Source : THE AGE NEWS
The Australian sharemarket has dropped back below 9000 points as technology stocks and banks declined, tracking declines on Wall Street overnight, where fresh anxiety over the impact of artificial intelligence on company profits and uncertainty over tariffs roiled investors.
The S&P/ASX 200 fell 34.40 points, or 0.4 per cent, to 8991.60 at 1.10pm AEDT on Tuesday, having lost 0.6 per cent in the previous session. The Australian dollar traded at US70.56¢ shortly before 1pm AEDT.
While early trade had been buoyed by results from companies including oil and gas giant Woodside and Nine Entertainment, a fresh record high for BHP shares and a 2.1 per cent jump overnight in the gold price, that didn’t prove enough to offset the falls by the finance and tech sectors.
On Wall Street, amid lingering uncertainty over President Donald Trump’s tariffs, concerns about AI-driven disruption have been prompting traders to dump shares of any company seen at the slightest risk of being displaced. Those worries have grown despite solid results from mega-caps amid doubts over whether big investments in the technology will pay off soon.
“The software selloff is a reminder of what can happen when momentum-driven sectors shift into reverse,” said Steve Sosnick at Interactive Brokers. “The broader, more important question is: How many sectors can go into reverse before they drag the broader market along with them?”
While software companies have been among the hardest hit, insurance brokers, private credit firms, cybersecurity and even US real estate stocks have been caught up in the so-called AI scare trade.
The picture was similar on the Australian market. Tech stocks led declines, with Australia’s biggest tech concern, WiseTech Global, down 2.7 per cent, while software makers Xero and TechnologyOne were down 2.8 per cent and 2.6 per cent, respectively, and data centre operator NextDC slipped 0.4 per cent.
Financial and insurance stocks, which make up more than a third of the ASX, also retreated, led by a 0.8 per cent drop of CBA, the biggest and most influential stock on the local market. ANZ Bank fell 1.1 per cent, ‘Millionaires’ Factory’ Macquarie lost 5 per cent and insurers QBE and IAG dropped 2.1 per cent and 2 per cent, respectively.
Property stocks were also lower, weighed down by a 2.4 per cent fall in data centre owner Goodman Group, and a 2 per cent drop in Westfield shopping centre landlord Scentre, which reported a solid result but disappointed with its distribution guidance for this financial year.
Meanwhile, Southern Cross Media shares slumped 4.2 per cent. The owner of the Seven Network and radio stations including Triple M announced the sudden exit of its chief executive officer Jeff Howard last night, less than 18 hours before its interim results came out, which showed a drop in sales and earnings and rising expenses in its first results since tying up with Seven West Media.
On the winning side, Nine shares gained 3.3 per cent after the media company, which owns the Nine Network and also publishes this masthead, said it lifted earnings by 6 per cent in the December half, its second period of profit growth in a row even as its revenue declined in its first results since the sale of real estate portal Domain Group.
Shares in Woodside Energy rose 1.5 per cent after the Australian oil and gas giant raised its dividend despite its full-year profit falling 24 per cent. The result came as the company said it was continuing its search for a new chief executive after Meg O’Neill abruptly resigned in December to take up a new job as boss of global oil and gas major BP.
BHP, the second-biggest stock on the ASX, bolstered the mining sector with a 1.3 per cent rise. It had earlier in the day climbed above $55 for the first time, continuing its rally since it said last week that copper, often labelled the “metal of the future”, had become its biggest earner, making it less dependent on the iron ore price. Fortescue Metal was up 1.5 per cent, and Rio Tinto gained 0.9 per cent.
Gold stocks pared back their morning gains as the price for bullion steadied, after four days of gains, as heightened uncertainty over US trade policy and tensions in the Middle East drove investors toward safer assets. Northern Star was up 0.7 per cent and Evolution Mining added 0.5 per cent.
Bullion was near $US5230 an ounce, having advanced more than 7 per cent over the previous four sessions. World markets are in a state of confusion after President Donald Trump said he would increase a global import levy to 15 per cent following the US Supreme Court’s ruling against his so-called reciprocal tariffs.
The US sharemarket slumped overnight. The S&P 500 fell 1 per cent, the Dow Jones dropped 1.7 per cent, and the Nasdaq composite sank 1.1 per cent.
“The push and pull with tariffs is likely to be a distracting theme for markets for the remainder of the year, albeit with less volatility than the initial shock last April,” said Michael Landsberg at Landsberg Bennett Private Wealth Management.
Trump’s quick move toward more aggressive tariffs shows how much uncertainty still hangs over the global economy, even after the Supreme Court said the president lacked the legal authority to institute his sweeping “reciprocal” tariffs.
To be sure, Monday’s moves for markets weren’t close to as bad as the panic that swept the world in April, when Trump initially announced his “Liberation Day” tariffs. US stocks were modestly higher for a brief moment during the morning.
Investors may be sensing it will take a long time, as well as more court battles, before more clarity comes about how global trade will look.
On Wall Street, big losses hit companies under suspicion of getting undercut by AI-powered rivals. Investors have been sharply and suddenly punishing stocks of such companies recently.
CrowdStrike fell 9.8 per cent to widen its loss for the young year so far to 25.3 per cent. A new tool from Anthropic that scans codebases for security vulnerabilities and suggests targeted software patches for human review has been hitting stocks across the cybersecurity industry.
AppLovin sank 9.1 per cent and took its loss for the year to date to 43.5 per cent. It’s among the software companies hurt by worries that AI competition will steal customers and fundamentally reset their industries.
More big moves may still be ahead for Wall Street this week, particularly with a profit report from Nvidia coming on Wednesday. Worries are rising that companies like Alphabet and Amazon may be spending so much on Nvidia’s chips that they’ll never be able to recoup their investments through higher productivity and future profits.
Novo Nordisk’s stock that trades in the United States tumbled 16.4 per cent after the Danish drugmaker said a trial for its CagriSema drug showed people lost a smaller percentage of their weight after 84 weeks than with a similar one made by rival Eli Lilly. Eli Lilly rose 4.9 per cent.
with AP, Bloomberg
The Market Recap newsletter is a wrap of the day’s trading. Get it each weekday afternoon.
