The Australian sharemarket is poised for a significant tumble on Tuesday, with ASX futures indicating a drop of more than 100 points, or 1.4 per cent, to 8510. This follows a widespread rout across Wall Street and Asian markets, ignited by robust US labour data that exceeded market expectations. The US economy added 172,000 jobs last month, well above forecasts of 85,000, prompting traders globally to swiftly recalibrate interest rate expectations, now fully pricing in a US Federal Reserve hike by year-end, with a potential follow-up in 2027.
The strong jobs report led to a swift sell-off in rate-sensitive sectors, particularly technology stocks. The S&P 500 fell 2.6 per cent, while the tech-heavy Nasdaq slumped 4.2 per cent. A gauge of semiconductor stocks, buoyed by artificial intelligence spending, plummeted 10 per cent, and Bitcoin briefly dipped below US$60,000. The repercussions extended to Asia, where South Korea’s Kospi Index, previously a top performer, tumbled 8 per cent at one point, triggered by losses in giants like Samsung Electronics and SK Hynix. Japan’s Nikkei also fell over 3 per cent, with European futures pointing to further weakness.
While Australia is less exposed to the recent surge and subsequent falls in AI and tech themes, the pervasive risk-off sentiment is expected to spill onto the ASX. Hugh Dive, chief investment officer at Atlas Funds Management, noted that local losses might exceed futures indications, though the Australian market could fare slightly better than overseas counterparts due to its different sector weighting. SPI Asset Management managing partner Stephen Innes added that while the AI investment story remains intact, crowded positioning can lead to sharp corrections. Gold prices also reversed year-to-date gains, falling towards US$4330 an ounce, while Middle East tensions pushed Brent crude to US$96.47 a barrel. Investors will also monitor key inflation reports from the US and China this week, alongside several central bank decisions and the impending US$1.8 trillion initial public offering of Elon Musk’s rocket company, SpaceX, which is set to hit the board on Friday.
