The Australian Securities Exchange (ASX) reopens on Monday following the completion of another profit reporting season, with share prices expected to weaken in line with a lower night on Wall Street last Friday.
The S&P/ASX 200 index is set to fall by about 0.3% on the opening 10 am AEST (12 am GMT Sunday) with futures trading showing the September share price index (SPI) contract trading 25 points below the previous settlement at 8,912.00 points.
The reporting season ended on Friday, with share price volatility a noted feature as companies that disappointed the market received a more severe negative reaction than companies that beat expectations were rewarded.
Notwithstanding this, the Australian market hit record highs in August.
“The animal spirits of the market are fickle, and when the winds change, it can be brutal. That’s one lesson we can take from this reporting season,” Morningstar equity strategist Lochlan Halloway wrote in a research note.
Stocks in the United States ended lower on Friday (Saturday AEST) on profit taking and as concerns mounted about the cost of artificial intelligence (AI) and the impact of tariffs on U.S. inflation.
The Dow Jones Industrial Average dropped 0.2%, the S&P 500 lost 0.6% and the Nasdaq Composite dived 1.2% ahead of the Labor Day long weekend.
However, the three price markers showed gains in August with the Dow up by 3.2%, the S&P 500 1.9% and the Nasdaq 1.6%.
Technology stocks were among the losers on Friday, with price falls recorded by Dell and Nvidia.
"Today is just weakness in the top of the market, in tech," Horizon Investments Head of Portfolio Management Zachary Hill was quoted in a Reuters story as saying.
"This is not the first time that we've had some worries about over-investment in AI, lack of monetisation opportunities and that type of thing."
The Australian sharemarket had finished a little weaker on Friday as investors took profits, with the S&P/ASX 200 losing 0.1% to 8,973.10, leaving the gain in August at 2.7%.
In fixed interest markets, yields on Australian Government bonds fell across the curve with rates down by 0.30% to 3.326% for two-year paper and 0.12% to 4.279% for 10-year paper.
