The Australian sharemarket opened 0.3% higher on Wednesday ahead of key inflation data and despite a sharp sell-off in United States technology stocks overnight as investors worried about artificial intelligence (AI) spending and the prospect of higher U.S. interest rates.
By 10:25 am AEST (12:25 am GMT) the ASX 200 index was trading 0.3% higher.
The positive move follows a volatile session on Wall Street, where a sharp downturn in semiconductor stocks dragged the technology-heavy Nasdaq Composite index 2.2% lower.
The broader S&P 500 lost 1.4% while the Dow Jones Industrial Average slipped 0.1% on Tuesday (Wednesday AEST).
“Some of the news lately about AI raises questions about all the spending that’s being done and the capex and ramping of the capacity for semi-conductors," Globalt senior portfolio manager Thomas Martin was quoted as saying in a Reuters report.
A second U.S. interest rate increase is being priced into markets by the end of the year.
The early rise has erased the losses on Tuesday when mining stocks helped to drag the ASX 200 index down by 29.1 points, or 0.3%, to 8,787 as seven of the 11 sectors lost ground.
But Australian technology shares are likely to face a second consecutive day of downward pressure amid a sell-off among peer companies in New York.
CommSec Equity Market Strategist James Gruber said if the trimmed mean inflation rate in the year ending May was above the 3.5% expected by Commonwealth Bank of Australia economists, the Reserve Bank of Australia would be less inclined to cut official interest rates.
“It's probably factored into the share market a fair bit already. So I'm not I'm not sure there'll be dramatic moves off the back of it,” Gruber said.
In bond markets, yields on Australian Government bonds fell, with two-year rates down 0.82% to 4.450% and 10-year rates 0.91% lower at 4.787% at the time of writing.
