PM 14 Jul 26: Markets brace for a busy 24hrs
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What is the main topic discussed in this episode?
A listener production.
Why did the Australian share market finish flat today?
The Aussie market remains under a bit of pressure as a number of sectors head backwards.
And it's a busy night ahead with a number of things to watch from the United States.
Good afternoon, I'm Steve Daglian.
I'm Laura Vassarati.
It's Tuesday the 14th of July. Welcome to the CommSec Market Update.
Wow, how time flies. I can't believe it's the 14th of July. No significance to the market today. I'm just surprised how quickly this year's flown by, Stevie.
It's Bastille Day.
It is.
Jour de la Bastille in France. And you've got France and Spain playing tomorrow morning in the World Cup as well. But markets are not doing anything. They're completely flat today.
I can't say they're up or down. I'm seeing all zeros. It's just completely flat.
And it's kind of what we saw yesterday as well, is a bit of choppiness also built into it too. But at one stage, we were down by as much as 0.6% this morning. And then the last couple of hours, the market has staged a little bit of a comeback. Not bad, considering that there are a few moving parts, of course. We do have a few days left of school holidays in a number of states, and that can keep markets a little quiet. But Of course, there are major events coming up, as you flagged at the outset. And then, of course, the renewed military strikes in the Middle East as well, just keeping markets guessing.
Yeah, keeping markets guessing, certainly. And that's really the escalating tensions between the US and Iran that investors are watching. We're not really sure what's going on there, what's happening with the Strait of Hormuz. And I guess that's why markets aren't moving too much because there's not really a firm catalyst because we don't really know what's going on. There's a bit of uncertainty around the missile strikes and whether or not the Strait of Hormuz is open or shut. So I think when we do get some, or potentially if we do get some more details around the what's actually going on there. That could be a catalyst to move markets. But of course, tonight, there are a lot of things that could move markets as well.
We might get to that a little later in today's podcast. But one thing that has been moving markets today is that sharp jump in oil prices that we saw last night, something like a 9% lift in oil prices. The gains have just been extending in today's session. So we are seeing oil sitting roughly around US$85 a barrel, and that's at about a one-month high, Stevie.
Exactly right. Last night, about a 10% lift in oil prices and one month high up another 2% or so today as well. What this has basically done is just reignite inflation concerns and it's boosting bets of US interest rate hikes this year as well. And that is just something that's keeping markets on edge. We were talking about this a little earlier, but a Fed official said that the Fed may need to raise rates to tame price pressures in overnight trade. That was Christopher Waller.
In the near term, I think that was the key words that investors took out of it as well.
Yeah, so that's the sort of thing that has markets thinking, or at least a little more concerned, especially with the uncertainty in the Middle East at the moment, that it could be a rate hike. And higher interest rates typically is a negative as far as share markets go. So to put some numbers on this, the market is now pricing in a 43% chance of a rate hike at the end of July, which is the next time the Federal Reserve holds its meeting, and then is now fully pricing in a lift by September, which is actually a month sooner or earlier than was being priced in just a couple of weeks ago.
But of course, those numbers can certainly change. Tonight, we are waiting for that US inflation data, so that could change market pricing on when they think interest rates might move again. If we do get a softer read, you might see that getting pushed out further, but you might see more certainty of a July hike if the inflation data is stronger than markets are expecting. We also have Fed Chair Walsh speaking over the next
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Chapters
4 chapters
1
What is the main topic discussed in this episode?
0:02–0:06
2
Why did the Australian share market finish flat today?
0:06–5:13
3
How are geopolitical tensions in the Middle East affecting market confidence?
5:13–9:19
4
What caused the recent sharp jump in oil prices and why does it matter?
9:19–9:57
Speakers
2 identifiedMore from CommSec Market Update
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