Chapter 1: What is the main topic discussed in this episode?
A listener production.
Could a US-Iran agreement be revealed within hours? Well, the speculation has markets and oil bouncing about. So how might the Aussie share market react? Good morning, I'm James Gruber. And I'm Gillian Bowen.
Chapter 2: What is the current speculation about a US-Iran agreement?
It's Friday the 22nd of May and this is the morning edition of the ComSec Market Update.
Well, happy Friday. It's always good to join the podcast on a Monday and a Friday morning. Now, we're going to start with the war in the Middle East again.
There's a bit of fresh peace talk speculation on social media right now, suggesting progress on a peace deal between the US and Iran, and that what's been described as, quote, a final draft of this agreement will be announced within the next few hours. But really, We've been here before, James, so it's a bit of we'll believe it when we see it.
But investors on Wall Street are reacting to it regardless.
Chapter 3: How might the US-Iran agreement impact oil prices?
There's been big swings in the oil price across the trading day, while Wall Street has turned modestly higher after being lower earlier in the day.
So what more do we know? Good question. Well, the potential agreement you're referring to is reportedly being mediated by Pakistan. But yes, no official confirmation yet. Part of the deal that has been detailed on social media includes a range of elements, as you'd expect. But one part relates to the movement through the Strait of Hormuz and the Persian Gulf.
under a, quote, joint monitoring mechanism. The Iranian ambassador to France has said in an interview with Bloomberg that Iran is in talks with Oman over a tolling system in the Strait. The US is against that, as you'd expect. And both the US and Iran are still at loggerheads over what to do with Iran's uranium stockpiles.
Well, and to add to the situation, during the final hour of trade on Wall Street, the Iran president was speaking on TV saying, quote, we will never back down. So it's as clear as mud, James, clear as mud, volatile as a result. So how do you think this will play out for the Australian share market today?
We're actually set to open higher this morning with the ASX 200 futures up 0.5% to $8,688. We'll have to wait and see if yesterday's gains flow through again today.
On that, yeah, the gains, our market had its best day in six weeks yesterday. We had unemployment data out yesterday morning too. So the unemployment rate climbed to its highest level yesterday. since November 2021, suggesting the labour market is cooling faster than expected. And so that dialed back expectations for further interest rate increases by the RBA.
The ASX 200 closed up almost 1.5% to 8,621.7. James, let's move on to commodities then and get an update on the oil price.
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Chapter 4: What are the implications of the US-Iran talks for the Australian share market?
What's the latest?
Oil prices whipsawed in volatile trading, handing lower on uncertain prospects for a resolution to the war. Brink crude futures settled down 2.3% to US$102.58 a barrel. Meantime, base metal prices were mixed on Thursday. Copper futures retreated on initial peace deal pessimism, while aluminium futures continued their run of late, up 0.8%.
Gold futures turned positive after being down heavily early as prospects warmed for an Iran peace deal. The futures settled 0.2% higher to US$4,543 an ounce, and iron ore futures slightly dipped down 0.3% to US$109.79 a tonne.
Okay, let's have a look at currencies. They were higher against the US dollar. One Australian dollar is buying 71.55 US cents. The euro is worth 1.1622 US dollars, while one US dollar is buying 158.89 Japanese yen. All right. So let's get a wrap up then of what's happened overseas with markets. The Dow Jones Index finished up 0.6%. The S&P 500 was 0.2% higher. The NASDAQ added 0.1%.
So James, yeah, lots to watch right up until the closing bell.
That's right. So US markets reversed early losses as oil prices turned down amid heightened speculation, as we mentioned, that the US and Iran are close to a peace agreement. Investors also focused on a fresh batch of corporate results. Walmart tumbled 7% after the largest global retailer maintained its annual targets and forecast second quarter profit below estimates.
The S&P 500 consumer staples sector led losses with a 1.6% drop, weighed by Walmart's fall. Shares of Nvidia, the world's most valuable company, edged down 1.4% as the AI heavyweights upbeat second quarter revenue forecast and $80 billion share repurchase program failed to impress investors who were concerned about the potential for increased competition.
Among other movers, IBM rose 12.5% on the news that the Trump administration will fund a handful of quantum computing companies, including a new IBM venture, in exchange for stakes in some of the firms. In US economic data, jobless claims fell last week, pointing to continued labour market resilience, giving the US Federal Reserve room to keep its focus on inflation risks. U.S.
manufacturing activity rose to a four-year high in May as businesses built inventories to guard against potential shortages and rising prices tied to the Iran war. Meantime, U.S. government bond yields were mixed as investors assessed the latest developments in Iran peace talks. The U.S. 10-year Treasury yield was one point lower at 4.56%, while the U.S.
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