Australian retail investors experienced a challenging Monday as technology stocks, recently favoured, faced a significant sell-off. This downturn was triggered by US-Israeli strikes, which escalated geopolitical tensions and subsequently impacted equity markets. ASX-listed payments group Zip, a company that provides buy now, pay later services, and logistics software giant WiseTech, which delivers software solutions for the logistics industry, were among the most traded stocks by individuals in previous weeks but suffered notable losses.
Escalating tensions in the Middle East saw oil prices surge almost 10 per cent, prompting a broad sell-off on the ASX. WiseTech and Xero each erased around 4 per cent, while Zip tumbled 8.4 per cent, and Appen declined by more than 6 per cent. This reversal follows a trend of retail investors globally diving back into the tech sector, anticipating a recovery after a period of decline due to artificial intelligence fears.
Adding to the negative sentiment, BCA Research warned that the strikes could accelerate the shift away from software and tech stocks into materials, industrials, and energy. Despite this, UBS strategist Richard Schellbach has upgraded his year-end target for the S&P/ASX 200 Index to 9400, up from 8900, citing a strong earnings season overall. The ASX closed slightly higher on Monday at 9200.9 points, supported by rallies in oil and gold stocks.
Schellbach also noted the increasing mentions of AI investments during earnings reports, however, he noted he was “underwhelmed by how little they had to yet show for it”. This sentiment was echoed by ETF Shares, who similarly pointed out AI was the “bullshit buzzword” of the earnings season, with companies across various sectors mentioning AI in their reports.