The Australian sharemarket opened lower on Monday, with technology stocks dragged down by a Wall Street sell-off fuelled by rising concerns about artificial-intelligence spending, while financial stocks rose ahead of the Reserve Bank's interest rate decision. The S&P/ASX 200 was down 12.2 points, or 0.1 per cent, to 8895.9 in early trade.
Technology stocks fell: WiseTech fell 1.7 per cent, Xero dropped 2.5 per cent and Codan slipped 1.3 per cent. The weakness followed a Wall Street session on Friday, where the S&P 500 tumbled 1.8 per cent for its worst day since June, and the Nasdaq composite fell 2.9 per cent. Intel lost 28.6 per cent, its worst drop since 1974, after its forecast for profit in the final three months of the year fell short of analysts’ expectations; chief executive Lip-Bu Tan said the personal-computer industry continues to feel pressure. Nvidia fell 4.2 per cent.
Bank stocks were stronger, with Commonwealth Bank rising 1.1 per cent, National Australia Bank up 0.8 per cent and ANZ 0.8 per cent higher. Westpac, which reported a $6.8 billion full-year profit down 1 per cent from the prior year, rose 1 per cent in early trade. The bank said it expects interest rates to remain "elevated" into 2027 and house prices to have fallen by nearly 11 per cent by March.
KMD Brands, owner of Kathmandu and Rip Curl, jumped 10.4 per cent in early trade and said it had entered an exclusivity agreement with US retail giant Bluestar Alliance regarding a possible takeover. The company said there was “no certainty at this time that this process will result in receipt of a binding proposal, or that any transaction will ultimately be consummated.”
Mining stocks were mixed, with BHP down 1.1 per cent and Rio Tinto slipping 1.4 per cent, while Fortescue edged up 0.3 per cent. Energy stocks slid as Brent crude fell 1.7 per cent to about $US111.60 a barrel while traders weighed the risk of renewed US military action against Iran and potential disruptions to Middle East supplies. Woodside Energy lost 0.4 per cent and Santos dipped 0.2 per cent.
On Wall Street, the sell-off came amid worries that the hundreds of billions of dollars invested in AI may not produce enough profit and productivity to make the investment worthwhile. “We’re moving out of the hopes and dreams phase of the AI trade and into the ‘show me’ phase,” said Joe Tigay, portfolio manager at Equity Armor Investments.
Cryptocurrency stocks tumbled following a hack at Binance, the world’s biggest crypto exchange. A US-based blockchain intelligence firm said the attack, which impacted more than $US6 billion worth of crypto, was likely carried out by a North Korean unit. Bitcoin fell below $US77,000. Binance said it had covered 95 per cent of the $US6.3 billion of stolen assets. Coinbase Global fell 10.6 per cent despite reporting stronger-than-expected results.
Treasury yields eased as investors sought safe havens, with the 10-year yield falling to 4.93 per cent from 4.98 per cent. In Asia, Japan's Nikkei 225 fell 2.1 per cent after the Bank of Japan held interest rates steady.
The front page in your inbox each weekday morning: the lead, the picks, and why each one earned its place.
Major bank stock percentage change in early trade
per cent
Source: Sydney Morning Herald
§
Analysis
Why This Matters
The sell-off in AI stocks raises doubts about whether huge capital spending by tech giants will generate sufficient returns, affecting investor sentiment globally.
The RBA's interest rate decision on Tuesday will set the tone for Australian borrowers and the housing market, with Westpac forecasting elevated rates into 2027 and a house price fall of nearly 11 per cent.
The Binance hack highlights ongoing security risks in cryptocurrency markets and could trigger tighter regulatory scrutiny.
Background
Wall Street has become increasingly volatile ahead of Tuesday's US midterm elections. The S&P 500 is only 3.1 per cent below its all-time high, but the recent AI-led sell-off has made investors cautious. President Donald Trump has historically used the stock market's performance as a measure of his own success. The Reserve Bank is expected to deliver its interest rate decision on Tuesday, with markets watching for any shift in guidance.
Key Perspectives
Westpac: says it expects interest rates to remain "elevated" into 2027 and house prices to fall by nearly 11 per cent by March.
Joe Tigay, portfolio manager at Equity Armor Investments: argues that the AI trade is moving from "hopes and dreams" to a phase where companies must show profits.
KMD Brands: cautions that there is no certainty that its exclusivity agreement with Bluestar Alliance will result in a binding proposal or a completed transaction.
What to Watch
The Reserve Bank's interest rate decision on Tuesday and its forward guidance on inflation and borrowing costs.
US midterm election results on Tuesday and their potential impact on market volatility and policy direction.
Further fallout from the Binance hack, including any regulatory responses and the stability of crypto markets.
12 claims in this story checked against 1 source: 12 supported.
Show each claim
SupportedThe ASX edged lower as technology stocks weakened following a Wall Street sell-off.Sydney Morning Herald - Latest News: “The Australian sharemarket has started the week in negative territory with technology stocks weaker on the back of a Wall Street sell-off”
SupportedBanks rose ahead of the Reserve Bank’s interest-rate decision.Sydney Morning Herald - Latest News: “financial stocks are higher ahead of the Reserve Bank’s interest rates call on Tuesday”
SupportedWestpac reported a $6.8 billion full-year profit.Sydney Morning Herald - Latest News: “Westpac said it expects interest rates to remain “elevated” into 2027 and house prices to have fallen by nearly 11 per cent by March as it reported a $6.8 billion full-year profit.”
SupportedKMD Brands rose on takeover talks with Bluestar Alliance.Sydney Morning Herald - Latest News: “KMD Brands, the owner of Kathmandu and Rip Curl, jumped 10.4 per cent in early trade The parent company of popular brands Kathmandu and Rip Curl has revealed it is in talks with the US-based global retail giant owner of labels including Dickies about a possible takeover.”
SupportedThe S&P/ASX 200 was down 12.2 points, or 0.1 per cent, to 8895.9 in early trade.Sydney Morning Herald - Latest News: “The S&P/ASX 200 was down 12.2 points, or 0.1 per cent, to 8895.9 in early trade.”
SupportedRising concerns about AI spending fuelled the Wall Street sell-off.Sydney Morning Herald - Latest News: “Worries are rising about whether all the hundreds of billions of dollars will produce enough profit and productivity to make the investment worth it.”
SupportedIntel fell 28.6 per cent, its worst drop since 1974, after its profit forecast for the final three months of the year fell short of analysts’ expectations.Sydney Morning Herald - Latest News: “Intel’s stock led the way lower and plunged 28.6 per cent for its worst drop since 1974. The chipmaker gave a forecast for profit in the final three months of this year that fell short of analysts’ expectations”
SupportedIntel chief executive Lip-Bu Tan said the personal-computer industry continues to feel pressure.Sydney Morning Herald - Latest News: “as CEO Lip-Bu Tan said the personal-computer industry continues to feel pressure.”
SupportedJoe Tigay said, “We’re moving out of the hopes and dreams phase of the AI trade and into the ‘show me’ phase.”Sydney Morning Herald - Latest News: ““We’re moving out of the hopes and dreams phase of the AI trade and into the ‘show me’ phase,” said Joe Tigay, portfolio manager at Equity Armor Investments, in a note to investors.”
SupportedA US-based blockchain intelligence firm said a North Korean unit was likely behind the Binance attack, which affected more than US$6 billion worth of crypto.Sydney Morning Herald - Latest News: “a US-based blockchain intelligence firm said a North Korean unit was likely behind the attack that impacted more than $US6 billion worth of crypto at Binance.”
SupportedBinance said it had covered 95 per cent of the US$6.3 billion of stolen assets.Sydney Morning Herald - Latest News: “The exchange said it had now covered 95 per cent of the $US6.3 billion of stolen assets.”
SupportedJapan’s Nikkei 225 fell 2.1 per cent after the Bank of Japan kept interest rates steady.Sydney Morning Herald - Latest News: “Japan’s Nikkei 225 fell 2.1 per cent after the Bank of Japan decided to keep interest rates steady”