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Live Coverage of ASX: Key Updates for August 5
Welcome to our live coverage of the ASX for Tuesday, August 5. We’re testing a new format to bring you a high frequency of updates, especially in the pre-market opening and throughout the day. The live blog will conclude at approximately 3:00 PM AEST. Don’t forget to refresh the page for the latest updates and give us your feedback on how we can improve.
Berkshire Hathaway Faces Share Decline Due to Writedown
[8:49 AM] Shares of Berkshire Hathaway Class B experienced a significant drop of up to 3.4%, marking their lowest point since February. This decline followed news of a substantial multibillion-dollar writedown and the decision to halt share buybacks for a fourth consecutive quarter.
The company reported a $3.8 billion writedown concerning its stake in Kraft Heinz, reducing its value to $8.4 billion from the over $17 billion recorded in 2017. This decline has occurred amidst a broader drop of 15% in shares following Warren Buffett’s retirement announcement in early May.
Strategists Caution on Potential S&P 500 Pullback
[8:46 AM] Analysts from Morgan Stanley, Deutsche Bank, and Evercore ISI have raised alarms regarding a potential correction in the S&P 500 after its rapid ascent since April. Key insights include:
- Morgan Stanley’s Mike Wilson predicts a 10% correction this quarter, anticipating pressure from tariffs impacting consumers and corporate profit margins.
- Evercore’s Julian Emanuel warns of a potential 15% drop, citing underlying valuation and macroeconomic risks.
- Deutsche Bank notes that a correction appears statistically overdue following three months of robust gains.
Recent economic indicators, such as inflation rising, a slowdown in job growth, and weak consumer spending, have intensified concerns about a potential decline in the US economy’s strength. Historically, August and September are known as weaker months for equities, with average S&P 500 losses of 0.7%, in contrast to a gain of 1.1% during other months. Technically, the S&P 500’s Relative Strength Index (RSI) reached 76, surpassing the ‘overbought’ threshold of 70, indicating possible market reversal—a sentiment echoed from levels seen in July 2024.
Source: Bloomberg
Market Opening Commentary
[8:33 AM] The ASX 200 futures have risen by 86 points (+0.99%), showing signs of recovery from Friday’s selloff and bringing the market within 0.2% of all-time highs. This positive movement follows a robust performance in major US indices, with the S&P 500 up by 1.47% and the Nasdaq climbing 1.95%, as they both rebounded from earlier losses.
For new readers, a quick recap can be accessed via today’s Morning Wrap.
This summary provides an overview of key economic events, investor sentiments, and stock market movements relevant to today’s ASX coverage, ensuring you stay informed on the latest developments in financial markets.
