Shares in Australian-listed companies are expected to continue sliding on Friday as concerns about spending on artificial intelligence (AI) weighed on stock prices in the United States.
The ASX 200 index is likely to start 0.9% under the previous close, according to Australian Securities Exchange (ASX) futures trading, which quoted the March share price index contract 84 points below the previous settlement at 8,866 points.
Shares on Wall Street dived on Thursday (Friday AEST) due to a sell-off of technology stocks, which pulled the Nasdaq Composite Index to a three-month low.
The Dow Jones Industrial Average and the S&P 500 each dived by 1.2% while the Nasdaq Composite shed 1.6% as Microsoft, Amazon and Alphabet lost ground.
Investor worries have increased over heavy AI spending and the returns it will generate.
"This is the first time we've seen the large-cap tech companies -- the Microsofts and the Alphabets and the Amazons -- go through a really large capex cycle ... and we're seeing this volatility about whether this investment will translate, ultimately, into results," U.S. Bank Wealth Management investment strategist Tom Hainlin was quoted in a Reuters story as saying.
The Australian market had closed lower on Thursday with the ASX 200 Index losing 0.4% to 8,889.2 points, as falls in materials stocks offset gains in eight of the 11 sectors.
Burrell Stockbroking wealth adviser Adam Dight said market sentiment was negative with clients reluctant to invest although the mood was not based on fundamentals.
"It’s not a valuation-based story anymore. It’s just sentiment,” he told Azzet.
Dight said he was advising clients to invest surplus cash but otherwise take no action.
Stock in focus today will include Rio Tinto after it called off its merger talks with Glencore.
In fixed interest markets, Australian Government bond yields fell, with two-year rates dropping 0.37% to 4.256% and 10 year rates losing 0.70% to 4.804%.
