What just happened?

Breadth was ordinary, though, with 177 stocks lower, 93 higher and 30 flat.

But boy, was there some aggressive selling at the speculative end of the market.

Where to start?

As I’ve been pointing out recently, lithium and uranium have been under pressure. Yesterday felt like capitulation selling. But it wasn’t just those two sectors. The whole junior mining sector has been under the pump lately.

Diggers and Drillers editor James Cooper had an update out for his readers yesterday.

Mining stocks are clearly coming under strain from rising bond yields, a strong US Dollar, and persistent fears of global diesel shortages that threaten to impact operations.

That weakness is broad: uranium, lithium, rare earths, gold, iron ore, and critical minerals have edged lower over the last several months.

And that weakness extends across the full lifecycle, from large-cap miners and developers to small explorers.

But there has been one glimmer of hope this year…

Copper continues to hold firm; up 18% year-to-date, while most of its peers sit in the red.

Now, there are two ways to look at that: either copper is due for a slowdown, as other areas of the resource market make their move…

OR that copper’s resilience is, in fact, a sign of future leadership.

What do I mean?

As I’ve pointed out in the past, stocks or sectors displaying relative strength (in weak markets) often outperform when sentiment lifts.

I tend to think the latter could be true for copper, given that it hasn’t yet experienced a major bullish move, just steady price resilience over the past 12 months.

In terms of the broader commodities complex, though, there are signs of a possible recovery forming towards the end of 2026.

And gold may hold the secret…

I’ll leave the meaty stuff for James’ paying subscribers.

But I can reveal that he waded into the carnage yesterday with a recommendation of a quality company caught up in the panic selling.

If you’d like to check out James’ work, and see what he’s recommending in the current volatility, go here.

Apart from turmoil at the speculative end of the resources sector, there was a late sell-off in AI-related names yesterday. This came on the back of news that another Australian data centre player, AirTrunk, had delayed a planned IPO in Singapore.

Bloomberg reports:

Data center operator AirTrunk is delaying a planned initial public offering of a real estate investment trust in Singapore until next year as higher interest rates and market volatility temper investor demand, according to people familiar with the matter.

The Blackstone Inc.-backed company had been planning to start formally gauging investor interest for the $1.5 billion REIT IPO at the start of October, the people said, asking not to be identified because the information is private.

A planned IPO in Australia by another data center company, Firmus Grid Ltd., collapsed last week. The Nvidia Corp.-backed firm failed to bring in enough demand at the valuation it sought, reflecting growing investor caution about artificial intelligence infrastructure deals that hinge on future earnings.

You might remember that in 2024, Blackstone and the Canada Pension Plan Investment Board acquired AirTrunk for A$24 billion. The planned Singapore IPO was to house four of AirTrunk’s data centres in a REIT structure, but high interest rates mean Blackstone would have to sell at too low a price.

Is this how the AI bubble pops? First at the periphery, then moving towards the core?

I mean, this is news in Australia, but I would imagine the travails of Firmus and AirTrunk barely rate a mention in the US.

They might want to sit up and take notice though.

Yesterday, the data centre players and builders were smashed.

First, the builders:

SKS Technologies Group [ASX:SKS] down 20.5%
Southern Cross Electrical Engineering [ASX:SXE] down 8.8%
MAAS Group Holdings [ASX:MGH] down 6.6% and 50% since Friday
IPD Group [ASX:IPG] down 6.6%

Now, the data centres and data centre adjacent players:

NEXTDC [ASX:NXT] down 7.6%
Megaport [ASX:MP1] down 9.9%
Macquarie Technology Group [ASX:MAQ] down 7.7%
DigiCo Infrastructure REIT [ASX:DGT] down 6.5%

Meanwhile, the market stayed calm and rotated into banks.

Commonwealth Bank – still one of the most expensive banks in the world – was up 2.3%!

Good luck with that safe haven while it lasts…

Apart from relative safety (and I stress the word relative), the reason for the rotation was an interpretation of yesterday’s RBA minutes that a rate rise in November was not a foregone conclusion.

I guess that’s a positive.

But inflation will take a much weaker domestic economy to beat. That’s not going to be good for the banks. But right now, the market is looking ahead one month at a time.

Back to the AI trade, and there are more signs of stress starting to build. Korea’s KOSPI index, which is home to some of the largest memory chip stocks in the world, is selling off again (see below).

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All the signs are there. It’s just a matter of time before the stress moves to the core of the AI system.

US quarterly earnings just kicked off. Earnings growth is expected to be ridiculously strong once again.

But as always, focus on the reaction to the earnings, not the earnings themselves. If prices continue to rally, the game goes on.

If you see a sell-off on good earnings results, that could well be a sign that we are getting closer to the end.

To be clear, I’m not suggesting this would be a sell-everything moment. The AI trade is massively concentrated. The bursting of that bubble could lead to a rotation into many of the companies that have been left behind.

This remains a stock picker’s market.

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