Latest / Best of Business / Shane Solly: Harbour Asset Management expert on what caused the latest drop in the US sharemarket

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Shane Solly: Harbour Asset Management expert on what caused the latest drop in the US sharemarket · Best of Business

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  Speaker 1: You're listening to a podcast from News talks'd be follow
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  Speaker 2: All Right, we're joined now by Shane Sally, who's from
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  Speaker 2: Harbor Asset Management. Welcome in, Shane.
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  Speaker 3: Yeah, Hey, Andrew.
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  Speaker 2: The uscare market down on Friday. That was because of
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  Speaker 2: a weakness of the information technology sector, particularly the semiconductors.
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  Speaker 2: So what's happening with semi conductors?
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  Speaker 3: Yeah, what's called the Philadelphia Philadelphia Semiconductor indexcess known as
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  Speaker 3: the socks fell more than ten percent on Friday. A
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  Speaker 3: couple of key reasons behind Andrew. Firstly, we saw a
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  Speaker 3: stronger US non farm labor so basically more people were employed.
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  Speaker 3: That's given markets concerned about the US for the Reserve
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  Speaker 3: removing the risks so they're not limited to do rate cuts,
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  Speaker 3: and people were saying they're worried about them. Their rate
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  Speaker 3: increases that push bond yous up, so not good for
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  Speaker 3: the euations. Secondly, Broadcom, one of the big semiconductor companies
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  Speaker 3: on Thursday, get a pretty flat revenue outlock. Market didn't
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  Speaker 3: like that, wanted more. Third there's definitely a case where
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  Speaker 3: investors maybe taking profits to use money to invest in
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  Speaker 3: some of these exciting new companies that are listing on
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  Speaker 3: the market. Semiconductor is pretty crowded trade. Also, it's a
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  Speaker 3: very cyclical sector. It is sensitive to new supply and
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  Speaker 3: there's some new large fabrications coming on. So one of
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  Speaker 3: the things we're watching for, Andrew is the rest of
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  Speaker 3: the market. The non tech sector was pretty pretty solid
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  Speaker 3: hold uper case, so it does seem to be a
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  Speaker 3: tech semiconductor issue. Not crying too much so that semiconductor
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  Speaker 3: index in the US up seventy percent year that even
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  Speaker 3: with Friday's ten percent four.
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  Speaker 2: Meanwhile, it's all about the war, and the war keeps
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  Speaker 2: on sputtering on. It ran Asrael trading missile strikes today,
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  Speaker 2: So what does that do to the market.
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  Speaker 3: Yeah, I think we've just seen this re escalation of
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  Speaker 3: Middle East tension. Did see the oil price, Gupe, As
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  Speaker 3: you mentioned the Brent oil price currently trading at ninety
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  Speaker 3: seven forty US. It would have been high, but we're
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  Speaker 3: actually seeing Chinese buyers really pull backs anyway, so they're
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  Speaker 3: actually helping the the world by not buying at the moment,
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  Speaker 3: but nonetheless that higher for longer energy impact that sees
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  Speaker 3: people worried about inflation, a lot of growth contribute to
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  Speaker 3: a bit of a risk off tone. Really. We've seen
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  Speaker 3: it in the Asian markets today. The Korean market down
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  Speaker 3: eight point two percent as we speak, and the Japanese
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  Speaker 3: market down four point two percent as we speak, so
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  Speaker 3: pretty weak.
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  Speaker 2: What about local investment markets?
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  Speaker 3: Yeah, look, I think what we saw here was a
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  Speaker 3: bit of a pop up in our bond Yo's a
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  Speaker 3: tenure gament bond yos. That's important. It's a hurdle which
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  Speaker 3: it's the benchmark for low risks of tenure gament. Bond
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  Speaker 3: yo is up to zero point sid we sent back
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  Speaker 3: to four point six percent, you know, and dollar a
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  Speaker 3: little bit weaker. He's on shar market down as you're saying,
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  Speaker 3: led by Orkney, Important, Fort Till, Meridi and some of
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  Speaker 3: the big caps, but very light volume. Today is not
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  Speaker 3: a big day to volume. We're watching the US shear
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  Speaker 3: market futures to see whether they sell off from Friday continues,
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  Speaker 3: some very anxious investors at this stage. Pretty flat, so
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  Speaker 3: as people watching closely.
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  Speaker 2: All right, what else are you watching for this week?
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  Speaker 3: Yeah? Look, we're watching locally. We're seeing a few data
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  Speaker 3: pieces really might help us in terms of understanding how
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  Speaker 3: weak things have gotten in the last three months. Tomorrow
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  Speaker 3: we've got the New Zealand and Manufacturer Index out for
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  Speaker 3: the first quarter, and then Friday we've got the Business
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  Speaker 3: New Zeon Manufacturing and Performance Index for May and net
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  Speaker 3: migration for April, so again a litmus test. We know
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  Speaker 3: it's been very shoppy. These will give us a bit
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  Speaker 3: more confirmation for Chinese data out Tuesdays and export data
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  Speaker 3: and inflation data on Wednesday, again important for US as
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  Speaker 3: an exporter into China, and then the US consumer price
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  Speaker 3: inflation out Thursday and US production price inflation on Friday.
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  Speaker 3: They're important because it comes back to this, how far
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  Speaker 3: does the feed, How fast is if you'd have to
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  Speaker 3: change rates the bond market steer and control and.
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  Speaker 2: Very important because the data will cover actually war period.
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  Speaker 2: So that's something we really want to know and I
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  Speaker 2: thank you so much. Shane Solely from Harbord Asset Management.
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