Australian shares opened 0.4% lower on Friday despite a record close in one of the three major United States stock indexes overnight, following a sharp sell-off in local mining stocks on Thursday.
Although Australian Securities Exchange (ASX) futures were pointing to a gain of 31 points or 0.4% in the ASX 200 index at the start of the last day of the trading week, the benchmark was trading 0.4% lower by 10:30 am AEST (12:30 am GMT)
In New York overnight, the Dow Jones Industrial Average surged 1.7% to a record closing high, while the S&P 500 gained 0.4% and the Nasdaq Composite added just 0.1% on Thursday (Friday AEST).
This was despite a plunge in Broadcom shares after the U.S. chipmaker missed revenue expectations, which dampened enthusiasm for artificial intelligence (AI) stocks.
"About the only blemish on the market at this point is Broadcom, and I think investors are buying the dip," said Murphy & Sylvest senior wealth adviser and market strategist Paul Nolte in a Reuters report.
"I don't think investors have given up on chips yet, but what they've yet to come to grips with, 'Is this real? Are these valuations legitimate?' I'm not sure yet that investors have really questioned that."
The ASX 200 has underperformed the three major U.S indexes over all periods in the last year, except on one day.
Burrell Stockbroking wealth adviser Adam Dight said the ASX essentially had just one well-performing sector, the mining-focussed materials segment, “and the rest are just making up the numbers” with tax and interest rates rises taking the “wind out of their sails.”
“There’s no EPS (earnings per share) growth,” Dight said.
He said clients were now fully invested after deploying their cash ahead of the start of the new financial year on 1 July.
The Australian market fell on Thursday with the ASX 200 Index dropping 99.6 points, or 1.1%, to 8,686.1 points.
In fixed interest markets, two-year Australian Government bond yields fell by 0.11% to 4.614% while 10-year rates held steady at 4.91% at the time of writing.
