In case you haven’t noticed what with gold and silver going crazy, the Australian XTX technology index had an extremely poor day all through Wednesday, with the tech sector easily the biggest faller of the Aussie day when it comes to a sectoral breakdown. And that’s understating it, even.
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Take a look at this breakdown to get an idea of the understatement in question:
That’s clearly quite the volatile move into the red; even for the XTX tech index. So far, the index is down -14% YTD, and on a 1Y basis, the Aussie tech index is down over -26%. And on Wednesday afternoon, that same index hit a new YTD low of 2,915pts (that’s just for the XTX, don’t forget).
So who’s driving the losses on Wednesday? Take a look at this quick run-through, numbers correct as of 3.30pm AEDT.
- Wisetech Global (WTC) down -9.73%
- Xero Ltd (XRO) down -14.72%
- NextDC (NXT) down -3.4%
- Technology One (TNE) down -9.5%
- Life360 (360) down -5.7%.
- Megaport Ltd (MP1) down -6.10%
- Macquarie Tech Group (MAQ) down -7%
- Iress Ltd (IRE) down -5.12%
All in all, a pretty bad day for tech. So what’s driving it?
We’re blindly following America
Oh, right. I shouldn’t have even had to ask. Indeed, we’re seeing yet another shaking of the tree when it comes to the U.S.-heavy AI thematic, and it’s showing up in tech and software stocks over on Wall Street.
The crown jewel, NVIDIA, is down -4.3% over the last week, according to Yahoo; that’s not as dramatic a sell-off as what we’re seeing Down Under, but it’s still a handy indicator to figure out where the panic is coming from.
Using prices at close on the U.S. Tuesday session (I’m ignoring the after-hours market here, to be fair, and things are changing quickly lately):
- NVIDIA down -2.85%
- Microsoft down -2.9%
- Tesla flat up +0.01%
- Google (Alphabet) down -1.2%
- Apple flattish red down -0.18%
- Facebook (Meta) down -2.10%
- Amazon down -1.8%
What I will note is that a lot of these stocks appear to be improving in the after-hours market, at time of writing, which suggests tech may have been oversold across the last few sessions and now investors are moving back in.
But it’s interesting timing for a tech scare-off, especially because this week, what was meant to be a landmark US$100B investment into OpenAI by NVIDIA fell through.
Perhaps that caused a lot of hearts to skip, because NVIDIA has quickly come out saying that the agreement was never formal (non-binding MOU, anyone?), and now NVIDIA is set to invest US$20B into OpenAI’s IPO.
That IPO, whenever it happens, will probably be the next big catalyst for tech broadly, if not the entire AI trade. It’s sure to be an absolute extravaganza, but this finance journalist does admit to looking at all of these increasingly-large numbers and wondering, just maybe, if this isn’t a stupid use of the market’s time.
(Try telling that to anybody ten-bagging, naturally, or anybody high off being in charge.)
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