Chapter 1: What is the main topic discussed in this episode?
A listener production.
Tempers flare in the Middle East. The US-Iran escalation wipes out Thursday's gains.
And find out what's ahead for investors next week.
Good afternoon. I'm Steve Daglian. I'm Laura Bessarachi.
Chapter 2: What triggered the Australian share market's worst day in seven weeks?
It's Friday the 8th of May. Welcome to the ComSec Market Update.
Oof, it's been a nasty session for the Aussie market. At the moment, down by 1.5%. That means we are on track for our worst day in seven weeks.
Ouch, not good at all. In fact, it essentially wipes out almost... All of this week's gains were holding on to the smallest of improvements after three straight weeks of declines as well. And this entire week has basically been driven, at least for us, by developments over in the Middle East.
So we're down heavily today because of renewed hostilities with both the US and Iran exchanging fire overnight. The prior two days, we had gains of almost 2.3%, and that was because of signs that the ceasefire was holding and tempers seemed to cool as well.
We also saw US markets lower overnight. So that gave us quite a negative lead in. But remember the session before they did hit a record high. I think they hit two record highs this week.
So, you know, investors sort of looking past, you know, the ebbs and flows with the US-Iran tensions over the course of this week and really focusing on US earnings, which have been better than expected for the most part, which is why the US market has certainly been outperforming us here in Australia.
Yeah. And we've had, look, overall a pretty rough run for the past few weeks, you know, not including a day here and there with strong gains. So we've actually had 11 declines in 14 trading days now. And this has been a pretty busy week. US earnings aside, we had the Reserve Bank, of course, on Tuesday raising interest rates for the third straight meeting. That's for the third time this year.
But there were some signs that maybe, you know, from the governor's presser that they might be happy to sit on the sidelines, at least for the time being, perhaps, to wait and see how things unfold in the Aussie economy. And then we've also had three major Aussie banks handing down their results over the course of the week with mixed results overall.
Looking across the different sectors in afternoon trade, it's almost a sea of red. We're only seeing telecom up very marginally up by just a quarter of 1%, but pretty steep falls right across the board from most of the other sectors. The hardest hit is the financials, so not helpful at all when that's our largest sector.
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Chapter 3: How did the US-Iran tensions impact the Australian market?
So buying shares in Westpac today onwards won't get you that 77 cent per share interim div that's due to be paid out to those who are eligible on the 26th of June. That dividend just a cent higher than what it paid 12 months ago.
Energy stocks are also under pressure today, surprisingly, because we have seen oil prices bouncing back up amid these rising tensions between the US and Iran, which has really cast doubt over the potential for a deal to bring the war to an end. But as I mentioned, energy stocks down despite oil prices lifting.
But if we look over the course of this week, we did obviously see oil prices coming down for most of it. And that means the energy sector is on track to lose ground. seven and a half percent. It's a worse performance in a very long time.
We've got Macquarie Group today down by about 1.1%, which doesn't sound great, but it actually is outperforming most of the bigger players today. Now, it came out with its full year results. It beat the market's expectations, the second biggest full year result, in fact. And if you look at the half year, the second half of the year, It was actually a record half for the group.
So it basically doubled what it earned in the first half, raised its final dividend as well. So it's paying out $4.20 per share to shareholders who are eligible. That's $0.30 above what it paid a year earlier. Profits up around 30% as well. So that's about $500 million above what the market was broadly expecting. Now, the key driver... was its largest division.
That's the commodities and global markets division. Two things that happened there that seemed to boost things. One was the fact that it sold an on-stream meters platform, which basically tracks electricity and gas meters on behalf of energy providers.
And secondly, the war in the Middle East has meant that quite a few businesses are hedging more, so trying to protect themselves from the volatility we're seeing in energy markets.
The best performer today has been gaming technology firm Light and Wonder. It was out with a mixed first quarter update yesterday, but largely missed market expectations and that sent its share price to a three year low in yesterday's session.
Today, though, the company finally snapping its five day losing streak and lifting by roughly 12%, which reverses almost all of the losses over the past week. So top performer today.
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