ASX eyes losses as oil prices, bond yields weigh on Wall Street

Wall Street capped an up -and- down week with a mixed finish for US stock indexes, as elevated bond yields and oil prices weighed on the market.

The S&P 500 inched 0.2 per cent higher after drifting between modest gains and losses for much of the day. The benchmark index also posted its second straight weekly loss.

The Dow Jones Industrial Average slipped 0.2 per cent, and the Nasdaq composite added 0.4 per cent. The Australian sharemarket is set to slump, with futures on Saturday pointing to a loss of 57 points or 0.7 per cent, at the open. The Australian dollar was trading at US71.11¢.

The majority of stocks on Wall Street fell, and helping to weaken them was rising pressure from the bond market. The yield on the 10-year Treasury climbed to 5 per cent from 4.94 per cent late Thursday after it topped the 5 per cent level early this week for the first time since 2023.

Higher yields slow the overall economy by making it more expensive for everyone to borrow money, from the US government to people looking to buy houses to businesses wanting to build AI data centres. They also tend to undercut prices for stocks and other investments.

Yields have been climbing in a long march since the COVID pandemic knocked them nearly to zero in 2020. The ascent has accelerated recently because inflation has remained stubbornly high for years.

Inflation is well above 3 per cent by several measures. It worsened due to higher oil prices caused by the war with Iran.

The price for a barrel of Brent crude, the international standard, got to nearly $US110 early this week, up from a little over $US70 in July. It has been seesawing since.

It briefly dropped below $US102 in overnight trading before erasing much of the loss and settling at $US103.87, down 0.9 per cent from the day before.

Rising oil prices have pushed gasoline prices to $US4.47 per gallon, up from $US3.20 per gallon a year ago, according to AAA. That is tightening the squeeze on household budgets. Diesel prices are at a record $US6.45 per gallon and that has a more direct impact on shipping costs for everything from groceries to clothing.

High inflation has been raising expenses for everyone, and more companies are giving details about how much.

Steel maker Nucor said late Thursday that it expects to report an increase in profit from its steel mills business in the third quarter from the second because it’s able to charge higher prices. But it’s also having to absorb higher costs. It gave a forecast for overall profit in the third quarter that fell short of analysts’ expectations, and its stock sank 6.3 per cent.

Berkshire Hathaway edged up 0.1 per cent after famed investor Warren Buffett said he’s giving up his role as chairman of the company. Buffett already gave up his role as CEO of the company, where he built a reputation for buying stocks at relatively cheap prices and being patient with his investments.

Elsewhere on Wall Street, General Motors fell 5.1 per cent and Qualcomm dropped 5.8 per cent.