Iron ore heavyweight Fortescue Metals added 1.6 per cent. Rare earths miner Lynas – the only producer of so-called heavy rare earths outside China – climbed 5.6 per cent after UBS raised the stock to “buy,” saying the western world’s “move to decouple rare earths supply chains away from China remains in motion” even after China paused its export restrictions.
Energy stocks were also higher after oil prices rose overnight as hawkish rhetoric by the European Union’s top diplomat Kaja Kallas raised expectations that sanctions on Russia will tighten. Oil and gas giants Woodside and Santos rose 1.2 per cent and 0.8, respectively.
However, banks continued on their losing streak and heavily weighed on the bourse. CBA, the nation’s biggest stock, was down 1.3 per cent, Westpac slipped 1.4 per cent, National Australia Bank dropped 0.7 per cent and ANZ Bank lost 2 per cent. ‘Millionaires Factory’ Macquarie Group fell 1.4 per cent. Even small moves of the banking sector bear weight on the local market as financial stocks make up more than a third of the ASX.
And while the tech sector briefly bounced up from its 6 per cent slump on Tuesday, it finished lower again as most of its stocks continued to wobble. Software makers WiseTech Global and Xero edged up 0.4 per cent and 0.3 per cent, respectively, while AI data centre operator NextDC slipped another 0.3 per cent. A 1.1 per cent rebound in warehouse and data centre owner Goodman Group and a 2 per cent rise in shopping centre landlord Vicinity boosted the property sector.
Embattled defence company DroneShield plummeted 19.6 per cent after saying its US chief Matt McCrann resigned “with immediate effect”. The US is one of the counterdrone company’s key markets. DroneShield has lost 49 per cent of its market value this month amid revelations that founder Olek Vornik sold all of his shares for $49.5 million.
On Wall Street overnight, the S&P 500 fell for a fourth day, sliding 0.8 per cent after dropping as much as 1.5 per cent earlier in the session. The Dow Jones lost 1.1 per cent, and the tech-heavy Nasdaq 100 Index fell 1.2 per cent — leaving it down 6 per cent from its October peak.
“Fears are growing that the AI trade can’t keep up with the momentum,” said Eric Beiley, executive managing director of wealth management at Steward Partners. “Nvidia will need to reassure investors that these lofty valuations are warranted otherwise the stock market could be in for further declines.”
Technology stocks were again the biggest weights on the US market. A basket of the Magnificent Seven companies declined 1.8 per cent. Amazon and Microsoft fell 4.4 per cent and 2.7 per cent, respectively.
Nvidia was one of the heaviest weights on the market, and its latest drop of 2.8 per cent brought its loss for the month so far to more than 10 per cent. That’s a steep enough fall that Wall Street has a name for it: a correction.
What Nvidia does matters disproportionately to savers’ retirement accounts because it’s the most influential stock on Wall Street due to its immense size. It single-handedly steers the direction of the S&P 500 some days, after fervent demand for its artificial-intelligence chips helped it briefly top $US5 trillion in total value. Its price more than doubled in four of the last five years.
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Many big investors still seem to be expecting stock prices to rise further, according to the latest monthly survey of global fund managers by Bank of America Global Research. But when asked what the No. 1 risk for the market is, one with a lower probability of happening but a chance of very big damage, 45 per cent pointed to an AI bubble. That beat out potential trouble in the bond market, inflation and trade wars.
A record percentage of investors is also saying companies are “overinvesting,” according to the survey. The worry is that all the dollars pouring into AI chips and data centres worldwide may not produce the kind of profits that AI proponents have been predicting.
Elsewhere on Wall Street, Cloudflare fell 2.8 per cent after an earlier issue at the internet infrastructure provider had caused global outages for ChatGPT and other services.
with AP and Bloomberg
