ASX posts another poor session; Gold vaults over $US4000

The Australian sharemarket posted another dour session on Wednesday, as retail and technology stocks took a tumble and investors opted to cash in on the price of gold topping $US4,000 per ounce for the first time.

The benchmark S&P/ASX200 pared some of its early losses but still finished 9.2 points (down 0.1 per cent) in the red, with seven of the 11 sectors keeping their head above the water. The Australian sharemarket has this week racked up losses for three straight sessions, with the local bourse falling 0.3 per cent on Tuesday. The Australian dollar was buying US65.63¢, down from US66.02¢ on Tuesday at 5pm.

Tracking their peers on Wall Street, tech stocks were among the session’s biggest losers, with WiseTech Global, the nation’s biggest IT stock, edging down 0.4 per cent. Accounting software maker Xero lost 1.7 per cent and family member tracking app Life360 sank 3 per cent.

Consumer discretionary stocks had another bad day, with Bunnings and Officeworks owner Wesfarmers (down 2.2 per cent), electronics chain JB Hi-Fi (down 1.3 per cent) and furniture seller Harvey Norman (down 0.6 per cent). The iron ore heavyweights were mixed, with BHP and Fortescue down 0.2 per cent and 0.3 per cent, respectively, while Rio Tinto rose 0.9 per cent.

Gold miners slumped amid some profit-taking after bullion hit a record high. The price of gold has been on a tear as investors seek safety from mounting economic and geopolitical uncertainty, alongside expectations of further interest rate cuts by the US Federal Reserve. US gold futures for December delivery gained 0.4 per cent to $US4020 per ounce. Perseus Mining (down 1.2 per cent), Greatland (down 1.1 per cent) and Vault Minerals (down 1.4 per cent) all posted losses. Northern Star Resources dropped 0.3 per cent, Newmont closed flat, but Evolution Mining recovered from a poor start to close 0.3 per cent higher.

BlueScope Steel lost 2.3 per cent. The nation’s largest steelmaker warned that a shortage of affordable gas on the eastern seaboard could prevent it from lobbing a bid to rescue the collapsed Whyalla steelworks, as it steps up calls for the Albanese government to force prices lower.

The financial sector, which makes up more than a third of the ASX, finished mixed. Commonwealth Bank, the biggest stock on the ASX, closed flat, Westpac slipped 0.3 per cent and NAB closed 0.4 per cent lower. ANZ (up 0.5 per cent) closed in the green.

James Hardie rallied 9.9 per cent after the building materials maker said sales of home sidings and trims beat its own forecasts in the September quarter, and flagged an update to its full-year profit guidance next month.

South 32 gained 2.7 per cent after the White House said it is taking a 10 per cent equity stake in the company’s Canadian joint venture partner Trilogy and allowing their Ambler Road mining project in Alaska to go forward. President Donald Trump ordered the approval of a 340-kilometre road through an Alaskan wilderness to allow mining of copper, cobalt, gold and other minerals used for cars, electronics and other technologies. Trilogy’s shares more than tripled.

On Tuesday, the S&P 500 dipped 0.4 per cent, coming off its latest all-time high and breaking its seven-day winning streak. The Dow Jones Industrial Average was down 0.2 per cent and Nasdaq composite was 0.7 per cent lower. Drops for Tesla and Oracle weighed on the US market.

Markets are taking a breather following a rush higher for many investments on hopes that the US economy will remain resilient and that the Federal Reserve will continue to cut interest rates.

The ebullience driven by artificial intelligence has given way to concerns about the rally being excessive after a $US16 trillion ($24 trillion) surge in the S&P 500 from its April lows.

Tesla was one of the heaviest weights on the market and sank 3.9 per cent as it unveiled more affordable models of its Model Y SUV and its Model 3 sedan. That, though, gave back only a portion of its 5.4 per cent leap from Monday, when speculation rose that the electric-vehicle maker may be set to announce a new car.

Oracle also dragged the market lower. It fell 2.3 per cent after a news report suggested it’s making thin profit margins on a key line of business related to artificial intelligence technology.

The frenzy around AI has been one of the biggest trends guiding Wall Street to record after record recently. It’s been so strong that it’s raised worries that prices have potentially shot too high across the market.

Overnight, IBM rose 1.7 per cent after announcing a partnership that will integrate Anthropic’s Claude AI chatbot into some of its software products. Advanced Micro Devices rallied another 3.4 per cent to add to its surge from Monday, when it announced a deal where OpenAI will use its chips to power AI infrastructure. Dell rose 3.7 per cent after executives talked up the company’s opportunity for growth because of AI at an investment conference.

Much is riding on expectations that the AI investment boom will pay off by making the global economy more productive and driving more growth. Without that increased efficiency, inflation could push higher due to upward pressure coming from the mountains of debt that the US and other governments worldwide are building.

That has optimists on Wall Street buying tech stocks and pessimists buying gold, according to Thierry Wizman, a strategist at Macquarie Group.

Investors have traditionally seen gold as offering protection from high inflation. Its price has soared more than 50 per cent this year not only because of governments’ huge debt loads but also because of political instability worldwide and expectations for lower interest rates from the Fed.

Investors looking to “hedge” themselves, meanwhile, may be buying both tech stocks and gold, Wizman wrote in a research report.

Elsewhere on Wall Street, Intercontinental Exchange, the company behind the New York Stock Exchange, added 2 per cent after saying it had agreed to invest up to $US2 billion in Polymarket.

Polymarket offers prediction markets that allow customers to profit from making predictions on events across politics, financial markets and popular culture, such as who will become New York City’s next mayor or whether the US government will announce this year that aliens exist.

With AAP and AP

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