Chapter 1: What is the main topic discussed in this episode?
A listener production.
Wall Street has its largest IPO of the year, and unsurprisingly, it's tied to AI.
Tech stocks continue to drive US shares to repeated records. While our share market is also heading for a positive open. Good morning, I'm James Gruber. And I'm Gillian Bowen.
Chapter 2: What recent developments have driven the US tech stock rally?
It's Friday the 15th of May, and this is the Morning Edition of the ComSec Market Update.
Well, markets in the US are continuing to surge forward off the back of another rally in technology shares. There's some fresh economic data out of the United States as well that investors have been assessing and developments out of the US-China summit. But essentially, it's all about chips and the trend to gravitate to artificial intelligence-linked companies.
The million-dollar question, though, James, is how much longer does this go on?
Well the rally has been going on for weeks breaking records left and right. What's likely to test the markets in coming months is the large slate of IPOs coming. We've had one today which I'll talk about but there are bigger ones in the pipeline including SpaceX possibly next month and Anthropic and OpenAI later on. These gigantic offerings will test the demand from investors and
But what will be fascinating to see is what they may sell in order to buy these IPOs, in other words, to fund these IPOs. Naturally, they could be selling other tech stocks to buy into SpaceX and so on.
Anyhow, on today's IPO, the biggest of the year so far, chip designer Cerebra Systems initially jumped 90% above its offer price before closing 68% higher with a valuation of $68 billion US dollars.
Wow. Okay. So looking at what's on the cards for Australia today then, the Aussie share market snapped a four-session losing streak yesterday, that is Thursday. It rose by a tenth of a percent to 8,641. Financials drove the gains up 1%. Our tech sector, however, was down more than 2%. The ASX 200 looks set to open in positive territory this morning.
ASX futures were up 52 points or 0.6% shortly after 6am. As we turn to oil and other commodities, I note there are some reports filtering through that some ships have been moving through the Strait of Hormuz. So James, what's the impact on prices?
Well, in short, not a lot. Global oil prices barely budged after Iran's state media said about 30 vessels had crossed the strait in recent hours, while the semi-official Fast News agency cited a source saying Iran had begun allowing transit for some Chinese vessels. Brent crude futures settled 0.1% higher to US$105.72 a barrel.
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Chapter 3: What economic data is influencing investor sentiment?
One Australian dollar is buying 72.19 US cents. The euro is worth 1.1688 US dollars, while one US dollar is buying 158.38 Japanese yen.
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Okay, it's time to get a little deeper into the results of Thursday's session on overseas markets. The Dow Jones Index finishing up 0.8%. The S&P 500 Index was 0.8% higher and the NASDAQ Index added 0.9%. So James, there's plenty at play for investors to take into account.
Yes, as we've been discussing, U.S. share markets advanced on Thursday, lifted by a tech stocks rally as investors absorbed generally solid economic data and watched for developments from Beijing, where U.S. President Trump was engaged in a high-stakes meeting with his Chinese counterpart, Xi Jinping.
On the economic front, retail sales were in line with expectations, but propped up by rising gasoline prices resulting from the Iran war. Semiconductor stocks were lifted by Nvidia, while other AI-related firms including Qualcomm, Intel, SanDisk and Micron were off between 3.4% and 6.1%.
Cisco surged 13% to touch an all-time high after the computer networking giant announced almost 4,000 job cuts as part of a restructuring plan and raised its annual revenue forecast. US-listed shares of tech infrastructure firm Nebius Group rose 7% after a broker upgrade. China agreed to buy 200 jets from Boeing, but even so, the planemaker's stock was off 4.7%. Meantime, U.S.
government bond yields were steady as U.S. government debt found buying interest at key technical levels. The U.S. 10-year Treasury yield was flat at 4.48%, while the U.S. 2-year Treasury yield was two points higher to 4.01%.
Okay, if we turn to Europe, the continent-wide FTSE Euro First 300 index ended up 0.8%, while the UK FTSE 100 added 0.5%. So European share markets hitting one-week highs after a boost from technology stocks there, while investors remain cautious about developments in the US-China talks that we've been
The technology sector index jumped 2.6% led by semiconductor stocks with STMicroelectronics up 5.4%, BE Semiconductor up 3.3% and Infineon jumped 5.7%. Our luxury brand Burberry shed almost 7% after reporting fourth quarter sales in line with expectations, while Watches of Switzerland jumped 19.2% on forecasting full year operating profits above expectations.
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Chapter 4: How are upcoming IPOs expected to impact the market?
In Australia, there are earnings results from QBE and Auckland Airport. In the US, there are US industrial production figures for April. And of course, we're keeping an eye on the summit between Donald Trump and Xi Jinping in Beijing for any new developments. And the key ones will likely be covered in the afternoon episode of the podcast, which drops shortly after our market closes.
Okay, it's time for our one more thing before we go. James, what do you have to round out the week?
Well, this week, US 30-year government bond yields have gone above 5%. They're now within touching distance of 19-year highs. Yields moving up signal bond investors are getting concerned about inflation, especially after this week's hotter-than-expected CPI and producer price figures.
So far, the US share market has ignored this trend, but if yields continue to go up, how long they look past these moves is a big question going forwards.
Something interesting to watch there for sure. That's it for today. And thanks for tuning in this week. Don't forget this afternoon's episode of the CommSec Market Update. Stephen Daglin and Laura Bezzarati are on deck with a full wrap of today's local trading session. I'm Gillian Bowen. And I'm James Gruber.
Have a great day and weekend. 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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