Chapter 1: What is the main topic discussed in this episode?
A listener production.
Chapter 2: What is causing stocks to fall this week?
Stocks fall on Iran peace deal doubts. Local shares set to drop too. And the astonishing rise of semiconductor stocks. Good morning, I'm James Gruber. And I'm Gillian Bowen. It's Friday the 8th of May and this is the morning edition of the ComSec Market Update.
Well, it's the end of the week, so I'm back here on the podcast with James. I pop up on a Monday and a Friday morning to bookend the week. And hello to anyone who is new to our podcast. It's great to have you here listening along to all the market action. And it's been another big week of corporate earnings out of the US, which has played a
Chapter 3: How are semiconductor stocks performing recently?
Thursday's action there has seen uncertainty over the Middle East conflict come back into play. What's going on? Well, it appears the US and Iran remain at loggerheads over the path to peace. Information has been filtering through About the two sides working towards a limited and temporary halt to the war, that draft framework has three stages.
So formally ending the war, resolving the blockade of the Strait of Hormuz and then launching a 30-day window for negotiations on a broader agreement. But James, we're not there yet.
Yeah, well, the Wall Street Journal is reporting some fresh reaction to this latest plan from Iran. Iran is describing the plan as unrealistic, and it says it won't allow the opening of the strait and for the US to exit the conflict without any reparations. A reminder, the ceasefire was announced back in April 7. And so, as you'd expect, volatility is back for stocks and oil prices.
Okay, well, with that in mind, what's on the cards for our market when it opens in a few hours' time?
Well, shortly after 6am this morning, the ASX 200 futures were pointing to a drop of 1.5% at the open to $8,766. That's a pretty big fall given what's happened overseas. Earnings reports from Macquarie and others will have some part to play in how the day on markets unfolds, as well as any further murmurings out of the Middle East.
Well, and yesterday, so Thursday, the ASX 200 did finish in positive territory and that marks two days in a row of gains. The market gained 85 points or 1% to 8,878 and crossed above its 200-day moving average. So seven of the 11 sectors rose, led by rally in miners, which were up 3.7%, but energy lagged on softer oil prices down almost 3%.
James, on oil prices, let's get an update on that now and other commodities, because there's been some movements.
It has. Oil prices were pretty volatile during the session after a report said Iran would not allow the US to reopen the Strait of Hormuz with an unrealistic plan. Brent crude futures settled down 1.2% to just above US$100 a barrel. Base metal prices were slightly lower on Thursday as investors weighed the latest developments in Iran.
Copper futures slipped 0.1% while aluminium futures fell 0.5%. Gold futures rose for a third consecutive session on Thursday on bargain hunting in hopes for a Middle East deal. The futures settled up 0.5% to US$4,711 an ounce. Meanwhile, iron ore futures edged up 0.1% to 110.95 US dollars a tonne.
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Chapter 4: What impact do Middle East negotiations have on global markets?
Datadog surged 30%, while Peers CrowdStrike and Palo Alto Networks added 8% and 7%, respectively. Whirlpool slumped almost 13% after the home appliance maker missed first quarter sales estimates and suspended its dividend. In U.S.
economic news, data showed the number of Americans filing claims for unemployment benefits rose less than expected last week amid low layoffs that are helping anchor the labor market. Initial claims for state unemployment benefits rose 10,000 to a seasonally adjusted 200,000 for the week ended May 2nd. Meantime, U.S.
government bond yields advanced in choppy trading on Thursday, reversing earlier declines as oil prices recovered during the day. The U.S. 10-year Treasury yield was three points higher to 4.38%, while the U.S. 2-year Treasury yield was up four points to 3.91%.
Okay, let's turn to European markets. The continent-wide FTSE Euro First 300 index ended 1.1% lower, while the UK FTSE 100 fell 1.6%. So European share markets slipping on Thursday after a steep rally in the previous session as investors there were also assessing progress towards a US-Iran peace deal. Spirits group Campari tumbled 15% after first quarter revenue missed expectations.
Piers Diageo and Pernod Ricard fell more than 2% each. Defence stocks shed 2.7% with Rheinmetall down 6.9% after the German group reported first quarter results and said it had submitted a bid to buy German naval yards Kiel. Consumer brands company Henkel rose 3.3% after meeting first quarter sales expectations. Okay, let's take a look at what's on the watch list.
In Australia, there are earnings updates from Macquarie Bank, QBE, REA and News Corp. And I will mention the federal budget is next week. Tuesday night, we'll get confirmation from the Treasurer on the government's plans. During the day on Tuesday, there'll also be an update on consumer sentiment and business confidence. So quite a setup on the state of play.
Back to today, though, in the US on Friday, unemployment data for April will be released with 4.3% tipped. It's time for our one more thing before we go. So, James, how are you rounding out the week?
Gil, the astonishing rise of semiconductor stocks has started to capture headlines. Just before ChatGPT was released in October 2022, the market capitalisation of stocks in the semiconductor sector accounted for 6% of the total market value of the S&P 500. Today, it's 22% and rising. And some are comparing the rise of technology stocks today to 1999.
So the top 10 Nasdaq stocks are up an average 784% over the past year. That tops what the top 10 Nasdaq names did in 1999. Some crazy statistics to finish the week, Gil.
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