ASX rises in early trade after Wall Street surges; Tech stocks rally

The Australian sharemarket advanced in early trade on Tuesday, led by tech stocks after an AI-fuelled rally on Wall Street, as oil prices and bond yields eased amid hopes for diplomatic progress in the Iran war.

The S&P/ASX 200 was up 12.70 points, or 0.2 per cent, at 8744.60 shortly after 11am AEST, with seven of its 11 sectors in the green. The benchmark index closed flat on Monday. The Australian dollar was steady at US71.19¢.

Tech stocks led the early gains on the ASX, after America’s tech-focussed Nasdaq composite leaped 2.3 per cent to a record overnight, with chip stocks and other companies in the artificial-intelligence industry leading the way. America’s AI chip giant Nvidia climbed 2.3 per cent and Advanced Micro Devices rallied 9.9 per cent.

Leaders of the industry have recently warned a slowdown is needed in the industry’s development for the safety of humanity. Yet even if the industry leans into more measures for safety, some analysts say it will still be hungry for chips to power it all.

Of the local tech names, software giants WiseTech Global and Xero climbed 3.6 per cent and 3.2 per cent, respectively. AI data centre operator NextDC jumped 4.4 per cent, and digital networks operator Megaport rose 3.6 per cent. Family tracking app Life 360 jumped 4 per cent.

The mining heavyweights were also higher in early trade, albeit at a more moderate pace. Iron ore and copper giants BHP and Rio Tinto were up 0.3 per cent and 0.2 per cent, respectively, and gold producers Northern Star and Evolution Mining rose 0.9 per cent and 0.6 per cent.

The ASX’s gains came after the price for a barrel of Brent oil fell 3.4 per cent to $US100.34. While that’s still much higher than its roughly $US72 price from earlier this year, it’s down from the nearly $US110 it touched last week.

Oil prices have been swinging up and down as some crude from the Middle East is able to sail through the Strait of Hormuz to get to customers, though nowhere near as much as the industry would like because of the war with Iran.

Satellite data showed that Saudi Arabia’s observed oil loadings from inside the Persian Gulf jumped over the weekend, with the highest number of ships seen at the nation’s main Persian Gulf port since June. The images indicate that the kingdom is successfully redirecting its exports back toward the Gulf following the shutdown of its vital East-West pipeline due to drone attacks.

Meanwhile, US president Donald Trump told Fox News he would “probably” be open to meeting his Iranian counterpart, Masoud Pezeshkian, on the sidelines of the UN General Assembly in New York this week. Trump will also hold a summit with Chinese President Xi Jinping. China is the world’s top importer of oil, and provides Tehran with an economic lifeline as its biggest buyer. The US is seeking to step up pressure on Tehran’s trading partners.

While beneficial for the wider market, the falling oil price weighed down energy stocks. Oil and gas major Woodside fell 1.5 per cent, Santos dropped 0.8 per cent, and refiner Ampol shed 0.3 per cent. Coal producers Yancoal and Whitehaven both lost 1 per cent.