Tech tumbles, Aussie jobs surprise, oil jumps | Market movements
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US tech results saw the sector retreat, Australian jobs outpaced expectations and the Middle East conflict pushed oil and rate expectations higher. Here's what moved markets last week and what to watch in the days ahead. I'm Jackie Newman, Head of Capital Markets at Sharesies. Let's get into it. It was a choppy week for US markets. The S&P 500 ended the week down 0.6% and the NASDAQ fell around 2.1%. Declines were heavily concentrated in tech, following Tesla and Alphabet's results. Locally, the ASX 200 fell 0.3% for the week, its third straight weekly decline. whilst the NZX 50 bucked the trend, gaining around 0.6% for the week. In the US, it was a big week for tech earnings, with Tesla, Alphabet and Intel all reporting.
Alphabet posted record revenue and strong cloud growth, but investors weren't impressed. Shares fell 7% after the print, as the company raised its FY26 capex forecast again, and free cash flow turned negative for the first time in its history. Tesla's second quarter revenue beat expectations, but earnings missed and operating income nearly halved. Heavy capex on AI Compute and the Robotaxi buildout tipped free cash flow negative for the first time in years. The stock fell around 14% after the result. Meanwhile, Intel beat expectations, reporting a 25% jump in revenue on the back of strong data centre and AI demand. Even so, its shares fell too. Across all these initial results, the read-through for tech is that investors are increasingly sceptical of ballooning capex and are looking for clear evidence that it is translating into returns.
Zooming out, the broader US reporting season is tracking well. According to FactSet, more than a quarter of S&P 500 companies have now reported second quarter results. Close to 90% of those companies have beat earnings expectations. And blended earnings growth is tracking at 38%, well above expectations coming into the season. On the ASX, energy and utilities traded higher last week, with Santos and Woodside lifted by the oil price spike.
How did US tech earnings from Alphabet, Tesla and Intel drive market moves last week?
Meanwhile, the ASX tech sector mirrored weakness in the US, with the sector down 6.6% for the week. Names like Xero, WiseTech and Megaport were among the hardest hit. In economic news, Australian unemployment held steady at 4.4% in June. Employment rose by 76,000, which was well ahead of consensus estimates for 15,000. It's the strongest month for jobs growth in over a year and keeps a rate rise from the RBA on the table for August. In New Zealand, June quarter CPI came in at 4.1% annually, the highest in two years and a modest upside surprise on the RBNZ's 3.9% forecast. Higher fuel prices were a major contributor to the uptick in inflation. Speaking of oil prices, they continue to be driven by the situation in the Middle East.
Brent crude pushed back above $100 a barrel and was up nearly 14% last week. That flowed straight through to bond markets. US Treasury yields hit fresh highs for the year, and traders are now pricing close to a 1 in 3 chance of a Fed rate hike this year, up from just 1 in 10 a week ago. In other news, the US rolled out new tariffs of 10% to 12.5% on goods from 60 trading partners. They replace an expiring 10% global tariff and cover almost all US trade. Looking ahead, there are a few things to watch this week. The FOMC hands down its rate decision on Wednesday, US time. The market expects it will hold rates steady. Microsoft and Meta report on the same day, followed by Amazon and Apple on Thursday.
In Australia, keep an ear out on Wednesday for the Q2 CPI print. This will be a key input into the RBA's next rate decision on the 11th of August. Plenty to keep an eye on. Stay across it and happy investing.
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