Miners send ASX lower despite Wall Street rally; Xero soars

The Australian sharemarket opened lower on Thursday as oil prices marched higher again, with mining shares leading the early losses, while software maker Xero boosted the tech sector with its announcement of a $1 billion share buyback.

The S&P/ASX 200 was down 39.4 points, or 0.4 per cent, at 9113.80 shortly after 11am AEDT, with seven of its 11 industry sectors in the red. The ASX added 0.3 per cent on Wednesday. The Australian dollar was weaker at US68.44¢.

Xero’s rally came amid new uncertainty for the tech sector amid reports that Nvidia is preparing to oust its CEO and founder Jensen Huang in a move that risks major disruption to the AI industry.

Xero’s shares soared 9.1 per cent after the small-business software maker said it plans to buy $1 billion of its shares over the coming 12 months to boost shareholder returns, and upped its sales and earnings forecasts for the financial year. First-half sales jumped 46 per cent to $NZ1.75 billion ($1.42 billion) as it won 226,000 new customers in the period, the company said.

Fellow software makers WiseTech and Technology One initially were caught up in the positive sentiment, but then pared their gains to 0.9 per cent and 0.6 per cent, respectively. AT data centre operator NextDC rose 1.2 per cent.

The tech rally failed to lift the wider ASX, which was weighed down by falls from the materials sector.

Mining giants BHP and Rio Tinto were down 1.4 per cent and 1.7 per cent, respectively. Gold miners also declined after bullion prices slipped below $US4000 an ounce, extending losses triggered by a high US inflation data and hawkish remarks from Federal Reserve officials that reinforced expectations of a December rate hike. Higher rates are a headwind for the non-yielding metal.

The Big Four banks were mixed. CBA gained 1.3 per cent despite a lawsuit by the corporate regulator, which alleges the nation’s biggest bank overcharged tens of thousands of business customers – many of them small businesses – millions of dollars in fees they were never told about.

NAB was flat after admitting it underpaid 66,000 of its workers $127 million over 14 years, with some workers owed more than $87,000 each. The bank will repay a total of $169 million to staff, including superannuation and interest, and make a $2 million “contrition payment” to the Fair Work Ombudsman to settle the legal side of the issue. Westpac shares were up 0.9 per cent, while ANZ Bank lost 2 per cent.

The energy sector was flat, with oil giant Woodside up 0.1 per cent and Santos up 0.5 per cent while refiner Ampol dropped 0.7 per cent. Oil prices climbed overnight, as traders weighed mixed signals on the prospects for a conclusion to the Iran war. Regional flareups have persisted and peace talks have shown little progress. Iran will not remove “a single atom” of enriched nuclear material from country, Secretary of the Supreme National Security Council Mohsen Rezaei said in an interview.

West Texas Intermediate futures rose above $US86 a barrel after sliding about 5 per cent in the previous two days, while Brent was up 1.4 per cent to $U92.76.

On Wall Street overnight, a rebound for stocks in the artificial intelligence industry lifted the US market higher. The S&P 500 rose 1.3 per cent and got close to recovering all of its brutal sell-off from last week triggered by worries about a potential slowdown for AI-related businesses. The index pulled within 2.6 per cent of its all-time high set last month.

The Nasdaq composite rallied a market-leading 1.6 per cent because of the strength for tech stocks, while the Dow Jones Industrial Average added 254 points, or 0.5 per cent.

Leading the way was one of the stocks that’s been at the centre of the AI industry’s manic recent swings. CoreWeave, which rents out access to AI chips to customers over the cloud, jumped 24.7 per cent after showing investors that it lost less money during the summer than analysts expected. Micron Technology, which sells memory for computers, rallied 11.9 per cent. Broadcom rose 4 per cent. GE Vernova, which is helping to power AI data centres, added 1.4 per cent.

The tech sector is in for yet another rollercoaster ride after reports that Nvidia, the $USS4.1 trillion ($6 trillion) chip company vital to the artificial intelligence revolution, is moving to axe its hugely influential CEO Jensen Huang over two extra-marital affairs, one of them with an alleged Chinese spy. Nvidia’s shares were down 7.2 per cent in after-hours trading on the news, having climbed 2.9 per cent during Wednesday’s session.

Outside of tech, Fossil Group soared 26.7 per cent after the seller of watches, handbags and other products reported a stronger profit for the latest quarter than analysts expected. It also raised its forecast for revenue this year.

Yields jumped in the bond market the day before following a worse-than-expected reading on inflation in the United States. The discouraging report raised expectations for coming hikes to interest rates by the Federal Reserve.

Higher yields mean higher rates for mortgages, and companies in the real-estate industry continued to fall Wednesday. Homebuilders D.R. Horton sank 1.5 per cent and PulteGroup slipped 0.8 per cent.

In other international markets, indexes rose across much of Europe and Asia.

South Korea’s Kospi jumped 2.6 per cent for one of the world’s biggest moves, while Hong Kong’s Hang Seng was an outlier after falling 1 per cent.

with AP, Bloomberg

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