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Chapter 1: What is the main topic discussed in this episode?
A Listener Production.
Chapter 2: What recent developments have caused uncertainty in global oil supplies?
There's fresh uncertainty on the global flow of oil. Iran says it's closed the Strait of Hormuz.
And that has the US president threatening new attacks at the same time as fragile peace talks take place.
So how will investors react when markets reopen after the weekend? Good morning, I'm James Gruber. And I'm Gillian Bowen. It's Monday the 22nd of June and this is the morning edition of the ComSec Market Update.
Well, we've emerged from another weekend with the situation in the Middle East again clouded in uncertainty.
Chapter 3: How has Iran's closure of the Strait of Hormuz affected U.S. foreign policy?
Iran says the Strait of Hormuz is closed again just days after ships and oil started moving through the key maritime route, a route which is key for global supplies. And that development prompted the US president to use social media to threaten to restart the war with Iran again. So how did we get here?
Well, on Friday, there was an announcement of a new ceasefire in Lebanon, but Iran wasn't satisfied that fighting had ended. So the Strait of Hormuz has become leverage.
And the other fresh development is the peace talks between the US, Iran and Pakistani mediators are back on in Switzerland. They had originally been abandoned, partially because the situation had appeared stable. The These are the first talks being held between the warring parties under the interim peace deal.
The US vice president is on the ground in Switzerland and has played down the impact of the fresh violence in Lebanon, saying, quote, things are always a little bit messy. So as has happened several times with the Middle East conflict, major developments impacting markets and the global economy have occurred over the weekend, while markets have been closed.
Chapter 4: What impact will the latest Middle East tensions have on investors?
Mm-hmm. With that in mind then, what's on the cards, James, for our market when it reopens in a few hours' time?
Well, when the ASX 200 futures were last trading, they were pointing to a 0.2% drop at the open, but that was before the weekend's developments. So we'll be watching for market reaction there, and we've also got an update on inflation this week as well. But I'll go more into that in the watch list section shortly.
Mm-hmm. A reminder on Friday, the ASX 200 closed lower, dropping 0.9% to 8,828.7, setting a new 20-day high regardless of the drop. The bottom performing stocks were Deep Yellow and Alcoa. James, on oil prices, let's get an update on that and other commodities.
So oil prices on Friday, they rose after the breakdown of US-Iran peace talks, but volumes were light due to the US federal holiday. Iran's claim that it has closed the Strait of Hormuz has prompted concerns about another oil price spike today, Monday, both Australia and US time. On Friday, Brent crude futures settled up nearly 1% to $80.57 a barrel.
The gold, base metal and iron ore markets were opened partially on Friday, though any trades on that day will be rolled over until Monday. That means futures prices for these commodities were all unchanged on Friday.
So let's have a look at currencies then. They were steady against the US dollar. One Australian dollar is buying 70.10 US cents. The euro is worth 1.1456 US dollars, while one US dollar is buying 161.23 Japanese yen. And it is worth noting that the yen currently sits near 40-year lows, prompting a volley of warnings from officials in Tokyo that intervention to prop up the currency is an option.
Music
So a reminder, we talked about it last week, but US share markets were closed on Friday for a public holiday. A quick recap of Thursday, though, the Dow Jones Index finished up 0.1%, the S&P 500 Index was 1.1% higher, and the NASDAQ Index added 1.9%. So fresh uncertainty to play into this week when markets reopen Monday US time. James, what else will be the focus?
Although the AI narrative has dominated markets, underlying macroeconomic concerns remain. The Federal Reserve's preferred inflation measure is due this week. So too is a final reading on first quarter GDP. Both reports will provide checks on the health of the US consumer and economic growth. S&P 500 futures were also down 0.2%, but trading volumes were light on Friday.
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