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Chapter 1: What is the main topic discussed in this episode?
a listener production. Tech shares drive the S&P 500 to another record high. Commodities across the board, including oil, climb, and a closer look at the extraordinary rise and rise of Nvidia. Hello, good morning. I'm James Gruber. It's Wednesday, the 3rd of June, and this is the morning edition of the ComSec Market Update.
Chapter 2: What factors are driving the S&P 500 to record highs?
Well, there are two big forces that are continuing to pull in different directions on share markets. The first is AI and investors' zeal for that sector. The second is the Iran conflict. On AI, Nvidia's CEO came out today and proclaimed Marvel Technology is the next trillion-dollar company. It's currently valued at close to US$250 billion after today's large move, which I'll detail later.
Chapter 3: How is Nvidia impacting the AI market and what are its profit margins?
Jensen Huang, though, is talking his own book, so to speak, because Nvidia recently took a large stake in Marvel. On Iran, news filtered out that Tehran is studying a US proposal to bring the war to a halt, but it hasn't been in contact with the Trump administration for days.
Anyhow, today, the enthusiasm for AI was largely countered by those worries over Middle East tensions, and that led to markets being largely flat to slightly higher. Let's take a deeper look at what's happened with Aussie futures, commodities and currencies. The ASX is poised to open higher, with index futures up 0.4%, a short time after 6am today.
Speaking of the ASX 200, yesterday it recovered from early losses to end little changed. as gains in mining stocks offset weakness in heavyweight banks, while investors remained wary about the durability of the Middle East ceasefire. Today, miners may continue their recent rally given the higher commodity prices overnight.
And on those commodity prices and markets, global oil prices rose to a one-week high as the market waited for news on the Iran war, with Tehran reviewing that proposed agreement with the U.S. to halt the conflict. Brent crude futures settled up more than 1% to $96 US a barrel. Base metal prices were higher on continuing supply concerns.
Copper futures hit over two-week highs, up almost 2%, while aluminium futures were 1.8% higher. Gold futures held steady on Tuesday as market participants focused on developments in the The futures settled 0.3% higher at US$4,520 an ounce. Meantime, iron ore futures were flat, rising 0.1% to US$105.13 a tonne. Let's take a quick look at currencies. They were mixed against the US dollar.
The euro was steady at 1.1629 US dollars. The Japanese yen slipped 0.2% to 159.94 a yen, and the Aussie dollar gained 0.3% to 71.82 US cents. Let's head to Wall Street. The Dow Jones Index finished up 0.5%, the S&P 500 was 0.1% high, and the Nasdaq was flat. A closer look at the trading day there. U.S.
markets were steady as risk appetite driven by AI fervor was counterbalanced by tensions arising from U.S.-Iran talks to reopen the Strait of Hormuz and end the month's long war. Among the 11 major sectors of the S&P 500, utilities were up the most, while communication services suffered the steepest percentage loss.
The semiconductor index advanced almost 2%, while the software and services index, battered in recent months over worries over AI, was off 3.3%. Among stock movers, Hewlett-Packard jumped 7% after the AI server maker pulled forward its long-term financial targets by two years.
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Chapter 4: What are the implications of the Iran conflict on market performance?
In further evidence of AI build-out, Alphabet said it was looking to raise $80 billion in equity offerings, including an investment from Berkshire Hathaway to fund a costly expansion of its AI infrastructure. Its shares slipped 3.8%. Marvel Technologies shares surged 33% after NVIDIA CEO Jensen Huang called the chipmaker the next trillion-dollar company. at the Computex conference in Taipei.
Nvidia invested $2 billion in Marvel in March. A 6% drop in Bitcoin hit cryptocurrency firms. Coinbase was down 4.7%, while Strategy Inc. sank more than 9%. U.S. government bonds dropped after a reading on the labor market showed a jump in job openings and as crude oil prices were little changed after a jump the day prior.
The labor department said that job openings surged $731,000 to $7.62 million by the last day of April, the highest level in two years. The U.S. 10-year Treasury yield fell two points to 4.45%, while the U.S. two-year Treasury yield was one point lower at 4.05%. To the European markets, continent-wide FTSE Euro First 300 index added 0.7% and the UK FTSE 100 advanced 0.3%.
Europe rose on Tuesday as a strong forecast from STMicroelectronics boosted tech shares and investors assessed Eurozone inflation data for signs of the Middle East conflict's impact on the economy. Eurozone inflation accelerated to 3.2% in May from 3% in April, driven by energy and services prices.
Chipmaker STMicroelectronics rose more than 15% to hit its highest level since September 2000 after lifting revenue targets for its data center business, signaling strong demand from the AI boom. Other AI-related stocks such as Infineon and Schneider Electric added 9.5% and 4% respectively. It's now time for the watch list. In Australia, GDP for the March quarter is scheduled today.
CBI economists expect GDP of 0.0% in the first quarter and for the annual rate to decelerate to 2.1% from 2.6% in the fourth quarter. In the US, there are ADP non-farm payrolls and the ISM services PMI, and Broadcom is reporting its results today. In Europe, the PPI is released today, along with the composite PMI. And now it's time for our One More Thing segment.
Today's One More Thing is on NVIDIA, the world's largest company, which we've already talked about extensively today. Anyhow, its net profit margin has surged to a record high of 71%, up from just 12% a decade ago. In simple terms, that means for every $1 of sales, it earns more than 70 cents in net profit.
which is pretty extraordinary, and no other large-cap US company comes close to that profit margin. It goes to show the extent of NVIDIA's pricing power, fueled by its continued dominance in the AI chip market. And that's it for today.
The ComSec Media and Markets team is monitoring developments on today's local trading session, so check out our afternoon episode of the podcast for all the key updates. I'm James Gruber. Have a great day.
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