ASX higher as tech shares rebound

The Australian sharemarket is in positive territory, with technology stocks leading the way as the US and Iran backed away from a fresh escalation that had threatened the fragile ceasefire underpinning peace talks.

The S&P/ASX 200 was up 34.4 points, or 0.4 per cent, to 8798.6, with six of the 11 industry sectors higher. Wall Street futures rose after Axios reported the US and Iran have agreed to halt strikes and meet this week in Qatar to resume talks, citing an unidentified US official. It is a sign of de-escalation after several days of tit-for-tat attacks that started on Thursday (US time) and continued over the weekend.

Oil prices advanced, with Brent, the international standard, rising 0.5 per cent to $US72.38 a barrel, while US oil added 1.1 per cent to $US69.96. Australian energy stocks are mixed, with Woodside Energy up 0.5 per cent while Santos edged down 0.1 per cent. There were gains for the refiners, with Ampol up 0.1 per cent Viva Energy climbing 1.2 per cent.

Mining stocks are mixed, with BHP up 0.1 per cent and Fortescue advancing 1 per cent, but Rio Tinto lost 0.6 per cent. Gold miners slid into the red, the precious metal rising over the weekend before paring some of those gains on Monday, with Northern Star falling 1.9 per cent and Evolution Mining slipping 0.2 per cent.

Financial stocks edged higher, with Commonwealth Bank up 0.4 per cent, National Australia Bank advancing 0.8 per cent, ANZ Bank adding 0.4 per cent and Westpac 0.1 per cent higher.

Technology stocks bounced higher, as WiseTech rose 3.9 per cent, Xero jumped 5 per cent, Technology One climbed 3.1 per cent and NEXTDC added 2.7 per cent.

Footwear retailer Accent Group lost 0.7 per cent after it pushed shareholders to reject Frasers Group’s unsolicited 65¢-a-share takeover offer, which it said was “materially inadequate”.

The Australian dollar was trading at US68.93¢.

On Friday, most of the US stock market increased after oil prices eased back to where they were before the war with Iran. But drops for stocks swept up in the mania around AI technology kept the market in check.

The S&P 500 finished nearly flat and slipped less than 0.1 per cent to close out just its second losing week in the past 13. The Dow Jones dipped 44 points, or 0.1 per cent, and the Nasdaq composite fell 0.2 per cent.

Health care stocks, meanwhile, were some of the strongest forces pushing upward on the US market after a committee of the European Medicines Agency recommended several medicines for approval and the extension for another dozen of their therapeutic indications. That included one for Eli Lilly (up 7.1 per cent).

Besides Lilly, nearly two out of every three stocks within the S&P 500 rose. But more drops for AI stocks helped to overshadow them.

After soaring to tremendous heights and leading the market for years, AI stocks have been under pressure recently because of worries their profits can’t possibly keep pace with the tremendous rallies for their stock prices. And those drops have an outsized effect because AI stocks have become Wall Street’s largest and most influential, giving movements for their stock prices more weight on indexes than others.

Micron Technology’s drop of 6.7 per cent was the heaviest weight on the market, for example. The maker of memory for computers has been a big winner this year, with its stock roughly quadrupling because the AI boom has created a surge of demand for its products.

But investors saw the downside of that surge when Apple said it had to raise prices on laptops and other products by significant percentages to make up for the increases in memory prices. The worry is that such higher prices could ultimately lead to lower demand.

Highlighting the rollercoaster ride that AI stocks have been on, SpaceX briefly dropped 2.9 per cent in the morning and fell below $US149. It then erased the loss to swing to a gain of 3.5 per cent before finishing with a modest rise of 0.2 per cent.

A report showed expectations for inflation in the coming year inched down among US consumers to 4.6 per cent from 4.8 per cent in May. That’s still high, but moves downward mean less chance of a vicious cycle where expectations for higher inflation drive changes in behaviour that create higher inflation.