Chapter 1: What is the main topic discussed in this episode?
a listener production.
Global oil prices are on the rise again. Fresh strikes on Iran set back hopes for a peace deal. So why is Wall Street near record levels and what's in store for Australia? Good morning, I'm Gillian Bowen. It's Wednesday the 27th of May and this is the morning edition of the ComSec Market Update.
Chapter 2: What factors are driving the rise in global oil prices?
So we're no closer to a peace deal in the Middle East, despite those suggestions over the weekend that an agreement between the U.S. and Iran was imminent. And there have also been fresh strikes, and the two sides are in disagreement about those as well.
Chapter 3: How are recent events in Iran affecting peace deal negotiations?
Iran says the U.S. has violated the ceasefire, but the U.S. says it conducted what it's called, quote, defensive strikes in southern Iran. So the uncertainty sent global oil prices back up again. Despite the volatility, investors on Wall Street appear to be more focused on the tech sector and continued optimism around AI, as well as strong corporate earnings.
So how is our share market shaping up today? Well, it appears we're in for a flat open. The ASX 200 futures shortly after 6am were down 0.1%. Today, investors will be keeping an eye on the Consumer Price Index. We'll get an update on inflation for April with the Bureau of Statistics releasing CPI figures at 11.30am Eastern Standard Time.
Yesterday, our share market put an end to a three-day winning streak with the ASX 200 dropping 0.39%. to 8,657.8. 10 of 11 sectors fell, materials improved. ASX Limited fell the most, down 13.23% after flagging additional spending. So let's move on to commodities.
Well, global oil prices jumped back up again on Tuesday as US military strikes on Iran added renewed uncertainty on any imminent prospects for peace. Yesterday in the podcast, I was talking about Brent plunging, and it went on to close at its lowest level since April 20 on expectations that a deal was close.
But as global oil flows remain restricted through the Strait of Hormuz and the US and Iran accuse each other of ceasefire violations, Brent crude futures settled 3.6% higher to US$99.58 a barrel. So gold futures were lower on Tuesday as more military strikes on Iran by the US impacted hopes for imminent peace and expectations mounted of higher US interest rates this year.
Base metal prices were higher on Tuesday. Copper futures were up 0.3%. Meanwhile, aluminium futures rose 2.1% on supply worries. Let's look at currencies. The dollar firmed on Tuesday off the back of dented hope for a ceasefire, as I've mentioned. Demand for the dollar picked up slightly as investors grew less confident about a swift end to the conflict.
One Australian dollar is buying 71.69 US cents. The euro is 1.1632 US dollars, while the Japanese yen is at 159.30 yen. Let's get a wrap now of world markets. So on Wall Street, trading reopened on Tuesday after the long weekend for Memorial Day. The Dow Jones Index finished down 0.2%. The S&P 500 was up 0.6% and the NASDAQ was 1.2% higher.
The S&P 500 hit a record closing high while the Nasdaq touched intraday record highs. AI optimism appears to outweigh concerns over a lack of progress on Middle East peace talks and those fresh US defensive strikes on Iran. Semiconductor stocks led gains. Micron joined the $1 trillion US market cap club.
Qualcomm rose 3.6% after reports from Bloomberg that it had reached a deal with TikTok owner ByteDance to supply chips, while Marvel Technology added 6%. The Philadelphia Semiconductor Index rose 6% to an all-time high. The S&P Information Technology Subindex leading gains with a rise of 1.5%. On the data front, US consumer confidence was out on Tuesday.
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Chapter 4: Why is Wall Street performing well despite geopolitical tensions?
A European Central Bank board member also said that the ECB should raise interest rates in June, even if ongoing peace talks with Iran result in a deal. The continent-wide FTSE Euro First 300 index finished down 0.6%, while the UK FTSE 100 was the exception in the region, rising 0.2% after being closed on Monday due to a UK market holiday. Let's take a look at what's on the watch list.
In Australia, we've got inflation later this morning, as I said. So that's the CPI figures from the Bureau of Statistics for April. It'll be interesting to get some insights on the impact of the Middle East conflict and how those costs may or may not be making their way through to consumers. We know the temporary cut to the fuel excise is in play.
The CBA economics team is expecting annual headline inflation to ease to 4.3% last month. And it's not just us paying attention to this data read. The Reserve Bank will also be examining it closely to see how inflation is tracking. Still on the RBA today, we'll mark the first time that a non-executive board member has spoken publicly since the new board was set up.
Chapter 5: What are the latest updates on the Australian share market?
RBA Monetary Policy Board member Carolyn Hewson is due to give a speech in Adelaide. It'll be interesting to see what we learn about how the board is thinking about the economy and the pressures from overseas conflicts. Amcor is trading ex-dividend while we're expecting earning results from New Farm.
In the US, earnings reports are due on Wednesday, their time for a range of companies, including Marvel, Best Buy and PDD Holding. It's time for our one more thing before we go. And we know that the Middle East conflict has pushed up petrol, jet fuel and fertiliser prices. But how has the Aussie share market stacked up since the conflict started about three months ago?
Well, the ASX 200 has shed roughly 5.9% of its value, but it's still virtually unchanged year to date. That's despite three RBA rate hikes in Australia this year and higher inflation. The US market, so the S&P 500 on the other hand, has outperformed. So while there was an initial dip, markets appear to have looked through the conflict and looked at it more as a temporary disruption for now.
The US profit results have also been mostly better than expected, which has been helpful while spending on AI continues. So there's a lot of context there about how markets are performing. That's it for today. Our team is monitoring developments on the local trading session, so please tune in to the ComSec Market Update podcast this afternoon. I'm Gillian Bowen. Have a great day.
This podcast is prepared, approved and distributed in Australia by Commonwealth Securities Limited, ABN 60067254399, AFSL 238814. The information does not take into consideration your objectives, financial situation or needs. Consider the appropriateness of the information before acting and if necessary, seek appropriate professional advice.
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