ASX set to slide on RBA day as Wall Street retreats; Magnum ice cream disappoints in debut

US stocks are pulling away from their record heights on Monday.

The S&P 500 slipped 0.3 per cent in midday trading, though it remains within 0.6 per cent of its all-time high set in October. The Dow Jones was down 122 points, or 0.3 per cent, just before midday, and the Nasdaq composite was 0.1 per cent lower.

Wall Street has slid lower to kick off its week. Credit: AP

The Australian sharemarket is set to retreat, with futures pointing to a fall of 21 points, or 0.2 per cent, at the open. The ASX edged 0.1 per cent lower on Monday. The Australian dollar was trading at US66.27¢ at 5.08am AEDT.

The Reserve Bank will announce its interest rate decision 2.30pm AEDT, with the central bank tipped to keep the official cash rate at 3.6 per cent. Traders and economists will be on alert for any shift toward a more hawkish tone that might signal the possibility of hikes next year.

On Wall Street, Berkshire Hathaway was a heavy weight on the market and fell 2.2 per cent after announcing a shake-up of some of its top leadership. Todd Combs, who had been CEO of the company’s GEICO insurance business, is leaving for a job at JPMorgan Chase, while chief financial officer Marc Hamburg will retire next year.

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Netflix dropped 4.3 per cent after Paramount announced a $US108 billion ($163 billion) bid in hopes of trumping Netflix’s deal to buy Warner Bros., which was announced last week.

Paramount said it’s offering $US30 for each Warner Bros. Discovery share, as well as a quicker and easier way for investors to get their payout. Paramount is offering to buy all of Warner Bros. Discovery in cash, unlike Netflix’s offer of cash and stock for just Warner Bros. following its pending split with Discovery.

The board of directors for Warner Bros. Discovery had agreed to Netflix’s offer last week, but it’s already facing potential scrutiny from federal regulators because of worries about too much industry power sitting at one company. President Donald Trump said Sunday that a Netflix-Warner Bros. combination “could be a problem.”

Warner Bros. Discovery rose 4.9 per cent following the hostile buyout bid, and Paramount Skydance’s stock climbed 7.5 per cent.

Unilever ’s spinoff The Magnum Ice Cream Co. was valued lower than some analysts expected in its debut on Monday, as the world’s biggest ice cream company looks to revive its performance as a standalone firm.

Magnum shares opened at €12.20 in Amsterdam on Monday, before rising to trade slightly above the technical reference price of €12.80, which gave the company a market value of €7.9 billion ($13.9 billion). Shares also opened in London, and were set to start trading in New York later on Monday as part of the triple listing.

Magnum is listing on the stock exchanges in Amsterdam, London and New York.Credit: Bloomberg

Elsewhere on Wall Street, Confluent soared 28.9 per cent after IBM said it would buy the company, which helps customers connect and process data. IBM said the $US11 billion deal will help customers deploy artificial-intelligence tools better and faster, and its shares added 1.5 per cent.

Carvana jumped 10.7 per cent in its first trading after learning it will join the S&P 500 index on Dec. 22. Many professional investors directly mimic the index or at least measure their performance against it, which will push many to buy any stocks within it.

CRH, a provider of building materials, rose 5.9 per cent, and Comfort Systems USA, a provider of mechanical and electrical contracting services, added 2.4 per cent after likewise learning they’ll join the S&P 500 in a couple of weeks.

They will replace LKQ, Solstice Advanced Materials and Mohawk Industries, which have all shrunk enough in size that they’ll drop down to the S&P SmallCap 600 index of smaller stocks.

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CoreWeave sank 7 per cent after the AI cloud company said it’s raising $US2 billion in debt that it could repay in stock and cash.

Moves elsewhere on Wall Street were relatively modest. The US stock market has become much more calm recently following weeks of sharp and scary swings.

The highlight of this week will come Wednesday, when the Federal Reserve will announce its latest move on interest rates.

Stocks have already run to the edge of their records on widespread expectations that the Fed will cut its main interest rate for the third time this year. Lower interest rates can give the economy and prices for investments a boost, though their downside is that they can worsen inflation.

The big question is what kind of hints the Fed will offer about where interest rates will go after that. Many on Wall Street are bracing for talk aimed at tamping down expectations for more cuts in 2026.

Inflation has stubbornly remained above the Fed’s 2 per cent target, and Fed officials are notably split in their opinions about whether high inflation or the slowing job market is the bigger threat to the economy.

In the bond market, Treasury yields climbed. The yield on the 10-year Treasury rose to 4.18 per cent from 4.14 per cent late Friday.

In stock markets abroad, indexes slid 1.2 per cent in Hong Kong but jumped 1.3 per cent in South Korea for two of the world’s bigger gains.

AP, Bloomberg

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