Australian shares to open higher as AI valuation worries weigh on Wall Street
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The news: The Australian sharemarket is set to open marginally higher after Wall Street closed with mixed results overnight, as technology stocks weighed on sentiment amid concerns over hyperscaler spending on artificial intelligence, while investors also digested a raft of economic data.
The numbers: Updated at 7:50am AEST:
- ASX futures: up 9 points to 8,755 points
- Wall Street: Dow Jones up 0.14%, S&P 500 down 0.01%, Nasdaq down 0.46%
- Europe: FTSE 100 up 0.65%, CAC 40 up 0.55%, DAX up 1.03%
- Spot gold: up 0.69% to USD4,027 per ounce
- Oil prices: Brent up 2.06% to USD75.25/barrel, US WTI up 1.71% to USD71.54/bbl
- AUD: up 0.10% at 69.07 US cents
- Bitcoin: down 1.54% to USD60,078.
The context: The Nasdaq, which has been under pressure this week on concerns about AI spending, briefly rose at the open before finishing 0.5% lower. The Dow gained 0.1%, while the S&P 500 ended little changed.
All of the ‘magnificent seven’ stocks fell. Apple declined 6% after raising prices for iPads and MacBooks to offset surging memory and storage chip costs. Shares in Nvidia, Microsoft and Alphabet also fell 1.6%, 3.4% and 0.4% respectively. Micron Technology jumped 15.7% after its earnings and forecasts beat Wall Street estimates, however broader concerns over debt-funded AI investment by hyperscalers continued to weigh on sentiment.
Elsewhere, Brent crude climbed above USD75 ($108) a barrel after Iran’s Islamic Revolutionary Guard Corps attacked a Singapore-flagged cargo ship in the Strait of Hormuz on Thursday, according to two senior US officials cited by the WSJ, testing the US-Iran agreement signed last week to end hostilities and reopen the key shipping route.
On the economic front, the US Department of Commerce reported annual inflation rose to 4.1% in May, the highest rate since April 2023, potentially strengthening the case for further Federal Reserve rate hikes, according to Reuters. Meanwhile, weekly initial jobless claims data fell to 215,000, below Reuters economists’ expectations of 225,000, pointing to continued resilience in the US labour market.
