ASX slumps despite AI rebound on Wall Street; NAB and BHP decline

The Australian sharemarket opened sharply lower on Tuesday, with miners leading the losses and only tech stocks advancing after a rebound in artificial-intelligence stocks on Wall Street.

The S&P/ASX 200 was down 89.9 points, or 1 per cent, at 8755.80 as of 10.20am AEDT, with all of its 11 sectors in the red bar technology. The losses come after the bourse added 0.4 per cent on Tuesday. The Australian dollar was stronger at US69.81¢.

Miners led declines, with copper heavyweight BHP - the biggest stock on the ASX - down 1.9 per cent after saying its copper output slumped by almost 20 per cent in the September quarter. National Australia Bank dropped 0.8 per cent after announcing it will axe up to 2500 jobs, or about 6 per cent of its workforce, over the next financial year.

On Wall Street overnight, the S&P 500 rose 0.4 per cent, coming off its worst week since June, and the Nasdaq composite rallied 1.1 per cent because it’s full of technology stocks. The majority of US stocks outside of AI and tech fell, though, and the Dow Jones Industrial Average swung between losses and gains before finishing with a drop of 36 points, or 0.1 per cent.

In Europe, the losses were sharper, and indexes slid more than 1 per cent following violent protests that could ultimately force the French government to increase its spending to ease voters’ anger. That in turn could put even more pressure on bond markets, and yields cranked higher worldwide.

Even with all the cross currents flowing through financial markets, AI stocks stood out, as they have for most of the past few years. A frenzy in spending for AI technology has forced them to the forefront of the market, sending them to record prices and driving indexes higher. Last week, AI stocks grabbed the spotlight after tumbling on worries about how expensive it has become to borrow money, which could threaten the boom.

Much of the spending on AI chips and data centres has come from borrowed money, and Treasury yields in the bond market have recently hit their highest levels in years or even decades. That has raised the cost of borrowing money for everyone.

Nvidia added 1.4 per cent overnight and was one of the strongest forces lifting the S&P 500. Because it’s the largest stock on Wall Street by total market value, a 1 per cent move for its stock has more effect on the index than any other’s.

SpaceX, which controls the xAI business, rose 1.3 per cent to $US147.96. Its founder, Elon Musk, pledged on Monday to give one share of SpaceX to “every kid in America” next year. The offer came after Anthropic said over the weekend that it will commit 5 per cent of the shares in its highly anticipated initial public offering of stock to a new “public benefit” fund.

The moves for AI stocks were still choppy, though. Consider CoreWeave, a company that’s borrowed to buy AI chips that it rents out to customers over the cloud and has been at the centre of the market’s swings. After initially jumping more than 7 per cent in the morning, it flipped to a loss of 3.5 per cent before finishing with a dip of 0.4 per cent.