ASX 200 Slips as NextDC Plunges 40% on Power Delay, Erasing Early Gains Despite Strong Lead From Wall Street

SYDNEY — Australian shares edged lower on Wednesday afternoon, giving up early gains as a dramatic plunge in data center operator NextDC dragged on technology and engineering stocks, offsetting a positive lead from Wall Street.

The benchmark S&P/ASX 200 index was down 9.4 points, or 0.11%, at 8,807.5 as of 2:18 p.m. Sydney time. The index had climbed as high as 8,841.9 earlier in the session before slipping to a low of 8,795.9.

The market had been expected to open higher. Futures pointed to a gain of about 0.4% before the open, after U.S. stocks finished mostly higher overnight. The Dow Jones Industrial Average rose 1% to 52,495, and the S&P 500 gained 0.3% to 7,712.

The decline extended Tuesday's weakness, when the ASX 200 fell 0.3%, led by a steeper drop in National Australia Bank shares after the lender announced sweeping job cuts.

NextDC plunges

NextDC shares tumbled more than 40% after resuming trading following a halt that began on Friday. The stock fell as low as $5.52 in early trade.

The sharp drop followed news of a delay in securing power for its data centers, a key concern for investors given the large amounts of electricity required to run facilities that support cloud computing and artificial intelligence.

NextDC has been one of the Australian market's most closely watched plays on the AI and data center boom, and the steep fall underscored investor sensitivity to any setbacks in the sector's rapid expansion.

The news also weighed on engineering and electrical contracting companies that have benefited from data center construction. SKS Technologies Group fell 10.8%, while Southern Cross Electrical Engineering dropped 9.9%. Both stocks had posted strong gains earlier in the year on expectations of continued data center demand.

Energy and gold under pressure

Energy stocks faced pressure after oil prices fell overnight. Producers such as Santos and Beach Energy were expected to trade weaker.

Gold miners, including Northern Star Resources and Westgold Resources, were also expected to have a subdued session after the gold price declined overnight.

James Hardie gains

On the positive side, building materials company James Hardie Industries was among the top gainers in the ASX 200, rising about 2.9% to $37.51. The stock is up about 21% this year.

Guzman y Gomez block trade

Shares in fast-food chain Guzman y Gomez were in focus after investment firm TDM sold about 89.5 million Australian dollars worth of shares in a block trade before the market opened.

The shares were priced at $25.55 each, a 4.3% discount to the previous close. It was the largest block trade in the company's shares since it listed on the ASX in June 2024 at $22 a share.

Guzman y Gomez shares are up about 23% this year, after the company exited its U.S. business and reported a nearly 30% increase in fiscal 2026 net profit.

Sigma Healthcare in focus

Investors were also watching Sigma Healthcare, the owner of Chemist Warehouse, which was scheduled to provide a trading update at its annual general meeting on Wednesday.

RBA in focus

Investors were also awaiting remarks from Reserve Bank of Australia officials for clues about the outlook for interest rates.

The central bank has raised rates several times this year to combat stubborn inflation, pushing its cash rate to a 15-year high. Markets are watching closely for signals about whether another increase could come at its next policy meeting in November.

Australian dollar

The Australian dollar rose 0.33% to 70.25 U.S. cents.

Weekly context

Australian shares have been volatile in recent weeks as investors weighed higher interest rates, global bond yields, commodity price swings and concerns about artificial intelligence spending.

The ASX 200 remains below its record highs, with gains in banks and miners at times offset by weakness in technology stocks.

What to watch

Investors will be watching for further details from NextDC on the impact of its power delay, as well as any comments from the Reserve Bank about interest rates.

Commodity prices, particularly iron ore, oil and gold, will also remain key drivers for the Australian market, given the heavy weighting of resources companies in the ASX 200.

The Australian market closes at 4 p.m. Sydney time.