AM 21 Jul 26: ASX set to fall following US weakness
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ASX set to fall, tracking US market weakness. Oil rises as Trump vows revenge for fallen US soldiers. And a closer look at how South Korea's market has unravelled. Hello, good morning. I'm James Gruber. It's Tuesday, the 21st of July, and this is the Morning Edition of the ComSec Market Update.
Why is the ASX set to open lower after Wall Street weakness?
Well, overnight, investors seemed to be wavering over several developments. First, they were still assessing the impact of China's new AI model called Kim K-3 AI and whether it's a direct threat to American AI models. Second, there were several bits of news out of the Middle East. Yemen's Houthis' declaration of a naval blockade against Saudi Arabia, potentially opening up a new front in the war. Donald Trump coming out in a social media post threatening a harsh response for the deaths of American soldiers, quote, "...every time Iran kills an American soldier, they will pay for that killing many times over." And reports that mediators had passed Iran a proposal to de-escalate the war with the U.S.
that would offer a 10-day ceasefire to find ways to revive an interim deal reached last month. And what was the market's verdict on all this? Well, they ended a little lower while oil finished up, albeit fading from the day's highs. 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 0.3% just after 6am this morning. As for the ASX 200 yesterday, it fell 0.1% to 8,791%. as gains in energy stocks offset losses in technology shares. On commodity markets overnight, global oil prices pulled back yet still ended higher as traders weighed those hopes of renewed US-Iran negotiations against Yemen's Houthis declaration that we already discussed.
Brent crude futures settled up 1.3% at US$89.22 a barrel. Base metal prices were higher on Monday, Copper futures gained 1.3% after figures showed China's imports of refined copper hit a nine-month high in June, thanks to strong demand and declining domestic supply. Meanwhile, aluminium futures edged up 0.1%, following data revealing global primary aluminium output in June fell 1.5% year-on-year. Gold futures, meanwhile, were little changed as investors assessed developments in the escalating US-Iran conflict, which lifted energy prices and clouded the outlook for US interest rates. The futures settled down 0.1% to US$4,016 an ounce. Iron ore futures slipped 0.2% to US$98.70 a tonne on seasonal weakness in Chinese steel demand.
Let's now take a look at currencies. They were mixed against the US dollar. The euro fell 0.2% to 1.1414 US dollars. The Japanese yen dipped 0.1% to 162.51 yen, and the Aussie dollar advanced 0.3% to just above 70 US cents. Let's head to Wall Street.
How are Middle East tensions and Trump’s statement affecting oil prices?
The Dow Jones Index finished down 0.6%, the S&P 500 fell 0.2%, and the NASDAQ was flat. A closer look at the trading day there, US share markets were mixed as chip stocks recovered from last week's sharp sell-off, while rally in oil faded on hopes the US and Iran could revive that peace deal. Communication services and energy led the sector gains, while healthcare lagged. The Philadelphia chip stock index rose 0.6%, with Marvel Technology up 3.3%, SanDisk jumping 2.7%, and Micron advancing almost 2%. Alphabet climbed 1.5% after a report said its Google unit is developing a Gemini integrated server chip aimed at improving AI efficiency and easing computing capacity constraints. Among other market movers, Domino's Pizza was up more than 2% after the pizza chain's quarterly revenue edged past Wall Street estimates.
U.S. government bond yields rose as traders weighed whether escalating oil prices, driven by the widening war with Iran, would eventually feed through to consumer prices, even as data showed inflation pressures easing last month. The U.S. 10-year Treasury yield rose 5 points to 4.59%, while the U.S. 2-year Treasury yield gained 4 points to 4.21%. To the European markets now. The continent-wide FTSE Euro First 300 index ended 0.4% lower and the UK FTSE 100 lost 0.7%.
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Chapters
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