ASX 200 sinks after Tesla nosedives more than eight per cent in one day, Elon Musk warns of 'few rough quarters' ahead
The index is down 0.5 per cent in the first 30 minutes of trading after falling 0.3 per cent on Thursday.
Eight out of 11 sectors are in the red with Champion Energy slumping 4.5 per cent, Clarity Pharmaceuticals shedding 2.8 per cent and Autobarn-owner Bapcor down 2.5 per cent after suffering a $500m wipeout on Thursday.
Fortescue has dived 2.4 per cent after jumping 4.5 per cent on Thursday when it revealed a boost in iron ore shipments.
Tesla's nosedive follows the electric car maker reporting a 12 per cent drop in revenue, leading Musk to forecast a poor performance in the near-term future.
"We probably could have a few rough quarters," Mr Musk said after the release of Tesla's results.
"I'm not saying we will, but we could — you know, Q4, Q1, maybe Q2.
"But once you get to autonomy at scale in the second half of next year, certainly by the end of next year, I think I'd be surprised if Tesla's economics are not very compelling."
The Dow Jones shed 0.7 per cent while the S&P 500 rose 0.1 per cent and the Nasdaq added 0.2 per cent on Thursday.
London's FTSE 250 added 0.6 per cent as Germany's DAX and the STOXX Europe 600 both jumped 0.2 per cent.
New Zealand's NZX 50 continues to hover around its opening price on Friday while Japan's Nikkei 225 is down 0.3 per cent.
The Japanese bourse's slump follows a surge of more than five per cent over the past two days after Donald Trump revealed a trade deal with the nation.
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Sydney Morning Herald
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- Sydney Morning Herald
ASX set to slip, Wall Street hits record; US-EU reach trade deal
Wall Street ended the week on a positive note, with stocks hitting fresh all-time highs, while on Sunday, the United States struck a framework trade deal with the European Union, averting a spiralling battle between two allies which account for almost a third of global trade. The trade deal announcement came after European Commission President Ursula von der Leyen travelled for talks with US President Donald Trump at his golf course in western Scotland to push a hard-fought deal over the line, which will see a 15 per cent US import tariff imposed on most EU goods. 'I think this is the biggest deal ever made,' Trump told reporters after an hour-long meeting with von der Leyen, who said the 15 per cent tariff applied 'across the board'. 'We have a trade deal between the two largest economies in the world, and it's a big deal. It's a huge deal. It will bring stability. It will bring predictability,' she said. The deal, that also includes $US600 billion ($914 billion) of EU investments in the United States and significant EU purchases of US energy and military equipment, will indeed bring clarity for EU companies. However, the baseline tariff of 15 per cent will be seen by many in Europe as a poor outcome compared to the initial European ambition of a zero-for-zero tariff deal, although it is better than the threatened 30 per cent rate. The deal mirrors parts of the framework agreement the United States clinched with Japan last week. On Friday, the S&P 500 rose 0.4 per cent to set an all-time high, the fifth time it did so this week. The Dow Jones climbed 208 points, or 0.5 per cent, and the Nasdaq composite added 0.2 per cent to its own record set the day before. A closely watched gauge of equity volatility – the VIX – closed below 15. The Australian sharemarket is set to slip, with futures, set before the US-EU trade deal was announced, pointing to a slide of 5 points, or 0.1 per cent, at the open.
The Age
a few seconds ago
- The Age
ASX set to slip, Wall Street hits record; US-EU reach trade deal
Wall Street ended the week on a positive note, with stocks hitting fresh all-time highs, while on Sunday, the United States struck a framework trade deal with the European Union, averting a spiralling battle between two allies which account for almost a third of global trade. The trade deal announcement came after European Commission President Ursula von der Leyen travelled for talks with US President Donald Trump at his golf course in western Scotland to push a hard-fought deal over the line, which will see a 15 per cent US import tariff imposed on most EU goods. 'I think this is the biggest deal ever made,' Trump told reporters after an hour-long meeting with von der Leyen, who said the 15 per cent tariff applied 'across the board'. 'We have a trade deal between the two largest economies in the world, and it's a big deal. It's a huge deal. It will bring stability. It will bring predictability,' she said. The deal, that also includes $US600 billion ($914 billion) of EU investments in the United States and significant EU purchases of US energy and military equipment, will indeed bring clarity for EU companies. However, the baseline tariff of 15 per cent will be seen by many in Europe as a poor outcome compared to the initial European ambition of a zero-for-zero tariff deal, although it is better than the threatened 30 per cent rate. The deal mirrors parts of the framework agreement the United States clinched with Japan last week. On Friday, the S&P 500 rose 0.4 per cent to set an all-time high, the fifth time it did so this week. The Dow Jones climbed 208 points, or 0.5 per cent, and the Nasdaq composite added 0.2 per cent to its own record set the day before. A closely watched gauge of equity volatility – the VIX – closed below 15. The Australian sharemarket is set to slip, with futures, set before the US-EU trade deal was announced, pointing to a slide of 5 points, or 0.1 per cent, at the open.
West Australian
an hour ago
- West Australian
Nick Bruining: Avoid the smoke and mirrors of synthetic exchange-traded funds
With exchange-traded funds increasing in popularity, investors are being warned about the risks of pouring money into the investment vehicles — particularly 'synthetic' varieties. Investors might not fully understand the underlying risks of ETFs that use this approach to investing, making incorrect assumptions about the make-up of the investments. An ETF is a pooled investment vehicle, traded on stock exchanges such as the Australian Securities Exchange. The ASX reckons more than $200 billion is now invested in ETFs — a 20-fold increase over the past decade. They are a popular vehicle for investors wanting exposure to a diversified pool of growth assets such as shares and are used heavily in self-managed superannuation fund arrangements. ETFs are regarded as a lower-cost alternative to conventional managed investment funds which are traditionally distributed through financial advisers. Many traditional managed funds now also offer an ETF equivalent. ETFs are listed on the ASX and other international exchanges and are purchased through stock brokers including discount online share services. That makes some ETFs ideal for smaller and first-time investors and for more sophisticated investors that are designing bespoke, complex investment portfolios. Early versions of ETFs were predominantly regarded as 'passive' funds, where the underlying investment mix matched standard indices such as the ASX-S&P200, which represents the top 200 stocks by capital value. 'Active' ETFs, on the other hand, actively trade assets within the fund while specialised ETFs can follow specific themes. For example, there are ETFs that invest purely in gaming company shares, cryptocurrencies and others which use short-sale arrangements that benefit when stock prices are falling. While broader ETFs typically provide high levels of diversification, investors should be aware that sometimes the underlying assets can be illiquid and mask secondary risks like movements in foreign currencies when some of the underlying assets are held overseas. While the inherent investment risks increase with reduced diversification, an increased risk applies when the ETF uses synthetic assets. In essence this type of ETF does not hold the physical assets that determine the underlying investment values attached to the ETF. Instead, the fund manager will use a mix of real assets and derivative instruments which mimic an asset, but where there is no direct interest in the specific asset. These 'non-real' assets are broadly described as 'synthetics'. Synthetic assets introduce another significant area of risk called counter-party risk. That is, the company providing the synthetic asset faces a situation where the value of the asset does not have the cash backing to support any large-scale sales or cashing-in of the synthetic asset. Admittedly, no synthetic ETF has failed since the first ETF appeared in 2001, but that doesn't negate the very real risks that can exist. For that reason, many financial advisers prefer to recommend ETFs backed by real assets. Nick Bruining is an independent financial adviser and a member of the Certified Independent Financial Advisers Association
