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Chapter 1: What is the main topic discussed in this episode?
a listener production.
Stocks sink on renewed Middle East tensions. Oil rises while other commodities plunge. And why gold has become the favourite asset of central banks. Hello, good morning. I'm James Gruber.
Chapter 2: What caused the recent decline in stock markets?
It's Thursday, the 11th of June, and this is the morning edition of the ComSec Market Update. So yesterday, Iran hit a US helicopter and America retaliated with strikes of their own. And today, President Donald Trump threatened to hit Iran, quote, very hard. That rhetoric didn't help already shaky stock markets, and it sent oil prices higher once again.
Chapter 3: How are oil prices affected by geopolitical tensions?
The negative news offset a milder-than-expected inflation print out of the US. Let's now take a deeper look at what's happened with Aussie futures, commodities and currencies. The ASX is poised to open lower, with index futures down 0.7%.
Chapter 4: Why is gold becoming the preferred asset for central banks?
As for the ASX 200 yesterday, it snapped a three-day losing streak, rising 0.6% to $8,653 thanks to gains from banks and consumer stocks. Insurance broker Steadfast was the top gainer on the benchmark as it surged more than 35% after receiving a takeover bid of $7.7 billion from a U.S. consortium. Today looks like it might be an ugly day for the ASX given the overnight market action.
On commodity markets, global oil prices climbed after President Trump said the U.S. is going to attack Iran very hard if no peace deal is finalized. And as market data showed, a larger than expected drawdown in U.S. crude inventories. Brent crude futures settled up 2% at $93.1 a barrel.
Base metal prices fell as intensifying fighting in the Middle East increased concerns about global economic growth. Copper futures sank to their lowest level in three weeks, down 0.8%, while aluminium futures declined 2.6%. Gold futures plunged as fears of a wider US-backed war with Iran stoked concerns about interest rate hikes to curb rising inflation.
The futures settled 3.6% lower at US$4,133 an ounce. Iron ore futures were steady, finishing up 0.3% at US$101.7 a tonne. Let's now take a look at currencies. They were mixed against the US dollar. The euro was flat at 1.1546 US dollars. The Japanese yen dropped 0.1% to 160.50 yen, and the Aussie dollar dipped 0.3% to 70.09 US cents. Let's now head to Wall Street.
The Dow Jones Index finished down 1.9%, the S&P 500 dropped 1.6%, and the Nasdaq lost 2%. A closer look at the trading day there. U.S. share markets extended declines as technology stocks remained under pressure and renewed tensions between the United States and Iran overshadowed a tame inflation reading.
Technology and AI stocks bore the brunt of the sell-off as investors priced in a tighter monetary policy and worried about stretched valuations in the sector. Nvidia, Micron and Broadcom fell between 3.7% and 5.1%, extending losses after a brief rebound on Monday. The S&P 500 tech sector index was down 2.3%.
Supermicro Computer tumbled 28% after announcing plans to raise $7 billion through a series of equity-linked financing transactions to fund component purchases for its growing AI server demand. Among other movers, shares of trucking companies XPO, JB Hunt and Old Dominion fell between 2.2% and 5.1% after Amazon announced expansion of its less-than-truckload freight services in the U.S.
The industrial sector slid 3.4%. Three of the 11 major S&P 500 sectors moved higher, with energy shares leading gains as oil prices climbed. Meantime, U.S. government bond yields were little changed after data showed core consumer price inflation eased more than the economists had expected last month.
The consumer price index rose 0.5% in May, putting the annual inflation rate at 4.2%, the highest level since April 2023 and above the 3.8% reading from April. Stripping out volatile food and energy prices, the core CPI rose 0.2% for the month and 2.9% from a year ago, both below estimates.
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Chapter 5: What are the latest trends in the Australian stock market?
In Australia, Melbourne Institute's survey of inflation expectations is out. In the US, the PPI for May and weekly jobless claims are released. And in Europe, the central bank will hand out its interest rate decision with rates expected to be kept steady at 2.15%. Now it's time for our One More Thing segment.
Gold has become the world's largest reserve asset, moving ahead of US government bonds, according to a European Central Bank report. Gold accounted for 27% of global central bank reserve assets at the end of 2025, compared to US Treasury's share of 22%. We'll have to wait and see if that's changed given the fall in gold prices since the end of last year.
And if you want to know more about the reasons behind gold's lackluster performance this year, I'll have a video about it on our socials this afternoon. And there's also an article on the topic on our website. And that's it for today. The CompSec 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.
This podcast is prepared, approved and distributed in Australia by Commonwealth Securities Limited, ABN 60067254399, AFSL 238814. The information does not take into consideration your objectives, financial situation or needs. Consider the appropriateness of the information before acting and if necessary, seek appropriate professional advice.
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