The Australian sharemarket is set to open slightly lower on the final day before the Easter holidays, as investors protect their portfolios from any more valuation damage spreading from the United States.
A sharply weak finish on Wall Street would have been prominent in the minds of futures traders who marked down the S&P/ASX 200 June share price index futures contract by 26 points (0.3%) to 7,760 at 8:20 am AEST (10:20 pm GMT Wednesday).
The major U.S. stock indices fell on Wednesday (Thursday AEST) on worries about the economy and technology sectors due to U.S. tariffs, with the tech-laden Nasdaq Composite dropping 3.1%, the S&P 500 2.2% and the Dow Jones Industrial Average 1.7%.
The damage was inflicted by news that Federal Reserve Chair Jerome Powell said larger-than-expected tariffs were likely to mean higher inflation and slower growth in the U.S. and NVIDIA (NVDA.O) said it would take $5.5 billion in charges because the U.S. government had limited exports of its H20 artificial-intelligence chip to China.
This provided a bearish backdrop for the opening of trading in an Australian market that finished a little lower on Wednesday after giving back earlier gains with the S&P/ASX 200 Index edging down just two points to 7,759.7.
Burrell Stockbroking wealth adviser Adam Dight said investors were reluctant to buy on the last day before a four-day break, particularly given the following week would be shortened to three days due to Anzac Day on Friday 25 April.
“No-one wants to go overly long [with] an extended break and we have Anzac Day,” Dight said.
“People are a bit gutless when there is an extended period of no trading.”
He said Australian gold producers like Newmont Corp (ASX: NEM) and Evolution Mining (ASX: EVN) were trading at a discount to the value implied by the precious metal price, which had hit a record high due to its reputation as a safe haven from trouble.
Dight said investors had also been attracted to banks which were looking for "bullet profit” given the strength of Australian household balance sheets.
Turning to fixed interest securities, while the yield on 10-year Australian Treasury bonds rose 0.07% to 4.234%, the two-year rate followed U.S. government paper, dipping 0.27% to 3.271%.
