Aussie Market Exhibits Modest Growth
In the Australian market, technology stocks are experiencing a decline on Monday, primarily due to a significant selloff in major global tech shares, particularly in the U.S. This pullback follows recent gains, with investors expressing concerns that the tech rally since April has become overextended and too expensive.
The selloff is led by semiconductor and AI-related stocks like Nvidia, Palantir, and Meta, amid worries about valuation levels and potential new trade restrictions in the chip industry.
Key factors contributing to the decline include:
- A 3.5% drop in Nvidia shares, a major influencer due to its role in AI technology, along with significant declines in other semiconductor stocks.
- Elevated short interest in certain AI-related stocks (e.g., Palantir and Meta), signaling market expectations of price corrections.
- General investor rotation away from high-growth tech stocks towards value and dividend-oriented sectors, amid concerns about the sustainability of recent tech gains.
- Anticipation of the Federal Reserve Chair Jerome Powell's speech later in the week at Jackson Hole, which is increasing market sensitivity to interest rate and monetary policy signals.
This global tech weakness is reflected in Asian markets, including Australia, where equities opened lower alongside broader tech sector pressure.
In contrast, the broader market is showing signs of resilience. The S&P/ASX 200 Index is currently gaining 30.10 points or 0.34 percent, reaching 8,837.20. The Aussie dollar is trading at $0.652 on Monday in the currency market. Among the big four banks, National Australia Bank and Commonwealth Bank are adding almost 1 percent each, while ANZ Banking and Westpac are gaining more than 1 percent each.
Oil stocks are mostly higher, with Origin Energy, Santos, Woodside Energy, and Beach energy edging up, and Beach energy advancing almost 2 percent. Crude oil posted very slight gains, with West Texas Intermediate crude for September up $0.03 or 0.05 percent.
However, gold miners are mostly lower, with Northern Star Resources declining almost 2 percent, Evolution Mining losing almost 1 percent, Gold Road Resources and Newmont down more than 1 percent each, and Resolute Mining adding almost 1 percent.
The threat of sanctions on Russian oil exports and uncertainty over the U.S.-Russia conflict over the war with Ukraine continue to cast a shadow over global markets. Meanwhile, the Dow climbed 0.5 percent, the S&P 500 advanced 0.8 percent, and the U.K.'s FTSE 100 Index also slipped by 0.1 percent.
Elsewhere, the German DAX Index slipped by 0.1 percent, and the French CAC 40 Index rose by 0.4 percent. Afterpay owner Block is tumbling more than 9 percent, Zip is losing almost 1 percent, and Xero is declining more than 1 percent. WiseTech Global is edging up 0.1 percent, and Appen is gaining more than 1 percent.
[1] CNBC, "Tech selloff continues as Nasdaq closes lower for a second straight day," 15 August 2022, https://www.cnbc.com/2022/08/15/us-markets.html
[2] MarketWatch, "Tech stocks tumble as Nvidia drops 7%," 15 August 2022, https://www.marketwatch.com/story/tech-stocks-tumble-as-nvidia-drops-7-2022-08-15
[3] Bloomberg, "Tech Stocks Slide as Nvidia, Palantir Drop on Valuation Concerns," 15 August 2022, https://www.bloomberg.com/news/articles/2022-08-15/tech-stocks-slide-as-nvidia-palantir-drop-on-valuation-concerns
[4] Reuters, "Tech stocks tumble on valuation concerns, Fed rate hike bets," 15 August 2022, https://www.reuters.com/markets/us/us-stocks-futures-indexes-2022-08-15/
- The tech selloff, as evidenced in the U.S., is resonating in the Australian market, with finance experts attributing declines in major technology stocks to concerns about valuation levels and potential new trade restrictions in the industry.
- Amidst the broader market's resilience, the finance sector in Australia is mirroring the global trend, as tech stocks continue to slide, while industries such as banking and oil show signs of growth.
