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Chapter 1: What is the main topic discussed in this episode?
A listener production.
Stock surge on fresh claims. A peace deal is coming shortly. Crude oil prices have also plunged. And in Australia, our share market appears to be heading for a strong open. Good morning, I'm James Gruber.
Chapter 2: What factors contributed to the recent stock surge?
And I'm Gillian Bowen. It's Friday the 12th of June and this is the Morning Edition of the ComSec Market Update.
So the US president's social media posts on the Middle East conflict appear to be causing market volatility again. A few hours ago, Donald Trump declared, quote, discussions and final points have been approved by all parties involved. And he goes on to say the time and place of the signing will be announced shortly.
Chapter 3: What impact did cancelled military strikes have on crude oil prices?
He also said he's cancelled the scheduled strikes and bombings against Iran. But we've been here before.
Chapter 4: How is the Australian share market responding to Wall Street's rally?
Well, yes, the details are thin. And as we've seen since mid-March, the US president has repeatedly claimed that a deal with Iran to end the war is close. So until a deal is actually signed and implemented, things are likely to remain uncertain. But regardless, investors on Wall Street reacted positively in afternoon trade with strong gains across the board.
And it appears our share market will follow that strong lead. Aussie futures were up 1.7% shortly after 6am this morning.
And I note that the US President is holding a news conference at the White House as we're recording, so people will be examining what he's saying at the moment very closely. A reminder, yesterday the ASX 200 closed lower. It dropped 0.23% to 8,633 and crossed below its 20-day moving average. Only four of 11 sectors fell, but bank losses weighed on the index while tech lagged.
Energy outperformed on higher oil prices that were around yesterday. Let's move on to commodities because there's been a strong reaction there as well to the breaking news. Oil, James, I know at one point was down to its lowest since April.
That's right.
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Chapter 5: How is the US President's announcement affecting market volatility?
So global oil prices fell on Thursday, US time, after those planned strikes on Iran were cancelled, stoking expectations, as we've been talking about, for a deal to end more than three months of war. Crude prices settled down 2.9% at US$90.38 a barrel. Base metal prices rose on those easing Middle East tensions. Copper futures were 0.2% higher at while aluminium futures climbed 0.4%.
Gold futures were lower before President Trump's announcement. The futures settled down 0.5% to $4,114 an ounce. Meantime, iron ore futures were largely unchanged, dipping 0.1% to $101.60 a tonne.
So if we have a look at currencies, they were higher against the US dollar. One Australian dollar is buying 70.31 US cents. The euro is worth 1.1561 US dollars, while one US dollar is buying 160.02 Japanese yen. Okay, so let's get a wrap up now of what's happened with overseas markets. The Dow Jones Index finished up 1.9%. The S&P 500 was 1.8% higher. The NASDAQ added 2.5%.
So yes, that was quite a in US share markets as news of the latest developments in the Middle East war filtered through during afternoon trade. Eight of 11 major S&P 500 sectors were in the green with material shares leading gains. Industrial companies rose as they operate fuel intensive factories and benefit when oil prices fall.
Manufacturing behemoth Caterpillar extended gains to 4.8%, with Boeing up 6% and GE Aerospace rallying 4.4%. Tech stocks were up 2.9%, with the semiconductor index rising 7.4%. Chipmaker shares SanDisk, KLA and Micron jumped 14%, 13% and 11%, respectively. Travel stocks rallied as an end to the conflict may cut fuel costs for companies and ease pressure on consumers.
United Airlines was up 8.8%, Carnival leapt 8%, and American Airlines soared to 9%. Meantime, US government bond yields fell after President Trump called off plans for renewed US military strikes on Iran at the last minute. The U.S. 10-year Treasury yield fell 8 points to 4.46%, while the U.S. 2-year Treasury yield dropped 6 points to 4.07%.
Okay, let's have a look at the European markets. The FTSE Euro First 300 index ended up 0.7%. The UK FTSE 100 added 0.5%. So Europe closed higher on Thursday, snapping a four-day losing streak as investors weighed the European Central Bank's decision to raise interest rates.
So the ECB raised borrowing costs by an expected 25 basis points, its first hike in nearly three years, while lifting inflation forecasts and cutting its growth outlook amid the price pressures stemming from the ongoing Middle East conflict. Tech stocks were mixed. Semiconductor shares led the gains on the benchmark index with BE Semiconductor in
and ASM International rising 6.6% and 7.3% respectively on expectations they will benefit from the AI boom. Rate-sensitive sectors lagged, so financial services slipped 0.7%, with asset managers ICG and Partners Group down 4.7% and 3% respectively. Real estate stocks also fell 0.8%. Okay, let's take a look at what's on the watch list.
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