ASX declines, dragged down by the big banks as NAB shares plunge

Online employment advertiser Seek was one of the top-performing stocks, up 5.2 per cent, lifting the communication services sector into the green in early trade.

In the US overnight, Wall Street fluttered to a record after US stock indexes drifted through a mixed day of trading. The S&P 500 edged up by 0.2 per cent to finish just above its all-time closing high set last month. The Dow Jones was close to flat, while the Nasdaq composite rose 0.1 per cent.

Intel shares soared 16 per cent on speculation that the iconic chipmaker could be broken up in a deal involving Taiwan Semiconductor Manufacturing and Broadcom. TSMC has discussed the idea of operating Intel’s US factories and owning a controlling stake in the venture, Bloomberg News reported last week. Broadcom, meanwhile, has held informal talks with advisers about making a bid for Intel’s chip-design and marketing business, the Wall Street Journal said.

US stocks have broadly climbed back toward record heights even though big recent disruptions seemed set to derail their long, upward trend that began in 2022.

Hanging over everything has been the threat of a punishing global trade war following President Donald Trump’s announcements of tariffs. But Wall Street has been taking such actions increasingly in stride, believing they are merely tools for negotiations and that they’ll ultimately prove to be less painful for markets and the economy than they may seem initially.

Then there’s DeepSeek, the Chinese artificial-intelligence startup that said it was able to match the performance of big US rivals without having to use top-of-the-line chips. That raised worries that the deluge of investment flowing into AI development may pull back and choke off an area of the market that’s been responsible for its stellar gains in recent years.

But big US companies have since said in recent weeks they still plan to invest billions of dollars in AI, even with DeepSeek’s disruption. Nvidia’s stock price overnight rose above $US143 a share — higher than it had been just before the DeepSeek selloff. The revival was made complete by the arrival of Grok-3, the latest chatbot from Elon Musk’s xAI on Monday night during an X livestream.

Such optimism has global fund managers feeling so confident that they’re piling into stocks and holding only 3.5 per cent of their portfolios in the safety of cash, according to a survey by Bank of America. That’s the lowest since 2010, strategist Michael Hartnett said in a BofA Global Research report.

Helping to support the fervour has been strong profit reports from US businesses. Companies in the S&P 500 are on track to deliver nearly 17 per cent growth in their earnings per share for the final three months of 2024 compared to a year earlier. That would be the best growth since 2021, according to FactSet.

Still, threats continue to hang over the stock market. Last week, two reports showed inflation unexpectedly worsened across the United States last month. Such stubborn inflation may force a halt to the Federal Reserve’s cuts to interest rates, which began in September to take pressure off the economy and help the job market.

Traders have been paring their expectations for possible cuts to rates through 2025, with an increasing number saying they foresee zero. That in turn has pushed up Treasury yields in the bond market, which typically drag downward on prices for stocks and other investments.

Treasury yields rose again on Tuesday, with the yield on the 10-year Treasury rising to 4.53 per cent from 4.48 per cent late Friday. Like the stock market, bond trading was closed Monday in observance of the Presidents’ Day holiday.

With AP, Bloomberg

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