US sharemarkets pulled back on Friday, weighed down by continued weakness in technology stocks, despite a broadly positive market reaction to President Donald Trump’s nomination of Kevin Warsh as the next Chair of the Federal Reserve.
The S&P 500 fell 0.43 per cent to close at 6,939.03, marking its third consecutive daily decline. The Dow Jones Industrial Average slipped 0.36 per cent, while the Nasdaq Composite underperformed, dropping 0.94 per cent. All three major indices were down more than 1 per cent at their session lows before paring losses into the close.
Despite Friday’s weakness, January finished in positive territory. The S&P 500 gained 1.4 per cent for the month, the Dow rose 1.7 per cent, and the Nasdaq added around 1 per cent. Small-cap stocks outperformed, with the Russell 2000 climbing more than 5 per cent over January.
Fed nomination steadies rates and currency markets
Kevin Warsh’s nomination helped ease concerns around central bank independence, given his prior experience as a Federal Reserve governor and his reputation for maintaining policy credibility. Markets appear to view him as a figure capable of balancing political pressure with a disciplined approach to inflation and monetary policy.
Following the announcement, the US dollar strengthened and Treasury yields remained steady, suggesting investors were comfortable with the direction of future policy and the likelihood of a smooth Senate confirmation process.
Precious metals unwind sharply
Outside of equities, a dramatic reversal in precious metals added to market volatility. Spot gold fell around 9 per cent on the day, while silver plunged roughly 28 per cent. The sell-off followed a sharp run-up over the past year, with gold and silver futures previously gaining about 67 per cent and 142 per cent respectively.
Retail-driven speculative activity, particularly in silver-linked products, appeared to unwind rapidly. The iShares Silver Trust recorded its largest single-day decline on record, pointing to forced selling and margin calls rather than a sudden shift in underlying fundamentals.
Earnings keep pressure on technology
Corporate earnings remained a key driver of individual stock moves. Apple oscillated between gains and losses after reporting stronger-than-expected results and a notable jump in iPhone sales. That followed a sharp sell-off in Microsoft the previous session, which erased more than US$350bn in market value. Semiconductor equipment maker KLA fell more than 15 per cent after forecasting slower growth.
In contrast, strength outside the technology sector provided some balance. Verizon shares surged nearly 12 per cent after beating expectations and issuing an upbeat full-year outlook, marking the stock’s strongest daily performance since 2008.
Australian market cautious ahead of RBA decision
Australian shares are set for a weaker start to the week, with ASX 200 futures pointing to a 60-point, or 0.7 per cent, decline. Despite the pullback, the local market ended January up 1.8 per cent, its strongest monthly performance since August.
Rates in focus
Attention is now firmly on the Reserve Bank of Australia, with markets pricing a high probability of a 25-basis-point rate increase at Tuesday’s meeting. Expectations have shifted sharply following stronger-than-expected inflation and employment data, marking a significant turnaround from easing expectations held just two months ago.
