ASX to dip after worries about banks weigh on Wall Street

2 hours ago 2

By Staff reporter

October 17, 2025 — 7.09am

The Australian sharemarket is set to slip on Friday, after a slump in Wall Street overnight amid fears about credit risks facing mid-sized American banks and simmering concern over trade tensions between the U.S. and China.

At 7.05am AEDT futures were pointing to a 0.3 per cent decline in the S&P ASX/200, while Wall Street’s S&P 500 had fallen 0.6 per cent.

On Thursday, Australia’s sharemarket hit a record high after a rise in unemployment sparked bets of interest rate cuts as soon as next month from the Reserve Bank. The dollar was trading at US64.84¢ shortly after 7.00am AEDT.

The ASX is expected to open lower on Friday, after touching a record high a day earlier.

Zions Bancorp. tumbled 12 per cent after the bank said its profit for the third quarter will take a hit because of a $US50 million ($77.1 million) charge-off related to loans made to a pair of borrowers. Zions said it found “apparent misrepresentations and contractual defaults” by the borrowers and several people who guaranteed the loans, along with “other irregularities.”

Another bank, Western Alliance Bancorp dropped 10.4 per cent after saying it has sued a borrower, alleging fraud. It also said it’s standing by its financial forecasts given for 2025.

Scrutiny is rising on the quality of loans that banks and other lenders have broadly made following last month’s Chapter 11 bankruptcy protection filing of First Brands Group, a supplier of aftermarket auto parts. The question is whether the hiccups are merely a collection of one-offs or a signal of something larger threatening the industry. The KBW Bank index fell 3.1 per cent.

The swings on Wall Street, where the Dow bounced from an early gain of 169 points to an afternoon loss of 472, fit the pattern of the week for stocks. They’ve been shaky since the end of last week, when President Donald Trump shattered a months-long calm in the U.S. stock market by threatening much higher tariffs on China.

The gold price continued to rise to record highs, a trend experts say is probably linked to uncertainty over global trade and the prospect of more interest rate cuts from central banks.

“Because of the trade tensions, a lot of central banks, global central banks are buying gold and that is being helped by lower interest rates as well as the weakening U.S. dollar,” said Sam Stovall, chief investment strategist of CFRA Research in New York. “It’s not a reaction to worries about the global economy, but rather political uncertainty.”

The decline on Wall Street erased an early morning gain driven by an encouraging signal about the artificial-intelligence boom.

Taiwan Semiconductor Manufacturing Co. reported a bigger jump in profit for the latest quarter than analysts expected. Chief Financial Officer Wendell Huang also said TSMC expects “continued strong demand for our leading-edge process technologies” going into the end of the year.

That’s important for the U.S. stock market because TSMC is a critical player at the centre of the AI frenzy, making chips for such companies as Nvidia. And Nvidia and other AI stocks have been central to Wall Street’s surge to record after record this year, even though inflation is still high and the job market is slowing.

AI stocks have shot so high that critics worry about a possible bubble, like the one in dot-com stocks that imploded in 2000.

U.S. companies broadly are under pressure to deliver stronger profits after the S&P 500 surged 35 per cent from a low in April. To justify those gains, which critics say made their stock prices too expensive, companies will need to show they’re making much more in profit and will continue to do so.

Travelers dropped 2.8 per cent Thursday even though the insurer reported a stronger profit for the latest quarter than analysts expected. Its revenue fell short of forecasts.

Hewlett Packard Enterprise fell 9.6 per cent after giving long-term financial targets that some analysts found underwhelming.

In the oil market, crude prices swung lower after Trump agreed to meet with Russia’s Vladimir Putin in Hungary in hopes of resolving the war in Ukraine. The war has had the United States trying to cut off purchases of Russian oil.

A barrel of U.S. crude gave up an early gain to drop 1.4 per cent to $US57.46. Brent crude, the international standard, fell 1.4 per cent to $US61.06 per barrel. Indexes climbed across much of Asia and Europe.

South Korea’s Kospi soared 2.5 per cent on hopes that a trade deal may be coming between Seoul and Washington. Samsung Electronics and automakers Hyundai Motor and Kia Corp. were among the big gainers. In the bond market, the yield on the 10-year Treasury sank to 3.97 per cent from 4.05 per cent.

With AP and Reuters

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