ASX slides; tech stocks track Wall Street gains

The Australian sharemarket had a soft start on Wednesday with investors digesting the latest rate hike by the Reserve Bank and waiting for news from the United States, where polls began to close for the midterm elections.

The S&P/ASX 200 was down 50.5 points, or 0.6 per cent, at 8836.30 just before 11am AEDT. Eight of its 11 sectors were in the red, while tech stocks rose after a rebound of some Big Tech stocks on Wall Street, energy stocks benefited from a higher oil price, and defensive investors lifted utilities. The Australian dollar was flat at US69.66¢.

The ASX added 0.3 per cent on Tuesday, with the RBA signalling a wait-and-see approach for the months ahead after raising interest rates to an 18-year high.

Consumer discretionary stocks led the early declines, paring back their rally from Tuesday afternoon, when investors waded into the sector on hopes for a future reprieve in rates after five demand-sapping interest rate rises this year. Electronics retailer JB Hi-Fi lost 1 per cent, Eagers Automotive shed 1.7 per cent and Harvey Norman was down 1.5 per cent.

The crucial banking and mining sectors, which make up more than half of the ASX, were also lower. Copper heavyweights BHP and Rio Tinto dropped 0.7 per cent and 0.8 per cent, respectively, as the red metal slumped to a seven-week low as traders assessed the artificial-intelligence trade and the prospects of diplomacy in the Middle East war. Iron ore miner Fortescue also fell 0.8 per cent.

All of the Big Four banks were down, with CBA falling 0.6 per cent, National Australia Bank dropping 0.4 per cent, Westpac edging down 0.1 per cent, and ANZ Bank losing 1 per cent.

On the bright side was technology, which benefited as the artificial-intelligence trade regained momentum on Wall Street. WiseTech Global gained 1.8 per cent, AI data centre operator N NextDC rallied 5.1 per cent and cloud and data centre connections provider Megaport jumped 5 per cent.

Energy stocks rose after oil prices edged higher overnight following a two-day decline, as traders weighed the outlook for the US-Iran war following conflicting signals on the trajectory of peace talks. West Texas Intermediate rose towards $US97 a barrel. Brent climbed above $US107 a barrel overnight before closing below $US104.

Tehran and Washington are reviewing fresh proposals from mediators on how to resolve their differences, according to a diplomat briefed on the matter. Still, Iran’s national security chief said on X that the US response has so far been “not satisfactory”.

Woodside shares rose 0.5 per cent and Santos gained 0.8 per cent, while refiner Ampol was up 0.7 per cent.

On Wall Street overnight, the S&P 500 rose 0.5 per cent, even though more stocks fell within the index than rose. The Dow Jones Industrial Average was down 247 points, or 0.5 per cent, in early afternoon trade, and the Nasdaq composite was 1 per cent higher.

Wall Street has been shaky recently as technology and artificial-intelligence stocks have swung on worries their prices shot too high in the frenzy around AI. Several of the most influential AI-related stocks held firmer, which supported the market, after flipping from gains in the morning to losses in the afternoon a day earlier.

Nvidia rose 3.2 per cent and was the strongest force pushing upward on the S&P 500 Tuesday. Close behind were gains of 3.2 per cent for Broadcom 5.5 per cent for Advanced Micro Devices and 2.6 per cent for Micron Technology.

Apple was long seen on Wall Street as a Big Tech company that’s less dependent on AI. But it’s still feeling the effects of the AI boom.

Memory chips for computers have become more expensive because of the demand created by the rush to build AI data centres. Those additional expenses are hitting Apple, which said it expects to make less profit from each dollar of its revenue during the final three months of this year.

That helped send Apple’s stock down 2 per cent, even though the seller of iPhones and Mac computers reported stronger profit and revenue for the latest quarter than analysts expected.

Palantir Technologies fell 2.1 per cent even though it likewise reported a better profit than expected. The software company said it made more money working with US companies than from the US government for the first time, as US commercial revenue soared 148 per cent from a year earlier.

Tuesday’s midterm elections may also be keeping financial markets unsteady, but history suggests they may not matter much for the broad market. Going back to 1970, the S&P 500 has had a positive return in the six months following a midterm election every time, according to Brock Weimer, an analyst at Edward Jones.

Some on Wall Street speculate that a Democratic sweep of Congress this time around could lead to more regulations and restrictions on AI development. But Donald Trump would still be president and have the power to veto. And Wall Street generally prefers split control of Washington, which it sees as offering less risk of transformative policies that could reshape the economy.

An encouraging report on the US job market said employers were advertising more job openings at the end of September than economists expected. That helped push the yield on the 10-year Treasury up to 4.96 per cent from 4.91 per cent late on Monday.

In other international markets, indexes were lower across Europe and mixed in Asia. South Korea’s Kospi dropped 3.6 per cent for one of the world’s sharpest moves following losses for its two tech giants, Samsung Electronics and SK Hynix.