Transcript generated automatically by AI and may contain errors.
Chapter 1: What is the main topic discussed in this episode?
A listener production.
Tech stocks sink US markets. Barnstorming US dollar hits commodities and our currency. And we take a closer look at Japan's stunning performance this year and over the past decade. Hello, good morning. I'm James Gruber.
Chapter 2: Why are tech stocks dragging down US markets?
It's Wednesday, the 24th of June. This is the morning edition of the ComSec Market Update. Well, the shine has come off US technology shares over the past two days.
Chapter 3: How is the US dollar impacting commodities and currencies?
Up until then, they seemingly could do no wrong. Even the Iran war couldn't stop them climbing. So what's changed? The main thing is that expectations for US interest rates are that they are now on the way up rather than down.
Chapter 4: What factors contribute to Japan's market success in 2026?
That's negative for stocks, especially technology shares, which are considered long-duration assets. That's because the majority of their value, their projected profits and free cash flow, is expected to be realized far out in the future, and higher rates hit valuations of those future cash flows.
Another major development overnight was the US dollar climbing to its highest level in a year against other major currencies. As investors increasingly expect higher returns on US assets, demand for the dollar has risen, because it's needed to purchase those assets. This stronger demand is driving the currency higher. The soaring US dollar hurt commodity prices as well as our currency overnight.
And let's take a deeper look at what's happened with Aussie futures, commodities and currencies. The ASX is poised to open higher with index futures up 0.4%. Speaking of the ASX 200, yesterday it closed 0.3% lower at 8,787%. The index ended down for a fourth straight session, with the biggest losses coming from mining and technology stocks.
Today, those same sectors may struggle again, given the beating that commodities and tech took overnight. So we'll have to wait and see whether the Aussie market opens up as the futures indicate. On commodity markets, global oil prices fell as investors kept a close watch on crude flows through the Strait of Hormuz following signs of progress in U.S.-Iran peace talks.
Brent crude futures settled 1.1% lower at $77.08 a barrel. Base metal prices sank as the US granted Iran a 60-day sanctions waiver following initial peace talks, improving prospects for a resumption of Gulf shipments through the Strait of Hormuz. Copper futures dropped 3.4%, while aluminium futures tumbled to three-month lows down 3.1%. Meantime, gold finished 1% lower.
Let's now take a look at currencies. They were mixed against the US dollar. The euro declined 0.5% to 1.138 US dollars. The Japanese yen was steady at 161.57 yen and the Aussie dollar shared 1.3% to 69.09 US cents. Let's now head to Wall Street. The Dow Jones Index finished down 0.1%, the S&P 500 was 1.4% lower, and the NASDAQ plunged 2.2%. A closer look at the trading day there.
The NASDAQ and the S&P 500 fell to over one-week lows on Tuesday, dragged down by sharp losses in semiconductor stocks. As investors braced for a more hawkish Federal Reserve and scrutinized growing debt-funded AI spending. Nvidia fell 4.2%, Alphabet lost 0.8%, while chipmakers Intel, Marvel Technology and Advanced Micro Devices fell between 5.8% and 9.4%.
Memory chipmakers Micron and SanDisk, among the best performers on the S&P 500 this year, fell 13% and 14% respectively. With highly priced tech shares coming under pressure recently, investors shifted focus to other areas of the market. Six of 11 major S&P 500 sectors actually moved higher, with consumer staples rising the most at 1.8%.
Heavily battered software shares also gained, with ServiceNow rising 3.2%, while Adobe, Atlassian and Salesforce added between 1.3% and 2.2% respectively. Shares of Elon Musk's SpaceX advanced 1%, reversing earlier losses. U.S. government bond yields fell on Tuesday as the stock market sell-off drove investors towards the safety of government debt.
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