South Korea's Kospi Falls 0.8%; Shipbuilding, Chip, Battery Stocks Retreat — Market Talk

The S&P/ASX 200 Index dropped 0.4% to around 8,400 on Thursday, snapping a three-day winning streak, with mining stocks leading the decline amid weaker commodity prices.

This pullback came despite a surge on Wall Street, where technology stocks helped push major indices toward record highs.

Investors are still evaluating the potential effects of US President Donald Trump’s policy shifts, weighing the economic boost from proposed tax cuts and deregulation against the potential risks posed by new tariffs.

Domestically, traders are looking ahead to Australia’s quarterly inflation report next week, which could solidify expectations for a February interest rate cut by the Reserve Bank of Australia.

The mining sector suffered notable losses, with BHP Group down 1%, Fortescue Metals losing 1.4%, Mineral Resources falling 2.8%, Evolution Mining dropping 2.5%, and Iluka Resources tumbling 3.5%.

                                  High        Low      Close     Change 
                                  ----        ---      -----     ------ 
  S&P SmallCap 600 Index      1,463.46   1,452.08   1,452.88     -12.22 
  S&P MidCap 400 Index        3,299.58   3,276.76   3,278.70     -14.04 
  S&P 100 Index               2,978.11   2,963.37   2,972.08      26.59 
  S&P 500 Index               6,100.81   6,076.13   6,086.37      37.13 
 
 
Source: FactSet 
 

The NZX 50 edged up 8 points, or 0.1%, to 13,057 around noon on Thursday, attempting to rise after retreating in the previous three sessions, mainly driven by gains among financials, real estate, and healthcare stocks.

An upbeat session on Wall Street Wednesday supported sentiment, buoyed by robust earnings and promising corporate developments, as investors assessed U.S. President Donald Trump’s tariff stance.

Wednesday's data also lifted sentiment as annual inflation remained steady at a nearly four-year low of 2.2% in Q1 of 2024, raising hopes of a further hefty interest rate cut in next month's monetary policy meeting.

On the data front, visitor arrivals in New Zealand eased to 5.9% last November, down from 6.3% in October.

Among early performers were F&C Investment (2.0%), Skellerup Holdings (0.8%), Meridian Energy (0.7%), Westpac Banking Corporation (0.6%), Infratil (0.6%), and Fisher & Paykel (0.3%).

Andrew Bary

Berkshire Hathaway had one of its worst days of relative performance versus the S&P 500 during the past year. Its Class A shares fell 1.6% Wednesday, compared with a 0.6% gain for the broader market.

A variety of relatively minor factors, rather than a single piece of major news, seem to be behind the decline. While Reuters reported that Berkshire's Pilot unit, the country's largest operator of truck stops, was pulling out of the oil-trading business, that isn't likely to have moved the needle.

Even if there were some trading losses in that unit, they would likely be insignificant for Berkshire given its $1 trillion market value. Pilot had no immediate comment on any possible losses. It said it is "focused on delivering reliable fuel supply to our travel centers and wholesale customers across North America."

Berkshire's Class A stock finished at $691,500, down 1.6% while the Class B shares ended at $460.51, down 1.7%. The S&P 500 gained 0.6% to 6086, ending just shy of a record.

CFRA analyst Cathy Seifert said that the stock can bounce around in the short term, but offered some possible explanations for the decline. First, Seifert noted that Apple stock, Berkshire's biggest equity holding as of Sept. 30, has been weak this year, falling 11% to around $224.

Berkshire cut its stake in Apple by two-thirds, to 300 million shares, in the first nine months of 2024. It isn't clear whether Berkshire has cut that stake further since then.

CEO Warren Buffett said at the annual meeting in May that Apple would likely be the company's largest holding at the end of 2024, implying a stake of at least 200 million shares. Berkshire will reveal its year-end Apple holding as part of its 13-F report on its U.S. equity holdings in mid February.

Second, Seifert said, there could be some profit-taking after the stock narrowly topped the S&P 500 in 2024. The Class A shares gained 25.5%, about a half percentage point more than the market.

Insurance losses from the Los Angeles fires shouldn't be a major issue for Berkshire. Although the company is the largest U.S. property and casualty insurer, its main focus is on auto insurance via Geico and reinsurance. While Berkshire may incur some losses, primary P&C insurers are expected to bear much of the financial damage, estimated at $25 billion or more.

It was also a bad day for value stocks Wednesday. The Russell 1000 value index lost about 0.6%, and Berkshire is the largest value stock in the market.

Berkshire Class A stock now has a gain of 1.6% this year, compared with 3.7% for the S&P 500.

With Buffett now 94, health is always an issue. But the Berkshire CEO told The Wall Street Journal recently that he feels good and has no plans to give up his job. Barron's has written that one option for Buffett would be to remain chairman and relinquish the CEO role to his likely successor, Berkshire executive Greg Abel.

A turning point could come for the stock in late February or early March, when Berkshire is expected to report its fourth-quarter results. The FactSet consensus forecast is upbeat, calling for operating earnings after taxes to rise 16% to nearly $7,000 per Class A share, or more than $10 billion.

Berkshire likely will benefit from the dollar's strength, which will cut the value of its foreign-currency debt, denominated mostly in yen. That could provide a boost of close to $1 billion.

Book value is expected to have ended 2024 at around $450,000 per Class A share, meaning the stock trades for just over 1.5 times our estimate of year-end book value. That price/book ratio is in line with the average over the past few years.

Berkshire remains probably the most defensive megacap stock given its more than $40 billion of annual earnings and over $300 billion of cash. But defense isn't in favor in the current tech-driven bull market.

Write to Andrew Bary at andrew.bary@barrons.com

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.

The WSJ Dollar Index is up 0.20 point or 0.20% today to 102.45

• Snaps a two-trading-day losing streak
• Off 2.57% from its record close of 105.14 hit Tuesday, Sept. 27, 2022
• Today's closing value is the third lowest this year
• Off 1.12% from its 52-week high of 103.61 hit Friday, Jan. 10, 2025
• Up 7.49% from its 52-week low of 95.31 hit Friday, Sept. 27, 2024
• Rose 4.74% from 52 weeks ago
• Month-to-date it is down 0.30%
• Year-to-date it is down 0.31 point or 0.30%

Data based on 5 p.m. ET values

Source: Tullett Prebon and Dow Jones Market Data

The Bovespa Index is down 366.57 points or 0.30% today to 122971.77

• Largest one-day point and percentage decline since Thursday, Jan. 16, 2025
• Snaps a three-trading-day winning streak
• Off 10.46% from its record close of 137343.96 hit Wednesday, Aug. 28, 2024
• Today's closing value is the second highest this year
• Off 10.46% from its 52-week high of 137343.96 hit Wednesday, Aug. 28, 2024
• Up 3.75% from its 52-week low of 118532.68 hit Friday, Jan 3, 2025
• Down 3.79% from 52 weeks ago
• Off 0.30% from its 2025 closing high of 123338.34 hit Tuesday, Jan 21, 2025
• Up 3.75% from its 2025 closing low of 118532.68 hit Friday, Jan. 3, 2025
• Month-to-date it is up 2.24%
• Year-to-date it is up 2688.37 points or 2.24%

Source: Dow Jones Market Data, FactSet