Banks weigh down ASX; JPMorgan, Goldman chiefs send warnings

The Australian sharemarket has declined at the open after a mixed session on Wall Street.

The S&P/ASX 200 was down 50.2 points, or 0.6 per cent, to 8733.7 in early trade, with financials the weakest sectors as the banks declined. The Australian dollar was trading at US69.82¢.

Financial stocks are weaker with Commonwealth Bank and National Australia Bank down 1.2 per cent, while Westpac and ANZ Bank shed 0.6 per cent.

Mining stocks are mixed. Fortescue and Rio Tinto added 0.5 per cent while BHP dipped 0.1 per cent. Among the gold miners, Northern Star advanced 0.5 per cent and Evolution Mining lost 0.6 per cent.

Energy stocks advanced after oil prices rose again as a flare-up in attacks in the Middle East increased uncertainty over a recovery in energy flows from the Persian Gulf. The US said it assisted in shipping more than 19 million barrels of crude through the Strait of Hormuz, even as an escalation of Iranian attacks on tankers in the waterway threatens the recent rebound in Gulf supply to near prewar levels.

Elsewhere in the region, Saudi Arabia intercepted more missiles and drones launched by Yemen’s Houthis, as fighting with the Iran-backed militant group showed few signs of subsiding. The headquarters of oil giant Saudi Aramco in the east of the kingdom was hit in the latest attacks. West Texas Intermediate advanced toward $US95 a barrel, after edging higher in the previous session, while Brent declined to close below $US106.

Technology stocks followed their Wall Street peers lower with Codan down 0.3 per cent, WiseTech falling 0.4 per cent, Xero shedding 0.7 per cent and Technology One 1 per cent lower.

Overnight, the S&P 500 edged down by less than 0.1 per cent and pulled a bit further from its all-time high set last week. The Dow Jones Industrial Average fell 180 points, or 0.3 per cent, while the Nasdaq composite dipped 0.2 per cent.

The modest Wall Street moves masked some big swings happening underneath the market’s surface.

Goldman Sachs, for example, jumped more than 4 per cent at the start of trading after the bank delivered a profit for July through September that blew past analysts’ expectations. But its stock quickly erased all of it and then flipped between gains and losses before finishing with a dip of 0.2 per cent.

The firm benefited in the summer from strong growth for its business that offers loans to clients for trading stocks, among other things, even as chief executive David Solomon said it’s dealing with a “complicated operating environment” created by lots of uncertainty.

Expectations are high for profits across all kinds of US companies. Analysts are forecasting overall growth of nearly 30 per cent for companies in the S&P 500 during the summer from a year earlier, according to FactSet. If they’re correct, it would be the third straight quarter of growth better than 25 per cent.

And companies need to hit those high numbers to justify the record-setting runs for their stock prices despite the many worries on Wall Street about high inflation, increased pressure from the bond market and the war with Iran.

UnitedHealth Group’s stock swung sharply even though it reported stronger profit and revenue for the latest quarter than analysts expected. The healthcare company also raised its forecast for profit over the full year of 2026.

After rallying as much as 5.6 per cent shortly after trading began, it erased all of it and finished with a dip of 0.2 per cent.

More firmly in the losing column was Wells Fargo, whose stock dropped 3.1 per cent after the bank reported weaker revenue for the latest quarter than analysts expected, even though its profit topped Wall Street’s estimates. CEO Charlie Scharf cited weaker revenue from its venture capital investments, among other things.

But Scharf also gave a potentially encouraging signal about the broader economy and future profits for companies across industries. He said that “our data shows that our consumer and business customers are doing well.” That’s despite uncertainty about the economy and recent surveys showing Americans have become more discouraged about their finances.

At the country’s biggest bank, JPMorgan Chase CEO Jamie Dimon highlighted “elevated asset prices” as one of the potential risks for the economy. He also mentioned high inflation, rising interest rates and “geopolitical conditions.”

“These forces may be manageable, but we remain prepared for a wide range of outcomes,” he said.

JPMorgan Chase’s stock flipped between gains and losses through the day before finishing with a drop of 0.9 per cent. It reported a weaker profit for the latest quarter than analysts expected, but it also gave a forecast for net interest income in the current quarter that topped Wall Street’s estimate.

Outside of earnings reports, some of the sharpest action was for stocks in the computer chip industry.

Worries have been high for a while about whether chip stock prices have shot too high in the frenzy around artificial-intelligence technology, and concerns climbed further following reports that China’s memory chipmaker CXMT is making advances that could challenge industry heavyweights. That includes companies like Micron Technology of Boise, Idaho, and Samsung Electronics and SK Hynix of South Korea.

Micron fell 3.6 per cent and was the single heaviest weight on the S&P 500. South Korea’s Kospi stock index tumbled 5.5 per cent for its worst day in nearly two months.

Bumble, meanwhile, leaped 56.6 per cent after the app company that helps people make relationships said it agreed to a $US1.3 billion ($1.9 billion), all-cash buyout by Ithaca Holdings.

In the bond market, Treasury yields eased after oil prices fell. The yield on the 10-year Treasury slipped to 5.21 per cent from 5.24 per cent late Friday. Trading in the US bond market was closed Monday for a holiday.

AP, Bloomberg

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