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Chapter 1: What is the main topic discussed in this episode?
A listener production.
The winning streak comes to an end despite the US and Iran officially signing an interim deal. And why have gold miners slumped on Thursday? Good afternoon. I'm Steve Daglian. It's Thursday, the 18th of June. Welcome to the ComSec Market Update.
Chapter 2: Why did the Australian share market break its winning streak?
Well, not a great Thursday, unfortunately, for markets. It's been a pretty choppy affair the entire session because at one stage, we're actually up this morning by as much as a fifth of a percent. Now, though, the market is down by around 0.6%. So we're down near the lows of the session as well. There is a lot for investors to digest today.
And I think that's just keeping markets a little on the choppy side. And it has been the case for most of the week. Now, quite a muted response locally to news that the US and Iran officially signed a memorandum of understanding at the Palace of Versailles near Paris. That was something that was flagged at the start of the week.
It seemed to come a couple of days ahead of schedule this morning and means that we were actually one of the first markets globally to react to the news. This was going to be signed in Switzerland on Friday. Some detail was also provided. There were some major concessions made to Iran, a commitment to for the Strait of Hormuz to reopen as well.
But at the same time, Iran committed to keeping it toll free for just 60 days and then potentially fees might start to be charged. President Trump also threatened to resume a tax if Iran failed to honour their commitments. And that's a statement that has just been weighing a little on markets, I think.
But also there's now a 60-day period, a ceasefire period, to allow for a more expansive deal to be negotiated and worked through. So yes, the interim deal is a welcome development and it's showing at least that progress is being made, but there's still plenty of work to do.
Another thing I will just point out is that even though our share market has fallen today, it has significantly outperformed the US markets this week. So over the prior four days, our market has actually improved by 4%. That's when we include Friday's session as well. and that means that we hit a five-week high just yesterday. So it's just something to keep in mind.
So we've had a bit of a pattern in prior days where the market has steadily been improving over the course of the trading session from low to high, but today was a little bit of a different story with our market actually kind of fading over the course of the afternoon. Maybe also a case of some money being taken off the table for some. The US markets did slump last night by roughly 1% or so.
We had an important meeting from the US central bank, the Fed's Chair Kevin Walsh, he basically kicked off his four-year term. It was his very first meeting as the big boss and essentially officials signaled a possible rate hike later this year. So they've got this thing called the dot plot where the officials signal where their expectations are potentially for interest rates in the year ahead.
And basically nine of 18 officials flagged a potential rate hike by December. That's something that did push American markets lower in late trade. Bond yields also rose to the highest levels in over a year in the U.S. as far as two years are concerned, and it also pushed the U.S. dollar higher. So it has been something that has been weighing a bit on commodity prices over the course of the day.
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Chapter 3: What impact did the US-Iran interim deal have on market reactions?
and Iran came after the close of the U.S. market, and it is one thing helping U.S. futures actually pushing higher. So they're pointing to a gain of around half a percent at the If we look across the different sectors today, certainly mostly lower, markets a little more defensive today. And it's a reason why we're seeing healthcare stocks lifting about a third of a percent.
We've got consumer staples also up around 0.2. We've also got industrials doing reasonably well, lifting very slightly. But outside of those three, we've got declines everywhere. Some of the worst performers are certainly resource stocks. So we've got energy down about 1.1% and the materials, those miners, down about 1.3%. Not overly surprising.
I mean, energy stocks have come under a bit of pressure, partly because oil prices are down about 3% in Asia trade. But it means that in a little over a week, the oil price has slumped by 18%. And that's because progress is being made in the Middle East. Just a reminder that at one stage, oil prices had actually surged by 50% from the end of Feb through to late April.
And since then, prices have certainly calmed a bit, but they're still a little higher than they were pre-conflict. As far as the materials are concerned, they're falling a bit, as I said, by about 1.3%. But we've got to keep in mind that over the week, they've improved as a group by around 4%.
But the fact that yesterday we had iron ore prices dropping below 100 US dollars per tonne for the first time since Feb, just a bit of a weight perhaps on Some of the iron ore producers, BHP down about 0.8% today, did hit a record high yesterday. So that's important to note, but Rio Tinto is down about two and Fortescue Metals is down by around 1.7%.
So earlier in the week, it was on Tuesday, we had a bunch of data. on China's economy. And one of the things that received attention was the data just continues to highlight that China's property market is still not in great shape. And it's important for iron ore and steel because it actually accounts for close to a third of China's steel demand that is basically linked to the property market.
And also new construction in China has been slipping now for over five years. If we look at some individual movers on the market today, we do have stocks like Mesoblast, 4D Medical, Deep Yellow, Cochlear, A2Mil, QBE, all improving. So a mixed bag there on the winners column. Washington sold Pats up in the order of 2% as well.
It agreed to sell its stake in Brickworks Industrial Joint Venture Property Trust, it's a mouthful, to Goodman for close to $2 billion. In the losers column, we've also got a long list of companies, but some of these are companies that have been on the receiving end of broker downgrade. So We've got stocks like Nick Scali, ResMed, and Sims Metal.
Karun Energy is actually up around 1.5%, but it did receive a broker downgrade. And we've got to remember that it still is down almost 30% this week. And that's after it cut its production forecast by about 10% a few days ago due to some operational issues. And that kind of started a process of a number of brokers downgrading their expectations for where the stock might be in 12 months' time.
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