Australian shares closed flat on Tuesday as strength in energy and financials offset a sharp sell-off in the technology sector amid global worries over inflated artificial-intelligence valuations.

The S&P/ASX 200 Index was little changed to close at 8,783.90.

The energy and financials sectors each gained past 1%, but information technology stocks sank over 4%, tracking losses for US-listed peers over the previous trading session and reflecting concerns over competition from China.

Overnight in the US, the Nasdaq Composite fell 0.4%, the S&P 500 lost 0.1%, while the Dow Jones added 0.4%.

In economic news, the International Monetary Fund lowered Australia's gross domestic product growth estimate for 2027 to 1.6% from 1.7%, saying the global economy could soon "test the limits" of resilience amid high borrowing costs.

Meanwhile, minutes of the Reserve Bank of Australia's latest policy meeting showed the board was concerned that delaying further action could fuel inflation expectations.

The ANZ-Roy Morgan Australian Consumer Confidence index rose 0.9 points last week to 68 points, partly reversing a decline in the prior week that followed the central bank's decision to increase the cash rate to 4.6%.

In corporate news, biotechnology firm Identifai Genetics (ASX:ID1) made its trading debut on the Australian bourse and ended the day 25% higher. The company is targeting the US as the first market for the commercialization of its Windrose prenatal genetic screening platform.

Arena REIT (ASX:ARF) said Edge Early Learning's administrator struck deals with six parties to sell 22 additional centers, including the remaining seven Edge-operated centers at Arena-owned properties. Its shares closed nearly 3% higher.

Electro Optic Systems Holdings (ASX:EOS) closed 6% lower even after its MARSS unit secured a contract worth 370 million pounds sterling to supply a counter-drone defense system to Kuwait.