But it was in the U.S. technology sector, which has been even hotter than metals and energy over the past 12-months, that something bigger could be brewing.
For the first time since it took flight, the artificial intelligence (AI) rocket is being seriously questioned, with the most pertinent issues raised by the investment world’s biggest bear, Jeremy Grantham.
A legend in the world of serious investing, as opposed to speculation and gambling, 87 year-old Grantham has been routinely rubbished for his forecasts of stock market bubbles and crashes which have been as right as often as they have been wrong.
He could be wrong again with his latest gloomy prediction of a great reckoning to follow the bursting of the AI bubble, which he likens to the U.S. railway bubble of the 19th century, which turned into a spectacular financial markets train wreck.
What really worries Boston-based Grantham is that trillions of dollars are being invested in building massive data centres without proof that the world will pay the price required by AI operators to justify the cost.
The switch from investing equity in the AI pie to raising debt is what drew billionaire Granthem out of his cave to roar a warning that new technology will soon collide with old fashioned debt and overblown optimism.
Australia is a small-time player in AI but the rush to invest in stocks such as Nvidia, Alphabet, Meta and SpaceX, has drained cash from the local market which has also been rattled by proposed new tax laws and falling property prices.
The risk for everyone, whether invested in the stock market or not, is that a “sell Australia” trend appears to be developing with the A-dollar the best measure of that event with this week’s fall to US68.9c a sign of international concern about the country.
Banks, more than miners, could be next in line for a savaging after Judo, a banking minnow, suffered a 37% share price fall after confirming a spate of problem business loans with investors wondering how many other cockroaches there might be in the books of the big banking boys.
High and rising interest rates are adding to the sour mood of the market which this week saw the gold index plunge by 12%, the broad-based metal index fall by 9.8% and the all-ordinaries fall by 2%.
The ugly week also saw two mine closures. A garnet project near Kalbarri on the WA west coast which Mineral Resources had been trying to salvage was mothballed (again), and Lotus Resources stopped work at its Kayelekera uranium mine in Malawi after the global sulphur shortage forced a delay in commissioning its sulphuric acid plant.
Gold, which has been the most popular punt in Australia for the past three years, is retracing its boom-time rise, falling this week through the US$4000 an ounce mark for the first time since last November to last trade at around US$3997/oz, down 6% over the week and 12% over the month.
Silver has fall further and faster, dipping to US$56.90/oz, down 13% over the week and 26% over the month.
Oil, which soared with the Persian Gulf war, has echoed the silver crash, down 9% this week to US$72 a barrel, roughly where it was when the shooting started, and down 25% over the month.
Copper, the star of the past few weeks, slumped back through the US$6 pound mark to briefly trade at US$5.91/lb before climbing back to US$5.99/lb, down US36c for the week and US65c from the all-time high of US$6.65/lb reached just three weeks ago.
Multiple factors drove copper lower but this week’s fall could be related to concern that the data centre boom will soon run out of puff (and funding) which will hit demand for the copper consumed in the cabling and computers used in the centres.
Copper stocks were buffeted by the fall in the price of the metal, led by Sandfire, down $1.80 to $18.98 and Capstone which lost $1.79 to $13.20. Aeris was 4c weaker at 35c but got a boost from Bell Potter which refreshed a buy tip and price target of 90c.
Good news was hard to find this week but could be unearthed with a bit of digging, a sign that the new financial year could be a time for stock picking rather than following a sector trend.
Benz Mining was the outstanding performer in a down week, delivering a 61c (32%) rise to $2.53 after reporting that its Glenburgh gold project inland from Carnarvon in WA could become a 10-to-12 million ounce monster.
BCI Minerals was another stand-out performer if only because almost everything else was heading south. The emerging salt and potash producer added 7.5c (21%) to 42c thanks to a burst of publicity about its Mardie project in WA which is 81% complete after a painfully long and expensive construction phase. Shaw and Partners reckon BCI will rise to 75c.
Astron, a Victoria-based mineral sands developer, was a third stock which delivered a rare win for investors this week, rising by 2c to 58c but with investment house Morgans tipping a continued rise to a target of 90c as a final investment decision looms for its flagship Donald projects.
Elementos also swam against the outgoing tide with a rise of 2.5c to 40c thanks to interest in its Oropesa tin project in Spain and a steep rise in the tin price which peaked at US$58,000 a tonne earlier this month before easing to a still hugely profitable US$51,154/t.
Australian Rare Earths was a winner, just, with a 1c rise to 12c after releasing a positive pre-feasibility study into its Koppamurra project in South Australia.
Gold stocks, apart from Benz, had a tough week with leaders Northern Star down 66c to $19.88 and Evolution down 69c at $11.82.
Encouraging discovery and development news could not stave off the sweeping correction flowing through the gold sector.
Minerals 260 lost 10c to 84c despite reporting more encouraging drill results from its Bullabulling project in WA with a best hit of 20 metres at 3.4 grams of gold a tonne from a depth of 93m.
Ballard Mining also suffered a sell-off, falling by 6c to 65c despite reporting a new drill result of 23.6g over 3.4m from a depth of 689m at its Baldock project in WA.
Other gold moves, all down, included Gorilla Gold, down 2c to 32c despite reporting a new shallow gold discovery at its Lady Margaret project in WA, and Polymetals, down, 8c to 73c despite confirming the presence of high grade silver and gold in its Endeavour mine in NSW.
Iluka, which is changing from a titanium sands miner into a rare earth stock, slipped 52c lower to $7.28 but was included in an upbeat comment on rare earths by investment bank UBS after the miner reported a maiden offtake deal with a major (but unnamed) car maker.
Aldoro was another rare earth newsmaker, reporting a record result of 542.9 metres at 1.4% total rare earth oxides from drilling at its Kameelburg project in Namibia. Investors were unimpressed, marking Aldoro down by 2.5c to 36c.
Other news and market moves in a forgettable week included:
- Nickel Industries down 6c to 90c after announcing a new US$169 million investment in an Indonesian nickel project.
- Iron Bear, a mining minnow rose to 8c then fell back to where it started at 7.2c after announcing a fresh investment of US$2 million by Brazilian mining giant Vale in a WA iron ore joint venture, and
- Killi, the new iron ore player, slipped 1c lower to 20c after announcing a maiden drilling program on its Lodestone project in WA.
