring a decline in US stocks led by a fall in major technology stocks. This dip occurs despite an otherwise impressive year for US markets, fueled primarily by tech sector gains.
ASX futures show signs of decline, dropping 0.4% or 36 points to 8189 early Tuesday morning. This comes as the New York markets faced a challenging session, with the S&P 500 falling by 1.1%, alongside losses in Apple, Microsoft, and Tesla. The Nasdaq and Dow Jones Industrial Average also saw declines of 1.2% and 1%, respectively.
For the S&P 500 and Nasdaq 100, this marks the third successive session of decline, each with losses exceeding 1% in the past eight days. Despite these challenges, US treasury yields have seen a rally, with the 10-year yield around 4.54%, and the Australian dollar slightly up, trading at 62.21 US cents.
With major US tech companies, labeled the “Magnificent Seven,” driving a 25% rise in the S&P 500 this year, some experts express concerns over market concentration. Nevertheless, most strategists foresee continued growth momentum in 2025.
In the aftermath of a tragic crash involving Jeju Air’s Boeing 737-800, Boeing shares dipped by 2.3%, while Jeju Air’s stock hit record lows, falling 8.7%. South Korea’s quick response includes inspections of all 737-800 aircraft in the country by week’s end.
Meanwhile, European and Asian markets experienced slight declines, and oil prices rose while traders brace for uncertainties ahead in 2025.
Is the Australian Sharemarket Heading for a Major Downturn?
As the year 2024 concludes, market analysts are closely observing the Australian sharemarket, which is showing signs of a potential downturn. This shift seems to echo the declining trend observed in the US stock market, where major technology stocks have started losing momentum. Despite an overall successful year for the US markets, heavily driven by technology sector gains, recent performances indicate turbulence.
Market Analysis and Trends
The early Tuesday morning ASX futures dropped by 0.4% or 36 points to 8189, signaling a response to the challenging session witnessed in New York markets. The S&P 500 experienced a decline of 1.1%, along with losses in prominent tech stocks like Apple, Microsoft, and Tesla. Additionally, the Nasdaq and Dow Jones Industrial Average logged declines of 1.2% and 1% respectively. This marks the third consecutive session of declines for both the S&P 500 and Nasdaq 100, where each session faced losses exceeding 1% within the past eight days.
US Market Concentration and Future Growth
A notable point of discussion among market experts has been the role of the “Magnificent Seven” tech giants, namely Apple, Microsoft, and Tesla, in driving the S&P 500’s impressive 25% rise throughout the year. Despite concerns over this market concentration, the consensus among most strategists is optimistic, anticipating continued growth momentum in 2025.
Global Market Insights
On a global scale, European and Asian markets have experienced slight declines as well. Alongside this trend, oil prices have risen as traders prepare for potential uncertainties in the coming year. The situation reflects a global sense of caution as we prepare to transition into 2025.
Aviation Incident Impact
In the international domain, a tragic crash involving Jeju Air’s Boeing 737-800 has impacted stock values significantly. Boeing’s shares dipped by 2.3% while Jeju Air’s stock reached record lows following an 8.7% reduction. South Korean authorities have responded swiftly, announcing plans to inspect all Boeing 737-800 aircrafts within the country by the end of the week, underscoring the import of stringent aviation safety measures.
Currency and Yield Movements
Despite the stock market setbacks, US Treasury yields have exhibited a rally with the 10-year yield stabilizing around 4.54%. Concurrently, the Australian dollar experienced a slight increase, trading at 62.21 US cents.
Conclusion
While current trends indicate a downturn for both the Australian and US markets, expert predictions suggest possible future growth, particularly in the tech sector’s influence. As we edge closer to 2025, a mixed global economic environment coupled with vigilant monitoring of sector-specific developments will be crucial for investors and market watchers.
