ASX Edges Higher as Bank Gains Counter Wall Street Tech Rout; Oil, Bond Yields Pressure Equities

The S&P/ASX 200 opened 38.7 points, or 0.5%, higher at 8699.6 on Thursday, with six of 11 industry sectors in positive territory. Gains were driven by the banking sector, where Westpac rose 1% and Commonwealth Bank, National Australia Bank and ANZ Bank each added 0.9%.

Australian technology stocks defied the weakness on Wall Street. Codan gained 0.9%, WiseTech advanced 1.6%, Xero climbed 2.2%, Technology One rose 1.2% and NEXTDC added 0.8%.

The positive open came despite a downbeat session in the United States. The S&P 500 fell 0.5% for its second consecutive loss after setting an all-time high. The Dow Jones finished flat, while the Nasdaq Composite dropped 1.3%.

Tech and AI-linked stocks were the main drag. Nvidia fell 2.9% and was one of the heaviest weights on the S&P 500. The selloff gathered pace around midday after The Financial Times reported that OpenAI’s annualised revenue is US$20 billion ($28.7 billion) less than previously signalled, according to sources. Oracle also slid following a report that it was trucking natural gas to server farms as a workaround to power bottlenecks. Even a strong September revenue report from Taiwan Semiconductor Manufacturing Co. failed to lift sentiment: TSMC’s US-listed shares fell 1.4%.

Bond market volatility added further pressure. The yield on the 10-year Treasury swung from 5.28% late Wednesday to as high as 5.35% early Thursday before settling back to 5.26%. It remains near its highest level since 2002 and well above the 3.97% level that prevailed before the war with Iran began, reflecting ongoing worries about high inflation, large government debt loads and a resilient US economy. Fewer Americans applied for unemployment benefits last week, suggesting companies are laying off fewer workers.

Higher bond yields make borrowing more expensive and put downward pressure on stock prices, particularly for more expensive growth stocks. Analysts expect companies in the S&P 500 to deliver nearly 30% earnings-per-share growth in the upcoming reporting season, a high bar that raises the stakes for corporate results.

Levi Strauss reported a bigger quarterly profit than expected and raised its full-year profit forecast, but its stock fell 2.4% after revenue growth fell short of estimates. PepsiCo rose 3.7% after posting stronger profit and revenue than anticipated, highlighting strength outside North America, though it cut its forecast for an underlying profit measure for the fiscal year.

On the commodity front, oil prices eased in early Asian trade after President Donald Trump said the US would not attack Iran before the midterm elections. West Texas Intermediate dropped toward US$91 a barrel, while Brent crude closed above US$104. The announcement also lifted gold from a two-month low; bullion climbed as much as 0.9% to trade near US$4,146 an ounce.

In the Australian market, mining stocks were mixed. BHP lost 0.3% and Fortescue shed 0.6%, while Rio Tinto edged 0.3% higher. Gold miners gained, with Northern Star adding 0.5% and Evolution Mining rising 0.7%. Energy stocks were mixed: Woodside Energy dipped 0.3%, Santos added 0.2%, Ampol was flat and Viva Energy fell 0.9%.

Separately, data centre start-up Firmus withdrew its plans for a blockbuster listing on the ASX after investors balked at the price and terms, scrapping an initial public offering that would have valued the company at about $43.7 billion.

The Australian dollar was trading at US69.59¢.

Across global markets, South Korea’s Kospi fell 2.6%, one of the larger declines worldwide, hurt by a 2.4% drop in Samsung Electronics. The tech giant said its operating profit for the latest quarter likely soared to 107.4 trillion Korean won ($110 billion) from 12.17 trillion won a year earlier, but the surge failed to satisfy investors. Indexes fell across much of the rest of Asia and Europe.