AM 24 Jul 26: Oil tops $100 as share markets sink
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What is the main topic discussed in this episode?
A listener production.
Oil tops $100 as share markets sink.
The ASX also set to start lower.
And a closer look at how Australia remains one of the world's richest countries. Good morning, I'm James Gruber. And I'm Gillian Bowen. It's Friday the 24th of July and this is the morning edition of the CompSec Market Update.
Well, hello. I've been away on holidays and it's great to be back on deck after a break and with you all again. There is a bit going on as we round out the end of the week. Global oil prices hit their highest levels since late May. There's been a strong sell-off on Wall Street as well and some key quarterly results from two of the magnificent seven stocks which have left investors unimpressed.
Yes, the S&P 500 had its worst day in a month. We'll get to it more deeply in a moment. But the tech sell-off is connected to doubts about the recent AI investment boom. And we've been covering that in the podcast for some time now. And look, the Middle East conflict is not a new issue, but tensions between the US and Iran are escalating again after attacks by Iran-backed Houthis on two Saudi Arabian oil tankers in the Red Sea. So all of that has combined to deliver another tumultuous trading day.
Yeah. So how's it looking then heading into our open?
Yes. This morning, the Aussie share market is set to open lower with index futures down 0.7% shortly after 6am.
Okay. So yesterday we did finish up 0.7%. 2%, that is Thursday, to 8,839. We had those stronger than expected unemployment data figures yesterday as well, and that stoked rate hike fears. So earlier gains across the trading session faded away. Materials led sector gains, while tech performed the worst. If we move on to commodities, James, how have things finished up?
Well, those oil prices topped the $100 mark, their highest levels in nearly two months, after Yemen's Houthis said they had attacked two oil tankers, those of the Saudi ones, in the Red Sea, causing further global supply disruptions following a near halt in trade through the Strait of Hormuz. Brent crude futures settled 7% higher at US$100.69 a barrel. Base metal prices were mixed. Copper fell 2.3% as soaring oil prices weighed on the economic outlook, while aluminium futures gained 0.1%, with still tight supply for the metal. Gold prices retreated from the previous session's two-week high. as the Middle East conflict drove up energy prices, fueling inflation concerns and reinforcing expectations of hikes in interest rates.
The futures settled down 2.4% at US$4,050 an ounce. Iron ore futures rose for the first time in three sessions, as persistently high shipping costs linked to the Middle East tensions offered some support. The futures settled up 0.1% to US$98.47 a tonne.
Why did oil surge above US$100 and which maritime attacks triggered it?
So turning to currencies, they were lower against the US dollar as investors sought safety in the greenback. So one Australian dollar is buying 69.67 US cents. The euro is worth 1.1379 US dollars, while one US dollar is buying 163.81 Japanese yen. Okay, let's get a wrap up now of what's happened with markets overseas. We touched it at the top, but these are the figures. The Dow Jones Index finished down 1%, the S&P 500 fell 1.2% and the NASDAQ plunged 2.2%. So very much in the red there, James. Take us through the detail.
U.S. share markets fell to multi-week lows as disappointing early big tech earnings revived concerns about heavy AI spending, while another jump in oil prices added to inflation concerns. The tech-heavy Nasdaq led losses briefly hitting its lowest level in over two months and falling more than 7% below its early June record high. The S&P 500 and the Dow also touched about one-month lows. Shares of Google parent Alphabet fell almost 7% after its second quarter results did little to reinsure investors as attention shifted to its higher spending plans and its first ever quarter of negative free cash flow. The stock's fall dragged the communications services sector 5.6% lower, leading sector-wide losses on the S&P 500.
Tesla dropped more than 15% after reporting negative free cash flow for the second quarter for the first time in more than two years.
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