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Chapter 1: What is the main topic discussed in this episode?
A listener production.
The Dow hits a record on Iran peace deal, while oil slumps to a three-month low. And can the ASX continue its run after reaching eight-week highs? Hello, good morning. I'm James Gruber. It's Tuesday, the 16th of June, and this is the morning edition of the ComSec Market Update.
Chapter 2: What led to the Dow hitting a record high?
Well, with the US and Iran signing a memorandum of understanding to end the war, it was off to the races for US markets, and it was again led by tech shares and the barnstorming semiconductor sector, which hit fresh record highs. The news wasn't so positive for oil, which plummeted, and front-month Brent crude futures are now down about 30% since they peaked in late April.
Let's 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 1.5%. Yesterday, the ASX ended up 1.3% at 8,914, posting its highest close in eight weeks, as markets embraced risk with the prospect of an end to the war. Miners led gains, with the sector rising 4.2% in its best day in more than two months.
today, we'll have to see if the relief rally continues, though market futures are telling us that it may not. It might depend on the RBA's decision on interest rates out at 2.30pm today. Markets expect rates to remain on hold, though investors will be closely watching the commentary around the decision too, for any hints about the future direction for the economy and interest rates.
On commodity new markets, global oil prices slumped to a three-month low on Monday amid a broad sell-off after President Donald Trump said the U.S. and Iran have signed a peace deal aiming to end the Iran war. Brent crude futures settled down almost 5% to $83.17 a barrel. Base metal prices were mixed on Monday.
Copper futures rose 0.8% on expectations the Iran agreement will help global economic growth. Meanwhile, aluminium futures slumped to its lowest level in over two months, down 4.2%, as the US-Iran deal eased supply concerns. Let's now take a look at currencies. They were mixed against the US dollar. The euro rose 0.1% to 1.1584 US dollars.
The Japanese yen slipped 0.1% to 160.39 yen, and the Aussie dollar advanced 0.3% to 70.70 US cents. Let's now head to Wall Street. The Dow Jones Index finished up 0.9%, the S&P 500 was 1.7% higher, and the Nasdaq added 3.1%. A closer look at the trading day there. U.S. share markets rose, with the Dow marking a record high close after the U.S.
and Iran struck a preliminary agreement to end the Middle East war and reopen the Strait of Hormuz. Seven of the 11 major S&P 500 sectors were in the green, with the S&P 500 tech sector leading the advance with a 3.4% gain. The Philadelphia Semiconductor Index hit a record high and rose 5.5%, with chip giant Nvidia up 3.2%.
Memory chipmakers reached record highs with Micron soaring almost 11% after multiple brokerages raised price targets. The fall in oil prices aided shares of energy-sensitive airline and crew stocks and hurt energy shares. United Airlines rose 3.8%, while Delta Airlines and American Airlines added 1.6% and 3.2%, respectively. Norwegian Cruise and Carnival Corp. advanced about 4% each.
Shares of oil majors ExxonMobil and Chevron fell about 3% each. SpaceX shares were up almost 17% after the Elon Musk-led firm ended its blockbuster IPO with a more than $2 trillion valuation. Meantime, U.S.
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Chapter 3: How are oil prices reacting to the US-Iran peace deal?
government bond yields fell to a one-month low on Monday as oil prices slid with the announcement of a preliminary agreement to end the Iran war. The U.S. 10-year Treasury yield declined 1 point to 4.48%, while the U.S. 2-year Treasury yield dropped 2 points to 4.07%. To the European markets, the continent-wide FTSE Euro First 300 index ended up 0.2%, and the U.K. FTSE 100 dipped 0.4%.
Broader European markets hit a record high, boosted by a relief rally across most sectors. Spain's financials heavy index led gains among major regional indexes, climbing 1.4% to record highs. Germany's DAX index rose 1.1% to a near two-week high. Banks were among the biggest boosts, adding 1.5% to hit their high since January 2008.
Energy price-sensitive auto stocks gained 2.6%, while airlines such as Lufthansa and Air France jumped 4.5% and 3.4% respectively. In corporate news, Renault Group gained 3.7% after the carmaker said it would develop a military vehicle in partnership with defence technology company Thales. It's now time for the watch list.
In Australia, as mentioned, the RBA will hand down its decision on interest rates this afternoon. In the US, housing starts for May will be released. In China, there's a host of data scheduled today, including retail sales and unemployment figures. And in Japan, the central bank is expected to raise rates by 25 basis points to 1% today. And now it's time for our One More Thing segment.
The boom in AI and semiconductors is having a global impact. Taiwan's economy is growing at 14% currently, driven by an explosion in exports, especially high-tech chips. It's producing a two-tiered export industry in Taiwan, with exports excluding semiconductors and AI servers having fallen by 40% since 2022, thanks to China increasingly taking market share.
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Chapter 4: Can the ASX maintain its recent gains?
And that's it for today. The ComSec 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.
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