Staff writers
Updated ,first published
The Australian sharemarket opened lower on Friday after drops for computer chipmakers and other winners of the artificial-intelligence boom dragged down stock markets worldwide overnight.
Miners led the declines, extending Thursday’s losses, after the US launched its fifth straight day of attacks on Iran, reigniting concerns about the war’s implications for global growth as rising oil prices push up inflation.
The S&P/ASX 200 was down 58.8 points, or 0.7 per cent, at 8781.90 as of 10.37am AEST. The dip follows a flat session for the ASX on Thursday. The Australian dollar was trading at US69.94¢.
Iron ore heavyweights BHP, Rio Tinto and Fortescue helped push the market into the red, slumping 2.6 per cent, 2.5 per cent and 0.6 per cent, respectively, as they fell for a second day.
Gold miners were also down sharply, after bullion prices dropped over 2 per cent overnight to trade below $US4000 an ounce on fears the oil price spike will prompt the Federal Reserve to raise interest rates, a headwind for the demand for precious metals. Northern Star Resources fell 3.7 per cent, Evolution Mining slumped 4.3 per cent and Newmont lost 3.7 per cent.
Tech stocks were mixed, despite the AI sell-down on Wall Street. Software makers Xero and WiseTech were up 2.7 per cent and 2.1 per cent, respectively, while AI data centre operator NextDC slid 3.4 per cent.
Coles shares jumped 3.8 per cent after the supermarket giant said it will no longer pursue a potentially pricey takeover of Greencross Pet Wellness Company. The deal had hung over the share price since talks with Greencross’s private equity owner TPG Capital were disclosed early this month. Rival Woolworths rose 1.4 per cent.
On Wall Street overnight, the S&P 500 fell 0.5 per cent, even though more stocks rose within the index than fell. The Dow Jones Industrial Average dipped 105 points, or 0.2 per cent, and the Nasdaq composite sank 1.5 per cent.
Nearly three out of every four stocks rose within the S&P 500 after more of the country’s biggest companies reported better earnings for the latest quarter than analysts expected.
Abbott jumped 10.7 per cent after the healthcare company delivered a fatter profit than expected and raised its forecast for earnings over the full year. J.B. Hunt Transport Services climbed 8 per cent after the freight company likewise topped analysts’ expectations for the latest quarter.
But a 1 per cent move for Nvidia’s stock packs more punch on the S&P 500 than a 1 per cent move for any other company because it’s the largest on Wall Street by value.
And Nvidia fell 2.4 per cent, making it the heaviest weight on the index. Other AI winners also sank, giving back some of their stellar gains.
Micron Technology fell 5.6 per cent to shave its gain for the year so far below 199 per cent. Sandisk fell 12.6 per cent but is nevertheless up 494 per cent for the year so far. Western Digital sank 9.2 per cent but is still up 171 per cent for the year so far.
Such stocks have been under pressure for weeks because of worries that their prices shot too high and that voracious demand for computer memory and processors may not be sustainable if AI ends up not producing as much profit and productivity as promised.
The losses came even though Taiwan Semiconductor Manufacturing Co., a bellwether of the chip industry, reported a stronger profit for the latest quarter than analysts expected. Its stock in Taiwan rose 1.2 per cent, but its stock that trades in the United States fell 2.3 per cent.
In South Korea, drops for AI winners like Samsung Electronics and SK Hynix dragged the Kospi index down 6.4 per cent. It’s been among the world’s shakiest markets in recent weeks because of how dominant the two AI winners are in it.
The day before, the Kospi jumped 6.2 per cent, but it’s had drops of 8.9 per cent, 7.8 per cent and 5.3 per cent in the last couple of weeks.
A hike to interest rates by the Bank of Korea also weighed on stocks in Seoul, the first by the bank since 2023.
Higher interest rates can keep a lid on inflation, but they also slow the economy and hurt prices for all kinds of investments. And worries are rising that the Federal Reserve and other central banks around the world may have to raise rates to rein in the effects of expensive oil.
Oil prices are near their highest in a month because of worries that the war with Iran will keep oil tankers out of the Strait of Hormuz and prevent shipments of crude from the Persian Gulf to customers worldwide.
The price for a barrel of Brent crude briefly climbed above $US86 per barrel before erasing the gain and falling back to settle at $US84.23, down 0.8 per cent from the day before.
In the bond market, the 10-year Treasury yield edged up to 4.56 per cent from 4.55 per cent late Wednesday and just 3.97 per cent before the war with Iran began. Higher yields have already sent the average 30-year mortgage rate to its highest level in nearly a year.
In other international markets, indexes fell across much of Europe.
with AP, Bloomberg
The Market Recap newsletter is a wrap of the day’s trading. Get it each weekday afternoon.
From our partners
