The ASX200 futures point to a 0.2% fall at the open, following a heavy session on Wall Street where the Nasdaq Composite dropped 2.87% in its worst day since June. The S&P 500 fell 1.4% and the Dow Jones slipped 0.09%. The sell-off was driven by Meta, which registered its biggest drop since July (7%) despite beating third-quarter estimates. Investors reacted negatively to the company's plans to ramp up AI spending, fuelling doubts about whether the investment will pay off.
Oil prices climbed to a five-month high, with Brent crude rising 4% to about US$113.17 a barrel, as further Houthi attacks on Saudi Arabia and concerns about a fresh escalation between the US and Iran gripped markets. Reuters reported that Saudi Aramco told staff to evacuate its headquarters in Dhahran as fighting between the world's largest crude exporter and Yemen's Houthis intensified. Separately, The New York Times cited unnamed US officials saying US and Israeli militaries have drawn up specific plans for renewed strikes on Iran after next month's midterm elections. The Wall Street Journal reported that more oil is now being shipped out of the Persian Gulf than before the Iran war, partly due to the "Hormuz Shuttle", but Rabobank's global energy strategist Joe DeLaura cautioned that rising insurance costs and tanker inefficiencies mean higher volumes do not guarantee cheaper delivered energy.
Treasurer Jim Chalmers will deliver a keynote speech at the Citi A50 Australian Economic Forum in Sydney. He is expected to update the Mid-Year Economic and Fiscal Outlook (MYEFO) and flag that business investment could more than double compared to the budget forecast in May, rising from 2.5% to over 5%, which would mean more than $50 billion in additional business investment over three years. Chalmers described Australia as "an island of opportunity and stability" in a "sea of uncertainty and risk", but acknowledged challenges including weak productivity, higher inflation, tighter monetary policy, and the impact of two wars on global growth and borrowing costs.
British banking giant Barclays plans to cut about 5,000 jobs (5% of its workforce) this year as it turns to artificial intelligence to reduce costs. CFO Anna Cross said about 1,000 positions had already been cut, with the remaining 4,000 to go by the end of December, with about 60% affecting support roles including developers. The announcement follows a major restructure at ANZ in Australia, which last year announced plans to cut 3,500 jobs and reduce its contractor workforce.
Chinese stocks have entered bear market territory, with the CSI 300 index falling 20% from its June peak after a 1.8% drop on Thursday. The reversal from the rally driven by government stimulus and AI enthusiasm reflects China's sluggish domestic economy and concerns about returns on costly AI investments. The sell-off hit Hong Kong as well, where the Hang Seng Tech Index fell as much as 5.3%.
In a comment that struck a note on automation, NASA senior engineer and manager Jeevan Perera told The Business: "With the capabilities I've seen in AI and automation, I can't think of a position or a job that can't eventually go away to full automation." He sees positives such as a permanent human base on the Moon, but the remark underscores the economic questions posed by rapid AI advances.