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Chapter 1: What is the main topic discussed in this episode?
A listener production. Oil falls more than 5% on Iran war draft deal. Overseas markets steady, but the ASX to open lower. And the magnificent seven stocks, are they cheap or bubble-like? Hello, good morning. I'm James Gruber.
Chapter 2: What impact does the Iran draft deal have on oil prices?
It's Thursday, the 28th of May, and this is the morning edition of the ComSec Market Update. Oil fell below $95 a barrel for the first time in more than a month after Iranian TV said it had obtained a draft copy of a deal to end the Iran war. The draft said the US would lift its naval blockade and Iran would restore shipping flows through the Strait of Hormuz.
While the news impacted oil, it didn't have much effect on stock markets with relatively muted action in the US and Europe overnight. Let's take a deeper look at what's It closed 0.7% higher to $8,718.
Chapter 3: How are overseas markets reacting to the latest economic data?
Data from the ABS showed its monthly consumer price index rose 0.4% in April from the previous month, while the annual pay slowed to 4.2% from 4.6%, both below consensus estimates. Market futures now suggest that rates will remain on hold in June, with the odds of an August hike easing to 44%.
Today, some of the resources companies may struggle given the drops in commodity prices overnight, and we'll have to see whether rate-sensitive sectors like banks can hold their gains from yesterday. On those commodity markets, global oil prices were lower after the leak of that draft agreement.
Chapter 4: Are the Magnificent Seven stocks a good investment or in bubble territory?
Brent crude futures settled down 5.3% to US$94.29 a barrel. Base metal prices were mixed on Wednesday. Copper futures eased from one-week highs in the previous session, down 0.9%. Meanwhile, aluminium futures climbed 3.7% on worries that are persisting over supplies due to the Iran war.
Gold futures fell to a two-month low on Wednesday, pressured by expectations of tighter monetary policy to fend off rising inflation. The futures settled 1.2% lower at US$4,448 an ounce. Iron ore futures were steady at US$109.27 a tonne. Let's take a look at currencies. They were mixed against the US dollar. The euro was steady at 1.1630 US dollars.
The Japanese yen dipped 0.1% to 159.52 yen, and the Aussie dollar dipped 0.4% to 71.40 US cents. And it's time to head to Wall Street. The Dow Jones index finished up 0.4%. The S&P 500 was flat and the Nasdaq added 0.1%. A closer look at the trading day there.
The S&P 500 and the Nasdaq were muted on Wednesday in choppy trading as investors took a pause from the AI-led market rally while remaining cautious on progress in Middle East talks. The consumer discretionary sector led the gains up almost 1.9%, while the energy index fell 1.5%, tracking a decline of more than 5% in oil prices. Tech shares shed 0.4% after reaching an all-time high on Tuesday.
Chip stocks were down after a strong rally. Intel fell more than 1.4%, and Marvel Technology fell over 5%, while Qualcomm shed 6%. Among other tech stocks, Zscaler tumbled 32% after the cloud security firm projected fourth quarter revenue below expectations.
Banking stocks were also down due to a 2.4% slide for JPMorgan Chase after CEO Jamie Dimon warned that expenses this year could be $1 billion higher than estimated. U.S. government bond yields were little changed, holding on to their prior day's declines amid continued hopes that Washington and Tehran are moving toward an agreement ending their three-month-old conflict. The U.S.
10-year Treasury yield was one point lower at 4.48%, while the U.S. 2-year Treasury yield fell one point to 4.04%. To the European markets, both the continent-wide FTSE Euro First 300 index and the UK FTSE 100 ended up 0.1%.
Europe ended little changed on Wednesday, holding near record levels reached before the Iran war began, as gains in automobile and chemical stocks offset lingering concerns over the conflict and its potential impact on energy markets.
The European Central Bank also warned on Wednesday that the war and lingering trade tensions could hurt Eurozone growth, raise borrowing costs and strain some member states' public finances. Autos and parts rose 2.5% after data showed Europe's car registrations rose 7% in April, supported by demand for electrified vehicles.
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