The ASX was set for a dismal day of trading early in the session, shedding 42.4 points or 0.5% before pulling back to almost even at 2 pm AEDT.
The bourse still shed 0.32% from record highs set yesterday, settling down 27.00 points to 8,291.40.
Alongside falls in Consumer Staples (-1.13%) a faltering Info Tech sector (-1.06%) was one of the main drivers of weakness in the market today, mirroring similar sentiments on Wall Street that drove the Nasdaq down 187 points or 1%.
Nvidia tumbled 4.5% following reports the government might introduce restrictions on AI-chip exports. The semiconductor index fell 5.3%.
Only two sectors made forward progress today – Financials, up 0.26%, and Real Estate, up 0.20%.
The major banks enjoyed small upticks to their stock prices despite the down market, buoyed by enthusiasm over the Commonwealth Bank's AGM.
“CBA investors are in the unique position of being in one of the best-performing stocks this year, which puts them at odds with the rest of the market: InvestorHub data showed that at the end of last quarter, only 28% of shareholders were in profit,” said InvestorHub co-founder and co-CEO Ben Williamson.
“Whilst the market speculates at the promise of a rally in other sectors – specifically mining – CBA would do well to remind its shareholders that it is still the same business that it was 12 months ago and that there is good reason to remain.
“With our research revealing that the majority of existing buy volume is coming from existing shareholders, CBA should take care to ensure it doesn’t let speculators lure its shareholders away.
“Otherwise, the bank risks losing a huge source of volume.”
Overall, the ASX200 has gained 1.27% over the last five days and currently sits 0.48% off its 52-week high.
AII drives tech and comm opportunities
Global investment manager firm Nuveen chief investment officer Saira Malik offers her perspective on equity portfolio strategies in the lead-up to US earnings season.
Malik says attractive opportunities can still be found in the information technology and communication services sectors driven by artificial intelligence (AI) demand, despite slower corporate earnings growth, declining S&P 500 earnings per share expectations and potential headwinds like geopolitical risks and increased volatility.
“Since the end of the second quarter, earnings per share (EPS) expectations for the S&P 500 have declined from +7.7% to +3.8%,” Malik writes.
“The only sector to have its estimate raised is information technology at +0.5%.
“The main drivers of the downward revisions include falling oil and natural gas prices (an especially relevant headwind for the energy sector), sustained disinflation (broadly dampening revenues and margins) and tougher comparisons (as strong results from the previous quarter set a high bar for 3Q).
“With lower rates expected to crimp net interest margins, we could see earnings per share (EPS) growth in the financial sector move even lower.
“With the US general election less than a month away and escalating hostilities between Israel and Iran, investors will likely have to contend with increased volatility over the next several weeks.
“Broader market indexes may experience pullbacks but there are still pockets of attractive investment opportunities.
“But because we don’t foresee a rising tide that will lift all boats on the horizon, we encourage investors to approach portfolio allocations with heightened selectivity.
“Year to date through October 8, the S&P 500 is up +22%, with the 'Magnificent 7' (Alphabet (NASDAQ:GOOGL), Amazon (NASDAQ:AMZN), Apple (NASDAQ:AAPL), Nvidia, Meta, Microsoft (NASDAQ:MSFT) and Tesla (NASDAQ:TSLA)) contributing close to half of that gain.
“The information technology (+31.5%) and communication services (+29.4%) sectors have been the two biggest outperformers, though investors may be surprised to learn that the more defensive utilities sector isn’t far behind (+28.6%).
“We think the utilities rally may be overextended and that other sectors deserve focus.
“Although the healthy health care sector has been largely ignored, it remains one of our favourites, based on its defensive attributes and attractive fundamentals.
“Although technology and communication services have been riding the wave of artificial intelligence (AI) euphoria for some time, we believe these sectors still have a long runway to outperform the broader market.
“Software has underperformed in the tech rally, but the headwinds it faces are cyclical, not structural. The more the economy hints at a soft landing, the likelier it is that businesses will expand their IT budgets.
“This should help software companies grow their enterprise revenue.
“While elevated interest rates have hampered the software industry, the Fed’s recently launched easing cycle should turn interest rates into a tailwind.”
Small cap movers
A major mover in the small caps sector today was Mako Gold Ltd (ASX:MKG), which was up as much as 77.78% to $0.016 on the back of a merger proposal with Aurum Resources Ltd (ASX:AUE).
Among other gains for small caps were Provaris Energy Ltd (ASX:PV1, OTC:GBBLF), which was as much as 25% higher to $0.03, Yandal Resources Ltd (ASX:YRL) up 15% to $0.115, Polymetals Resources Ltd (ASX:POL) as much as 8.98% higher to $0.425, Nova Minerals Ltd (ASX:NVA, NASDAQ:NVA) up 8.11% to $0.20, Alkane Resources Ltd (ASX:ALK, OTC:ALKEF) as much as 8.0% higher to $0.54, Australian Gold & Copper was 6.82% higher to $0.235 and Lunnon Metals Ltd (ASX:LM8, OTC:LNMLF) up to 6.67% higher to $0.32.
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