Australian shares opened lower on Tuesday despite bargain hunters returning to United States technology stocks overnight, helping Wall Street recover from Friday's sharp sell-off amid improving sentiment about growth sectors.
The ASX 200 was set to begin 0.3% above its previous close at 10:00 am AEST (12:00 am GMT) as Australian Securities Exchange (ASX) futures trading priced the June contract of the benchmark index 23 points over the prior settlement at 8,533 points.
However, the index had shed 1.5% by 10:25 am AEST.
Overnight trading saw a strong lead from New York, where stocks were led higher by gains in the technology-laden Nasdaq Composite index as investors picked up sold-off computer-chip makers in the wake of the sharp correction on Friday.
They also took heart from Iran and Israel agreeing to end attacks on each other after U.S. President Donald Trump asked that they immediately "stop shooting".
Although the Dow Jones Industrial Average lost 0.2%, the S&P 500 added 0.3% and the Nasdaq Composite put on 0.9% on Monday (Tuesday AEST).
"Today looks like a day where investors are doing a little bit of bargain hunting off the big tech sell-off," Cherry Lane Investments partner Rick Meckler was quoted as telling Reuters in this article.
"What normally happens after that is you get analysts coming in and reiterating buys."
The recovery was headed by chip makers, including Intel, with the Philadelphia Semiconductor Index jumping 5.6% as investors returned to the sector after concerns about high valuations triggered heavy selling at the end of last week.
Intel climbed 11.2% after reports that Alphabet's Google had placed a substantial order for future tensor processing units, while Broadcom recovered 2.8% after its recent earnings-driven decline.
The ASX was closed on Monday for the King’s Birthday public holiday, but had ended down on Friday with the ASX 200 Index dropping 0.7% to 8,625.1 points, bringing losses for the week to 1.2%.
In fixed interest markets, Australian Government bond yields fell, with two-year rates down by 0.30% to 4.661% and 10-year rates off by 0.20% to 4.962% at the time of writing.
