The Overnight Report: AI Stocks Down

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This story features NEW HOPE CORPORATION LIMITED, and other companies.
For more info SHARE ANALYSIS: NHC
The company is included in ASX200, ASX300 and ALL-ORDS

News over the weekend to slow the development of AI has resulted in the selling of AI-related stocks across global markets.

Oil prices moved higher. The US 10-year Treasury hit 5%.

After a flat day yesterday, the ASX200 futures are pointing to a slightly weaker start for Tuesday.

Good Morning,

The Australian market traded in a narrow range on Monday, ending up 8.7 points or 0.1% to 8749 with a big week ahead of central bank meetings, including the FOMC decision on Wednesday, the Bank of England on Thursday and the Bank of Japan on Friday.

On the calendar today, New Hope ((NHC)) is reporting FY26 earnings and James Hardie Industries ((JHX)) has an Investor Day (EST).

For more details and to stay in touch with which companies are going ex-dividend, check out the FNArena Calendar https://fnarena.com/index.php/financial-news/calendar/

Today’s Big Picture, J.L. Bernstein extract

The AI trade split in two

Dario Amodei (Anthropic/Claude) published an essay Saturday calling for a slower pace on frontier models.

Sam Altman (OpenAI) agreed and Elon Musk backed him.

Chipmakers, server builders and the industrial companies selling into data centers took the hit.

Cybersecurity and software went the other way, because slower AI means the software everyone was writing off just got more runway.

The 10-year touched 5 and buyers showed up

The yield hit 5.011% this morning, its highest since 2007, pushed there by record diesel prices and the Saudi pipeline shutdown.

It came right back down near 4.94% once bond buyers stepped in.

That round trip is the good news in today’s tape.

There’s still real demand for Treasuries once the price gets cheap enough.

Warsh has the votes, probably

Futures put Wednesday’s quarter-point increase near certain. July’s meeting went 9-3 for a hold, so four people need to change their minds.

Goldman’s David Mericle wrote that he sees no strong economic case for hiking, then switched his call to a hike anyway.

The decision is priced. The dissent count is not.

CBA Economics Daily Alert extract

Shares fall as oil and bond yields rise ahead of Fed decision

Global stocks fell on Monday as a surge in oil prices and rising government bond yields weighed on risk appetite ahead of central bank meetings in the United States and Japan later this week.

A sell-off in chipmakers dragged down stocks as leaders of AI giants proposed slowing the technology’s development, with elevated oil prices also weighing on sentiment.

US sharemarkets tumbled on Monday. Technology and industrial stocks led declines across the three major indexes, falling between -1.4% and -1.7%.

AI-related shares also came under pressure after the leaders of OpenAI and Anthropic called for a slowdown in AI development to manage risks and protect humanity.

Shares of Nvidia declined -3.4%, while Micron Technology dropped -5.3%. Broadcom and Advanced Micro Devices each fell over -4%.  

Bank of America slid -5.1% after CEO Brian Moynihan said he expects investment banking fees to drop by at least -10% in the third quarter.

The Dow Jones index finished down- 0.3%, the S&P500 index dipped -0.5% and the Nasdaq index shed -0.6%.

Continental European sharemarkets dropped on Monday as rising oil prices and a sell-off in AI-related shares weighed, after leaders of the biggest AI firms called on the industry to slow development of the most advanced models.

The tech sector was among the biggest decliners, down -3.9%, with ASML and Infineon Technologies both down more than -6%. The continent-wide FTSEurofirst300 index ended -0.5% lower but the UK FTSE100 index advanced 0.4%.

US government bond yields rose on Monday after posting their worst weekly performance since mid-May last week. Benchmark 10-year US Treasury yields touched 5% for the first time since 2023.

Traders now attach a 90% probability of the US Federal Reserve raising rates on Wednesday in what could be its first hike since mid-2023. The US 10-year Treasury yield rose by 2 basis points to 4.99% and the US 2-year Treasury yield lifted 2 basis points to 4.67%.

Currencies were weaker against the US dollar on Monday. The Aussie dollar shed -0.3% to US71.47 cents.

In commodities, global oil prices rose on Monday, with fears of a tightening market after Saudi Arabia closed a major crude pipeline pitted against signs that the US may still be seeking a diplomatic resolution with Iran.

The commodity initially rallied on the halt of the kingdom’s East-West pipeline, which has the capacity to carry about 7 million barrels a day to the Yanbu hub on the Red Sea that has been key to bypassing the Strait of Hormuz since the Iran war choked off exports from the Persian Gulf. Brent crude futures settled up 1% to US$105.68 a barrel. 

West Texas Intermediate (WTI) crude futures advanced 1.3% to settle at US$101.39 a barrel.

Gold futures fell as the US dollar rose on Monday. The futures dipped -1.3% to settle at US$4,351.90 an ounce. 

Iron ore futures slipped as persistently high prices of coke used in blast furnaces continued to squeeze margins.

The futures settled -0.5% lower at US$97.55 a tonne as steel mill profitability fell -22.5 percentage points last week to 7.8%, the lowest reading since September 2024, data from consultancy Mysteel showed.

AI Showdown Exposes A Hidden Portfolio Risk, Nigel Green, deVere Group

Monday’s sell-off across AI-linked and semiconductor stocks in Asia, Europe and the United States is being read the wrong way by most investors.

The sell-off followed a weekend essay from Anthropic CEO Dario Amodei calling for the industry to slow the pace of AI capability development. OpenAI CEO Sam Altman quickly echoed the call, and other prominent tech figures voiced support within hours.

However, the backdrop matters. Days earlier, a prominent AI researcher resigned over safety concerns, and other voices inside the industry warned publicly about the risks of moving too fast.

Markets that had shown little appetite for caution suddenly had a reason to pay attention, are treating this as straightforward bad news for anything tied to AI spending,

It’s the wrong lens entirely.

A slower pace of model development does not erase the earnings assumptions already baked into a large share of this market’s recent gains, wherever those gains sit inside an index or a fund.

Amodei and Altman are debating the speed of the frontier. Investors should be asking a different question: how much of their expected growth was ever anything other than one theme, dressed up as diversification.

Monday’s reaction is a reminder that an enormous amount of recent market growth runs through a single narrative. And that narrative just got a lot more uncertain.

A slower pace of frontier development does not mean falling demand for computing power itself. Even under a more cautious approach, running the AI systems already built still requires far more capacity than the industry can currently supply, a gap that has little to do with how fast new models are released.

Slowing the race to build smarter models doesn’t slow demand for running the models already out there. Conflating the two is exactly how investors end up mis-pricing news like this.

The exposure extends well beyond specialist tech funds. Years of strong returns tied to AI-driven earnings have pushed that exposure into mainstream index trackers, workplace pensions and multi-asset portfolios that were never marketed as a bet on a single technology theme.

Somebody who has never bought a tech stock in their life can still be sitting on a concentrated AI position through their pension.

There is a parallel with previous market cycles, where a handful of dominant growth stories eventually forced a re-rating of an entire market, and is impossible to ignore now that AI has become the primary driver of major equity indices.

The difference this time is how directly ordinary savers are exposed, through the pension funds and workplace schemes that quietly rode the same rally.

AI isn’t going anywhere, and neither is the demand behind it. But a portfolio that turned into a concentrated AI bet by accident needs to be reassessed on purpose, not after the next Monday like this one.

The argument over how fast AI should advance will keep playing out among the people building it. For everyday investors, the more urgent task is working out exactly how exposed their own portfolio already is, and deciding on purpose whether that exposure still makes sense.

Reviewing that exposure doesn’t require predicting where AI development goes from here, It requires an honest look at how a portfolio got built, and whether the concentration inside it was ever a deliberate decision.

Nobody needs to predict the next twist in this debate to do that work, they just need to look.

Copper Overtakes Iron Ore, Tom Wickenden, Betashares extract

• The Australian resources sector has returned more than 40% over the past 12 months, despite the absence of a Chinese development boom and a sustained surge in iron ore prices.
• The shift reflects the growing contribution of copper and gold to Australian miners’ earnings. Betashares analysis of 42 Australian-listed materials companies found that copper accounted for 34.4% of FY26 earnings, narrowly ahead of iron ore at 33.4%, measured on the ASX-listed, free-float share of earnings. Gold contributed a further 19.7%.
• Together, copper and gold now account for around 54% of Australian materials-sector earnings. The analysis suggests the sector is becoming less dependent on Chinese property and infrastructure investment and more exposed to structural demand from artificial intelligence, electrification and the global energy transition.
• Critical minerals and energy-transition metal ETFs have also been topical, attracting approximately $436 million in year-to-date net flows and growing to around $1.76 billion in FUM by the end of August 2026. 

For the first time, copper has overtaken iron ore as the largest contributor to earnings across Australian-listed materials companies measured by their free-float. Copper now accounts for 34.4% of earnings, compared with 33.4% for iron ore.

Gold adds a further 19.7%, so copper and gold together now account for around 54% of the sector’s earnings. That is a significant change in the composition of the market.

The recent resources rally has been driven by more than just iron ore. Copper is benefiting from the enormous material requirements of AI data centres, grid investment and electrification, while gold producers have earned through a much higher gold price environment than in previous years.

This is a positive development for Australian investors because it means the market has greater exposure to structural global growth themes and less reliance on a single country’s property cycle.

That does not mean the sector is immune to commodity-price volatility, but it does mean the Australian market is becoming more diverse, with copper and gold providing important sources of earnings growth alongside the traditional iron ore exposure.

Corporate news in Australia:

• FleetPartners ((FPR)) has advanced SG Fleet ((SGF)), Orix and a Sumitomo-led consortium to further due diligence after all three increased their takeover offers, while Element has withdrawn from the auction
• Healthscope’s lenders have selected a Calvary Health Care-led consortium to acquire and divide the private hospital operator’s 25 hospitals following its receivership
• Coronis has reportedly offered around $20m for The Agency Group Australia’s ((AU1)) 5,481-property rental book, while The Agency is separately facing a whole-of-company takeover bid from Aura
• Brookfield has completed exclusive due diligence on its $3.6bn takeover proposal for Reliance Worldwide ((RWC)) and is expected to move towards a binding offer, while Reliance has commenced a go-shop process seeking superior proposals
• Firmus Technologies is reportedly pitching an IPO of up to $7bn at a valuation of around $50bn
• Minerals 260 ((MI6)) is seeking to raise $250m to advance its Bullabulling gold project in Western Australia, with Argonaut, Bell Potter and Euroz Hartleys leading the raising

On the calendar today:

-NZ Aug Card spending

-CH Aug Retail sales, Industrial prod’n & Unemployment

-EZ ECB’s Cipollone speaks in Frankfurt

-EZ ECB’s Reinesch speaks in Luxembourg

-EZ July Trade Bal

-EZ Sep ZEW

-UK July Earnings

-UK July Unemployment

-US ADP weekly employment change

-AUCKLAND INTERNATIONAL AIRPORT LIMITED ((AIA)) Qtrly update

-DATA#3 LIMITED. ((DTL)) ex-div 18.25c (100%)

-DURATEC LIMITED ((DUR)) ex-div 2.50c (100%)

-EVOLUTION MINING LIMITED ((EVN)) investor briefing 15-17 Sept

-FIREFLY METALS LIMITED ((FFM)) FY26 earnings report

-FOCUS MINERALS LIMITED ((FML)) ex-div 8.00c (100%)

-GUZMAN Y GOMEZ LIMITED ((GYG)) ex-div 14.40c (100%)

-GUZMAN Y GOMEZ LIMITED ((GYG)) ex-div 26.20c (100%)

-JAMES HARDIE INDUSTRIES PLC ((JHX)) investor briefing

-LOVISA HOLDINGS LIMITED ((LOV)) ex-div 33.00c (50%)

-NEUREN PHARMACEUTICALS LIMITED ((NEU)) ex-div 15.00c (100%)

-NEW HOPE CORPORATION LIMITED ((NHC)) FY26 earnings report

-PLATO INCOME MAXIMISER LIMITED ((PL8)) ex-div 0.55c (100%)

-QANTAS AIRWAYS LIMITED ((QAN)) ex-div 19.80c (100%)

-RED HILL MINERALS LIMITED ((RHI)) ex-div 10.80c (100%)

-RAMELIUS RESOURCES LIMITED ((RMS)) ex-div 3.00c (100%)

-SPHERIA EMERGING COS. LIMITED ((SEC)) ex-div 1.10c (100%)

-WESTGOLD RESOURCES LIMITED ((WGX)) ex-div 10.00c (100%)

-WHITEFIELD INCOME LIMITED ((WHI)) ex-div 0.88c (100%)

FNArena’s four-weekly calendar: https://fnarena.com/index.php/financial-news/calendar/

The Australian share market over the past thirty days…

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