STAN CHOE
Shares on the Australian stock exchange are expected to slip on opening, even as a rebound overnight for tech stocks in the US sent indexes higher on Wall Street.
Futures markets at 6am AEST suggest a slight 0.12 per cent, 11 point fall in the local bourse on Tuesday, with the dollar trading higher against the US greenback at US69.57¢. On Monday, the market started the week lower as trading volumes plunged and investors awaited the next market-moving catalyst.
In the US, a rebound for AI stocks lifted Wall Street overnight.
The S&P 500 rose 0.7 per cent and pulled back within 1 per cent of its all-time high, even though the majority of stocks within the index fell. The strength for companies in the artificial-intelligence technology industry sent the Nasdaq composite 1.1 per cent higher, and the Dow Jones Industrial Average rose 155 points, or 0.3 per cent, to a record.
AI stocks have swung sharply in recent weeks on worries that their prices shot too high. Doubts are rising about whether all the dollars flowing into AI chips and data centres can possibly create enough gains in productivity and profits to make back all the investments.
Broadcom was one of the strongest forces lifting the S&P 500 and rose 3.7 per cent after announcing long-term agreements to provide silicon products to Apple. It was coming off two straight losses of more than 2 per cent on Wednesday and Thursday at the end of last week, before Friday’s holiday in advance of the Fourth of July.
The global appetite for AI from investors will face an additional test later this week when SK Hynix, the South Korean maker of computer memory, plans to raise $US28 billion by selling shares of stock that will trade in the United States on the Nasdaq. That would make it one of the biggest U.S. offerings ever, behind SpaceX’s IPO from last month, which raised $US75 billion.
SK Hynix’s stock in Seoul has already more than tripled so far this year because of the AI boom, but its day-to-day swings have included sharp losses in recent weeks. It fell 14.6 per cent on Thursday alone, for example.
SpaceX, which owns the xAI business, has seen its stock likewise swing following its ballyhooed initial public offering.
It erased an early gain to fall 1 per cent in the last day of trading before it’s scheduled to join the Nasdaq 100 index of the largest non-financial stocks on the exchange. That inclusion will force funds like the QQQ exchange-traded fund, which mimic the index, to buy SpaceX themselves.
Elsewhere in AI, TeraWulf climbed 4.9 per cent after it said Anthropic agreed to a 20-year deal to use its data centre in Kentucky. TeraWulf expects the deal to bring in roughly $US19 billion in revenue. TeraWulf is in the midst of transitioning its business away from mining bitcoin and into high-performance computing.
In the oil market, prices drifted after OPEC+ announced on Sunday that seven of its members plan to expand oil production by a combined total of 188,000 barrels per day in August. It was the fifth straight month that OPEC+ members have agreed to raise output, moves that tend to weigh on oil prices.
The price of a barrel of Brent crude, the international standard, fell 0.2 per cent to $US71.99. That’s close to where it was before the United States and Israel attacked Iran in late February and sent prices spiking.
In the bond market, Treasury yields eased a bit. The yield on the 10-year Treasury fell to 4.47 per cent from 4.49 per cent late Thursday.
A report showed that growth last month for US recreation, finance and other services businesses was roughly in line with economists’ expectations. The survey by the Institute for Supply Management said that some businesses said they were seeing lower prices for gasoline and diesel, easing inflationary pressures.
In stock markets abroad, indexes fell modestly across much of Europe and Asia. Hong Kong’s Hang Seng was an outlier and rose 1.1 per cent.
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