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Chapter 1: What is the main topic discussed in this episode?
A listener production.
The Dow reaches record highs while tech holds back other indices. The ASX expected to rise at the open. And what's behind the recent tumble in iron ore prices? Hello, good morning. I'm James Gruber.
Chapter 2: What recent developments are impacting the ASX and US markets?
It's Friday the 5th of June and this is the morning edition of the ComSec Market Update. Well, Israel and Lebanon reached a ceasefire deal overnight and markets welcomed the news. They're hoping it may lay the groundwork for a broader Iran peace deal.
The news sent the Dow to record highs, but other indices were more subdued, dragged down by tech stocks, with the high-flying chipmakers getting a reality check after Broadcom's results after market yesterday. Let's take a deeper look at what's happened with Aussie futures, commodities and currencies. The ASX is set to open higher with index futures up 0.4%.
As for the ASX 200 yesterday, it ended down 1.1% at $8,686, its lowest close in a week. Miners snapped a four-day rally, dropping 3.3%. mainly due to concerns about iron ore prices impacting the likes of BHP and Rio Tinto.
Chapter 3: What factors are contributing to the recent tumble in iron ore prices?
Today, there is expected to be more pressure on the large cap resource stocks, given further falls in iron ore prices overnight. On those commodity markets, global oil prices fell on hopes for an Iran deal following the Lebanon-Israel ceasefire. Brent crude futures settled down 2.6% at US$95.23 a barrel. Base metal prices were mixed on Thursday.
Copper futures advanced 0.5% on Iran peace deal optimism, while aluminium futures dropped 0.7% on profit-taking. Gold futures climbed as the Iran news pressured the US dollar, aiding the yellow metal. The futures settled 1.2% higher on at US$4,503 an ounce.
Iron ore futures tumbled 1.7% on continued concerns about demand from China as steel margins shrink and steel consumption weakens amid high input costs. Let's take a look at currencies now. They were mixed against the US dollar. The euro edged up 0.1% to 1.1613 US dollars.
Chapter 4: How is the Dow reaching record highs affecting other indices?
The Japanese yen was steady at 160.01 yen, and the Aussie dollar lifted 0.1% to 71.35 US cents. Let's head to Wall Street. The Dow Jones Index finished up 1.7%, the S&P 500 was 0.4% higher, and the NASDAQ lost 0.1%. A closer look at the trading day there. U.S. share markets advanced mostly on Thursday as progress towards ending the Iran war buoyed investor sentiment.
while disappointing results from Broadcom led a chip sell-off that held back the Nasdaq. Among the 11 major sectors of the S&P 500, healthcare and financial stocks boasted the biggest percentage gains, while technology shares were down the most.
Chipmaker Broadcom missed revenue expectations, sending its shares tumbling 13% and casting a pull over the AI frenzy, which has sent chip stocks up nearly 95% so far this year. Fellow chipmaker Marvel Technology gained 5%, while Advanced Micro Devices, Micron Technology and Qualcomm fell between 3% and 8.6%.
The healthcare sector got a boost from UnitedHealth, which jumped 5.2% after a broker upgrade. The financial index rebounded despite Blackstone becoming the latest asset manager to cap withdrawals from its flagship private credit fund following a rise in redemption requests. That's because Blackstone indicated that redemptions at its funds are slowing.
The company's shares jumped 8.4% on the news. U.S. government bond yields were lower on Thursday after labor market data was softer than expected, while oil prices tumbled on renewed optimism a deal to end the Iran war could be reached. The Labor Department said weekly initial jobless claims rose 13,000 to a seasonally adjusted 225,000, topping estimates. The U.S.
10-year Treasury yield was down 2 points to 4.47%, while the U.S. 2-year Treasury yield lost 4 points to 4.05%. To the European markets, the continent-wide FTSE Euro First 300 index ended up 0.5% and the UK FTSE 100 rose 0.3%. Europe rose as oil prices eased. Low investors remained cautious on whether the latest developments in the Middle East would lead to a durable peace deal.
Software and IT stocks extended a recovery from a sharp sell-off over AI disruption concerns. Capgemini, Nemeshcheck, Dashault Systems, SAP, and Sopra Stereo rose between 6.4% and 8.8%. Chip stocks eased, with Infinia Technologies and STMicroelectronics down 3.4% and 2.6% respectively, after US chipmaker Broadcom reported lower-than-expected second-quarter revenue.
Shares of British financial firms with exposure to China fell after Chinese media reported mainland residents were facing tighter restrictions on opening offshore accounts at major Hong Kong banks. HSBC, Standard Chartered and Prudential declined between 1.8% and 7.6%. It's now time for the watchlist.
In the US, the unemployment rate for May will be released, as well as non-farm payrolls from last month. And now it's time for our One More Thing segment. I'm told yesterday's One More Thing was a little bit somber, so today's segment is a much lighter one to finish the week. Now, you'd expect the largest companies in the U.S. to be highly professional outfits.
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