Tech Shares Plunge, Westpac Profits Soar, Virgin Loyalty Chief Departs
The Australian sharemarket opened with significant losses, reflecting the broader trend observed in US markets. As investor concerns about technology stocks continue to grow, the S&P/ASX 200 index dropped by 73.1 points, or 0.8%. Notably, eight of the eleven sectors experienced declines, with technology shares bearing the brunt of the downturn.
Westpac’s Impressive Performance
In contrast to the tech woes, Westpac Banking Corporation reported a strong net profit of $1.9 billion for the December quarter. This figure represents a 5% increase compared to the quarterly average from the preceding September half. Despite facing stiff competition in retail banking, Westpac’s net interest margin slightly fell by three basis points to 1.79%.
Westpac’s CEO, Anthony Miller, expressed optimism about the economic outlook. He stated, “We expect demand for both business and household credit to remain resilient.” Additionally, the bank noted a decline in impaired loans, mirroring trends seen at Commonwealth Bank.
Tech Shares Under Pressure
The technology sector suffered notable declines following sharp losses on Wall Street. A few key stocks experienced significant drops:
- WiseTech fell by 11.8%
- Xero decreased by 4.4%
- Technology One lost 5.9%
- Cochlear plummeted 16%, reaching a multiyear low of $205.71
Many firms are grappling with concerns regarding artificial intelligence and its potential impact on their business. For instance, despite AppLovin posting a surprising profit, the company’s shares tumbled by nearly 20% due to worries that AI could disrupt its market.
Changes at Virgin Australia
In personnel news, Virgin Australia announced a leadership change in its loyalty program. Nick Rohrlach, who led the Velocity Frequent Flyer program since 2021, will depart to focus on family life. Andrew Cleary, formerly with Qantas, will take over as chief customer officer and Velocity CEO on April 30. Following the announcement, Virgin shares rose by 1.1%.
Impact on Other Sectors
Other sectors also felt the heat from fluctuating commodity prices. Mining stocks experienced declines as commodities prices retreated:
- BHP dropped 1.1%
- Fortescue fell by 0.4%
- Rio Tinto decreased by 0.8%
Additionally, energy stocks took a hit with oil prices declining by over 2%. Woodside Energy, Santos, and Ampol reported losses of 0.9%, 1.7%, and 1.1%, respectively.
Market Outlook and Key Statistics
The Australian dollar weakened, trading at US70.87¢ as of 10:44 AM AEDT. U.S. markets mirrored the downturn, with the S&P 500 losing 1.6% and the Dow Jones Industrial Average dropping by 669 points, or 1.3%. Analysts are watching closely as inflation reports are expected to show a slowdown to 2.5% last month from 2.7% in December.
The volatile market conditions raise questions about the sustainability of investments in AI and the overall economic outlook. Investors continue to seek safer avenues for their investments, with treasury yields reflecting this sentiment.
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