ASX jumps as tech companies and miners rally; Bitcoin rebounds

The Australian sharemarket has come roaring back from last week’s hefty falls, as investors piled into technology stocks that have been caught in the market’s growing fears about the disruptive effects of the artificial intelligence boom.

The S&P/ASX200 closed 1.9 per cent higher on Monday at 8,870.10, with all market sectors in the green and technology, mining and real estate sectors posting the strongest gains.

The market rebound followed a horror day of trading on Friday, which had been the worst day since US President Donald Trump’s “Liberation Day”, and came as key sharemarkets in the region moved higher.

Managing director of fund manager Whitefield, Angus Gluskie, said it was common to see buyers seeking to snap up shares after big falls, and the longer-term debate was about the impact of artificial intelligence on different sectors of the market.

Software companies have been particularly hard hit in recent weeks, as investors have fretted over the risk posed to these firms’ business models, with US-listed giant Atlassian tumbling last week.

“I think we will probably see gyrations in markets as analysts and investors debate the range of opportunities and risks around AI,” Gluskie said.

Senior advisor at investment firm Shaw and Partners, Adam Dawes, said there was “lots of value” in the technology sector, pointing the sharp declines in some big-name tech companies’ shares recently. “It’s just a little bit of a rebound and some bargain hunting in the technology space,” he said.

Some of the tech names that rose sharply on Monday included logistics business WiseTech (up 3.6 per cent), tracking business Life360 (up 3 per cent) and data centre owner NextDC (up 4.9 per cent). Despite the rebound on Monday, shares in WiseTech – the biggest technology stock on the ASX – are still about 60 per cent lower than they were a year ago.

Property shares also performed strongly, led by a 6.5 per cent surge in Goodman Group, which is a major investor in data centres, which are benefiting from the boom in artificial intelligence.

Mining stocks surged thanks to higher commodities prices, with Fortescue leading the iron ore heavyweights with a 2.6 per cent gain, while BHP gained 1.9 per cent and Rio Tinto jumped 2.1 per cent.

Gold miners also rose as the precious metal gained, with Northern Star jumping 3.6 per cent and Evolution Mining adding 4.5 per cent. Silver major South32 rose 4 per cent.

The market rally comes as investors gear up for a flurry of Australian earnings results over the coming weeks, as reporting season ramps up. The country’s biggest bank, the Commonwealth Bank, will hand down its results on Wednesday, the same day as biotech giant CSL.

Morningstar market strategist Lochie Holloway noted that in the last corporate results season in August last year, there were some dramatic swings in major stocks including historic sell-offs in Woolworths, CSL and James Hardie.

Holloway said it was not clear why volatility spiked during the previous earnings season, and algorithmic trading and flows from index funds were probably contributing factors. “Regardless, investors should be prepared for more of the same when February reporting season kicks off in earnest,” Holloway said.

Financial stocks also had a solid day on Monday, with Commonwealth Bank rising 0.6 per cent, Westpac and National Australia Bank gaining 1.5 per cent, while ANZ Bank jumped 1.7 per cent.

Macquarie Group, which will hold an investor update on Tuesday, rose 2.4 per cent.

Consumer finance company Pepper Money soared 28.4 per cent after rival Challenger lobbed a takeover bid. Challenger shares fell 3.6 per cent.

The Australian dollar was trading at US70.38¢ at 5.44pm AEDT.

On Friday in New York, the S&P 500 rallied 2 per cent for its best day since May. The Dow Jones soared 1,206 points, or 2.5 per cent, and topped the 50,000 level for the first time, while the Nasdaq composite leaped 2.2 per cent.

Chip companies helped drive Wall Street’s widespread rally, and Nvidia jumped 7.8 per cent to trim its loss for the week, which came into the day at just over 10 per cent. Broadcom climbed 7.1 per cent and erased its drop for the week.

They were the two strongest forces lifting the S&P 500, and they benefited from hopes for continued spending by customers diving into artificial-intelligence technology. Amazon CEO Andy Jassy, for example, said late Thursday it expects to spend about $US200 billion ($285 billion) on investments this year to take advantage of “seminal opportunities like AI, chips, robotics, and low earth orbit satellites.”

Such immense spending, similar to what Alphabet announced a day earlier, is creating concerns of its own, though. The question is whether all those dollars will create big enough profits to make the investments worth it. With doubt remaining about that, Amazon’s stock dropped 5.6 per cent.

Bitcoin, meanwhile, steadied following a weeks-long plunge that had sent it more than halfway below its record price set in October. It climbed back above $US70,000 on Saturday after briefly dropping close to $US60,000, It was trading at $US70,361 at 10.32am AEDT.

Prices in the metals market also calmed a bit following their own wild swings. Gold rose 1.8 per cent to settle at $US4979.80 per ounce, while silver added 0.2 per cent.

Their prices suddenly ran out of momentum last week following jaw-dropping rallies, which were driven by investors clamouring for something safe to own amid worries about political turmoil, a US stock market that critics called expensive and huge debt loads for governments worldwide. By January, prices for gold and silver were surging so quickly that critics called it unsustainable.

On Wall Street, the recovery for bitcoin helped stocks of companies enmeshed in the crypto economy. Robinhood Markets jumped 14 per cent for the biggest gain in the S&P 500. Crypto trading platform Coinbase Global rose 13 per cent.

With AP

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