Australia’s share market has handed back some of the previous session’s gains after a major sell-off in US tech stocks over an increasingly shaky outlook for the global artificial intelligence build-out.
The S&P/ASX200 fell 55.7 points by midday, down 0.61 per cent, to 9009.4, as the broader All Ordinaries slipped 72.7 points, or 0.79 per cent, to 9132.5.
“Risk sentiment soured overnight as the post-midterm bounce quickly unravelled, with concerns that the Democrat-controlled Congress could impose greater regulatory constraints on the AI infrastructure build-out weighing heavily on markets,” Westpac economist Ryan Wells said.
Softer oil prices, which was credited with much of Thursday’s rally, rebounded with Brent crude trading near $US99 a barrel.
“There remains considerable uncertainty on the near-term prospects for the US-Iran war, with the recent price increase limited by reports that Iran and the US are reviewing proposals on a nuclear program,” Mr Wells said.
Local energy stocks still inched lower, as Woodside managed a modest 0.2 per cent gain but the rest of the segment lost ground, with uranium producers hit hardest.
Non-energy miners weighed heavily on the market, with raw materials tracking 3.4 per cent drops in BHP and Rio Tinto after copper prices took a hit from the AI rout.
Local gold stocks were a sea of red despite the precious metal proving resilient to trade around $US4094 ($A5904) an ounce.
The major banks provided a ballast, with NAB leading a big four rebound after Thursday’s hammering.
CommBank shares were up 1.6 per cent by midday to $168.97 after briefly hitting a 10-week in early trade.
Insurers continued to find favour as investors continued to mull the latest interest rate rise, pushing QBE shares to their highest level since early 2009.
Consumer staples outperformed the rest of the market thanks to defensive positioning and a solid trading update from Coles, while cyclicals fell 0.5 per cent as Eagers Automotive continued its decline after Thursday’s cautious market update.
In company news, Nine Entertainment shares are up more than eight per cent after strong first-quarter earnings from its newer streaming and outdoor advertising assets, while traditional TV revenue softened, reinforcing its pivot away from legacy media.
The local market is on track to end a massive week of risk higher, but volatility is likely to remain elevated, Global X ETFs strategist Billy Leung said.
“For the ASX, the relatively limited weighting to large technology companies provides some insulation, but Australia will not be immune to a sustained reduction in global risk appetite,” he said.
“We should expect further volatility and avoid assuming that one difficult session marks the bottom.”
The Australian dollar is buying 69.35 US cents, down from 70.09 US cents on Thursday at 5pm.
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