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Chapter 1: What is the main topic discussed in this episode?
A listener production.
Wall Street resets its highs after more corporate earnings. And our share market is expected to open lower. While the US and Iran appear to be talking about more talking. Good morning, I'm James Gruber. And I'm Gillian Bowen.
Chapter 2: What recent events contributed to Wall Street's record highs?
It's Monday the 4th of May and this is the morning edition of the ComSec Market Update.
Well, it was a big week of corporate earnings in the US, and it'll be the same again this week, actually. The S&P 500 and NASDAQ pushed through fresh record highs on Friday. Tech stocks the big helping hand there.
Chapter 3: How is the Australian share market expected to react?
Both indexes have now lodged their sixth consecutive weekly advances. It's the longest run of weekly gains since October 2024.
Now, when we last spoke, we were previewing the release of Apple's results after the closing bell. Investors had a chance to react to those during Friday's session on Wall Street, and they flocked to the iPhone maker after its better-than-expected quarterly results and optimistic outlook.
Chapter 4: What are the latest developments in US-Iran negotiations?
I'll go more deeply into that trading session shortly, but it's all about corporate earnings at the moment. And as you said, it's not over. More than 100 companies in the S&P 500 are set to post results this week.
So we'll try to cover as much as we can in the podcast that we have for this week. We also can't ignore the Middle East war. The latest developments are reports that Iran has submitted a fresh proposal for negotiations with Washington. And a short time ago, Reuters was reporting that Iran has now indicated negotiations that it has received a US response.
It's unclear, though, what that response says. On Saturday, the US president wrote on social media that Iran, quote, "...has not paid a big enough price for what they have done to humanity." The two countries suspended their bombing campaign four weeks ago. The blockade of the Strait of Hormuz also remains. And last week, Brent crude futures topped $120 a barrel.
So that was a four-year high before pulling back a bit. So it'll be interesting to see what investors make of these further developments and any more that may come this week. So James, how is the Australian share market looking when it opens up?
Well, when the ASX 200 futures were last trading, they were down 23 points or 0.3% to 8,727. While there are some banks reporting results this week, investors are going to be watching the RBA's interest rate decision tomorrow afternoon. Expectations are for a 25 basis point rise to take the official cash rate to 4.35%. If that happens, it'll be the third rate rise this year.
Okay. And a reminder on Friday, the ASX 200 closed up. It gained 64 points or 0.74% to 8,729.8. The ASX snapping an eight-day losing streak, tracking that strong lead from Wall Street. 10 out of the 11 sectors advanced, led by miners, which were up 2.1%. So let's then now go through commodities. James, what's the latest there?
Well, oil prices dived, as we've indicated on Friday, following that fresh Iran proposal for negotiations with the U.S., a move that could improve prospects for breaking the impasse over peace talks. Brent crude futures settled down 2% to $108.17 a barrel. Base metal prices were higher. Copper futures ended higher.
up 0.1%, while aluminium futures climbed 1.3% on supply concerns amid the US-Iran standoff. Gold futures inched up on Friday, reversing earlier losses of more than 1% on hopes for a breakthrough to end the Iran war. futures settled 0.3% higher to US$4,645 an ounce. Meanwhile, iron ore futures were also modestly higher by 0.6% to US$107.86 a tonne.
Okay, so if we have a look at currencies, they were higher against the US dollar. One Australian dollar is buying 72.19 US cents. The euro is worth 1.1747 US dollars, while one US dollar is buying 156.74 Japanese yen.
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Chapter 5: How did Apple's quarterly results impact investor sentiment?
Okay, it's time to go a little deeper into the results of Friday's session on overseas markets. So Wall Street reset its record highs, as we've said, but here are the figures. On Friday, the Dow Jones Index finished down 0.3%. The S&P 500 Index was up 0.3%, and the Nasdaq Index was 0.9% higher. James, we've spoken about Apple, but also what else is going on?
Well, those Apple shares advanced 3.3%, first of all, after the company provided a solid sales forecast. It helped drive the S&P 500 and NASDAQ to those record closing highs and turned the page on their biggest monthly percentage gains in years. Software companies climbed after Atlassian lifted its annual forecast. The Australian-based enterprise software maker surged 30%.
Peers, Salesforce, and ServiceNow added 4.1% and 3.2% respectively. Roblox fell 18% following a cut in its annual bookings forecast. Reddit jumped 13% after an upbeat quarterly revenue forecast. Meanwhile, ExxonMobil's quarterly profit was hit by Middle East disruptions, while Chevron beat earnings expectations, but overall profit marked its lowest level in five years.
The supermajors dipped 1% and 1.4% respectively. Meanwhile, U.S. government bond yields fell on Friday alongside oil prices as traders weighed prospects for a deal to end the Iran war. The U.S. 10-year treasury yield fell 1.0% to 4.37%, while the U.S. 2-year treasury yield also lost 1.0% to 3.88%.
And I'll point out that European markets were closed on Friday for Labor Day. Let's take a look at what's on the watch list in Australia. As we've said, it's a big week with the RBA to hand down its interest rates decision tomorrow afternoon. So a quarter of a percent hike is on the cards. And today there'll also be half-year earnings results from NAB.
In the US, earnings season continues with Palantir and Pinterest reporting today. There's also a deluge of economic data from the US during the week, most notably with key unemployment data on Friday ā which is tipped to remain at 4.3%.
Okay, it's time for our one more thing before we go. So, James, what do you have?
Well, Gil, America has been in a long and strong bull market since 2009, and one of the key things driving that has been companies buying back their stock. They've done it to the tune of 2% to 3% of the total market capitalization of the S&P 500 in recent years. What buybacks do is they increase demand for shares.
That natural demand for shares, which has led to the higher market prices, is going to be tested over the next 12 months with some massive IPOs in the pipeline, including SpaceX, Anthropic, and OpenAI. If listed, these companies will be selling shares to the public en masse, which is expected to overwhelm any buybacks the rest of the S&P 500 might do.
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