Insights · Shares and markets
Australian shares swing as the US elections move oil and technology stocks
The results of the US midterm elections lifted Australian shares and pushed oil lower, before a sharp fall in US technology stocks the next night. The index still ended the week higher.
Australian shares moved sharply in both directions last week. The S&P/ASX 200 index, which tracks 200 of the largest companies on the Australian Securities Exchange (ASX), rose 2.61 per cent on Thursday 5 November, then fell 0.49 per cent on Friday to close at 9,020.8 points. Over the five days it rose 1.27 per cent.
The US election results lifted shares and pushed oil lower on Thursday
The Democratic Party won control of both houses of the US Congress in the midterm elections. On Wall Street on Wednesday, the S&P 500 rose 1.58 per cent and the Dow Jones Industrial Average 3.03 per cent, NewsWire reported, the best day on Wall Street since April 2025. Traders read the result as a sign that the conflict with Iran could end sooner, and the price of Brent crude oil, the main international benchmark, fell more than 8 per cent overnight to near US$95 a barrel.
The ASX 200 closed Thursday at 9,065.1 points, a rise of 230.6 points. Eight of its 11 sectors rose. Technology shares rose 10.09 per cent as a group. The large miners also gained, with BHP up 6.19 per cent and Rio Tinto up 6.98 per cent. Energy was the main exception: the sector fell 4.76 per cent as oil prices dropped. The Australian dollar rose to 70.08 US cents.
An analyst at the trading platform eToro said falling oil prices did much of the work in lifting markets. Oil matters for Australian households too: higher fuel prices led the rise in inflation in September, as our article of 29 October reported.
US technology shares fell sharply the following night
The mood changed in New York on Thursday. The Nasdaq Composite, an index weighted towards technology companies, fell 5.5 per cent, its deepest one day fall since April 2025, ABC News reported. The S&P 500 fell 4.4 per cent and the Dow 3.4 per cent. The Nasdaq ended the day nearly 12 per cent below its record close of 6 October, a fall that markets describe as a correction.
ABC News reported that investors were concerned the new Congress could bring tighter regulation and a slower build of the data centres that support artificial intelligence. Shares in the chip maker Nvidia fell 9.3 per cent. In Asia on Friday, Japan's Nikkei index fell 5.9 per cent and South Korea's Kospi about 4.8 per cent, after a fall of more than 8 per cent early in the day briefly paused trading there.
US markets steadied on Friday. The Nasdaq rose 1.1 per cent and the S&P 500 0.3 per cent, the Associated Press reported, leaving them 3.4 per cent and 2.7 per cent lower for the week. The S&P 500 was still 7.8 per cent higher for the year to date.
Australian sectors moved in different directions on Friday
The ASX fell less than markets in the US and Asia. On Friday, 154 of the 200 companies in the index fell, ABC News reported, and the sectors moved in different directions:
- Materials fell. The sector, which includes the miners, lost about 3 per cent after its strong rise on Thursday. Technology fell 1.4 per cent.
- Banks and staples rose. Financials gained about 0.5 per cent, with all four major banks higher. Consumer staples, such as supermarkets, rose about 1 per cent.
- Oil rose again. Brent crude climbed back to about US$99.67 a barrel, and the Australian dollar eased to 68.93 US cents.
The ASX 200 ended the week about 3 per cent below its high of the past 52 weeks. The week also followed the Reserve Bank's rise in the cash rate on 3 November, which our article of 5 November covered.
A spread of investments can soften the swings in any one area
A week like this shows how differently parts of the market can move on the same news. Technology shares, miners and energy companies each rose sharply and then fell, or the reverse, within two days. Banks and supermarkets moved much less.
ASIC's Moneysmart website suggests investors spread their money across asset classes, such as shares, property and bonds, and across sectors within shares. Different investments tend to do well at different times, which can lower the overall risk of a portfolio. Short term moves can be large, and past movements are no guide to what comes next.
We give clients access to Australian and international shares and exchange traded funds (ETFs), funds that trade on the ASX like a share and usually hold a basket of investments. We also arrange managed funds, bonds, term deposits and high interest cash accounts. Your adviser can look at how your holdings are spread across these, and whether that still suits your plans and the time you have before you need the money.
If the past week has raised questions about your share holdings or the balance of your portfolio, please talk to your adviser.
This article is general information only. It does not take into account your objectives, financial situation or needs, and it is not a recommendation to buy, sell or hold any investment. Figures are as published on the dates given. Past performance is not a reliable indicator of future performance. Read the full risk warning
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