Live Update: ASX Set to Decline Amid Wall Street’s Concerns Over Risky Bank Loans

Wall Street faced a decline as market participants responded to escalating concerns about regional banks and trade tensions with China. The downturn was significant, with various indices reflecting a cautious atmosphere among investors.

US Regional Banks Under Pressure

The S&P 500 index fell by 0.6% to close at 6,629. Similarly, the Nasdaq Composite and Dow Jones Industrial Average experienced declines of 0.5% and 0.7%, closing at 22,562 and 45,952, respectively. This decline was largely influenced by Zions Bancorporation, which reported unexpected losses from two loans in California. Western Alliance also faced scrutiny after initiating a fraud lawsuit against a borrower, which heightened fears of potential credit stress amid persistently high interest rates.

Trade Tensions Intensify

Compounding these financial concerns, President Donald Trump made headlines by threatening 100% tariffs on Chinese imports, set to commence from November 1. This move was in direct retaliation for China’s restrictions on rare earth exports. Tom Hainlin, a strategist at US Bank Wealth Management, commented, “The added uncertainty over trade and what it means for the economy is fuelling market instability.”

Analysts and Earnings Outlook

Despite solid earnings from major banks, the overall market sentiment was dampened by weaker results from insurance giants like Travelers and Marsh & McLennan. Analysts revised their expectations, projecting S&P 500 earnings to rise by 9.2% in the third quarter, a slight increase from earlier forecasts, according to data from LSEG.

Mixed Signals from Technology Sector

In the technology sector, enthusiasm surrounding artificial intelligence displayed mixed signals. While chipmaker TSMC raised its AI spending forecast, key players like Tesla, Meta, and Palantir saw their stock values decline. Salesforce, which previously made headlines due to a cyber-attack, experienced a resurgence in stock price after it projected $60 billion in revenue by 2030. However, the overall market remains fragile, revealing vulnerabilities beneath the surface of Wall Street.

Key Market Statistics