Australian shares have fallen flat after a morning bounce, following an overnight uptick on Wall Street prompted by cooler-than-expected inflation figures.
At lunchtime on Thursday the ASX200 was up 2.6 points, or 0.03 per cent, to 7788.8, as the broader All Ordinaries gained 4.2 points, or 0.05 per cent, to 7724.4.
The benchmark top-200 index had rebounded as much as 0.2 per cent from seven-month lows, but had given up most of the gains by midday.
“Australia’s sharemarket is expected to see a modest lift at the open and rise 0.1 per cent with tech stocks seeing lots of love following the positive mood shift on Wall St,” Moomoo market strategist Jessica Amir said.
“But as the US futures are now in the red, gains on the ASX in risk assets could be short lived, so investors need to be really specific with stock selection and focus on quality.”
Uncertainty around global growth and the erratic deployment of US tariffs has weighed on equities markets this week, driving the local bourse 1.8 per cent lower since Monday, and 9.4 per cent below its mid-February peak.
Traders and investors had also been taking profits on trades in outperforming markets, shifting liquidity out of assets like US equities, US tech and Bitcoin, Natixis Investment Managers portfolio strategist Garret Melson said.
“Tariffs have certainly weighed on investor sentiment, but the greatest pain in equities so far has been more a function of unwinding crowded beta and momentum trades,” Mr Melson said.
“In other words, the worst performing assets are the names that have outperformed over the past year, drawing in assets and pushing up valuations.”
Six of 11 ASX sectors were trading higher, with real estate stocks and IT stocks jumping 1.2 per cent and 0.7 per cent respectively.
Energy stocks led the losses, dropping 0.7 per cent despite an overnight uptick in the oil price above $US70 a barrel for Brent crude. Oil prices are expected to fall, however, with Citi analysts expecting Brent prices of $US60 ahead.
Financial stocks and the materials sector, which account for just over half of the Australian share market by company size, had eased 0.2 per cent and 0.4 per cent lower by midday AEDT.
Westpac was the only big four bank in the red, losing 1.2 per cent to $29.70 per share after Morgan Stanley cut its price target to $27.30.
The Australian dollar is buying 63.27 US cents, up from 62.93 US cents at 5pm on Wednesday. The Aussie hasn’t had a convincing break above the 63.60 US cent level since November 2023.