Chapter 1: What is the main topic discussed in this episode?
A listener production.
Chapter 2: What triggered the recent decline in the Australian share market?
An escalating US-Iran conflict triggers our biggest tumble in weeks.
But despite the broader sell-off, there were still plenty of winners around today.
Good afternoon, I'm Steve Daglian.
I'm Laura Bessarati.
It's Thursday the 28th of May. Welcome to the ComSec Market Update.
Well, it's been quite a rough session today leading into the close, the Aussie market down by 1.4%. We were lower earlier on, hitting a low of 1.8%. That looked like it was going to be our worst day in almost 12 weeks, but we did bounce off those lows, but still quite a rough session nonetheless.
It certainly has been, and it's enough to wipe out Wednesday's solid gains quite handedly.
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Chapter 3: What sectors showed resilience despite the market downturn?
We were up about 0.7% yesterday, so just remember that. We'd actually finished at the best levels of the session as well yesterday, and this was after the softer than expected inflation data at the headline level, and that basically had markets thinking that rates are most likely going to be on hold in coming months.
The market reckons there's about a 50% chance now of one more rate hike by August, and that was 60%. before the data was handed down yesterday. But of course, there was something else that really weighed on our market today and saw us dropping back heavily.
And it's nothing surprising because it's been what's been driving markets for the past few months. We're up to or entering a fourth month now. of the war and there's been a lot happening between the podcast yesterday afternoon and now this afternoon's podcast. There's a lot of he said, she said going on.
We had the US President saying he was not satisfied with negotiations while the White House denied an Iranian report claiming a draft agreement involving Iran and Oman to oversee the waterway. We had the US military carrying out fresh strikes in Iran overnight. And Iran has said that it's attacked a US military base in the region.
So tensions seeming to just continue ramping up and really dampening any hopes about a peace deal, even though the two sides were supposedly getting very close to a deal just a few days ago.
And that's the thing because this ceasefire is now about seven weeks old and negotiations are apparently still ongoing despite all this. So they're still claiming that the ceasefire is in place. And I guess you've got to ask the question on when does a ceasefire no longer a ceasefire if there are strikes actually going through.
But at the end of the day, it is making a peace deal not look any closer.
Absolutely. So if we have a look at what's happened over the course of the week, yes, you mentioned we did improve yesterday, but it was only a lift of 0.7%. Today's decline has certainly offset that as we're down 1.4%. So over the course of the week, the Aussie market looks like it could drop 0.7% at this stage. This is before the market shuts today.
And of course, we still have tomorrow to go in month to date terms. We're down 0.8%. And if we zoom out a little further over the course of the year, we're down 1.4%. So firmly in negative territory for the year at this stage.
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Chapter 4: What is the impact of inflation data on market expectations?
So over the year, we've got oil prices up in the order of around 60% still. There are plenty of stocks in focus as well. The best performer on the market today is a site minder, SDR, which is up close to 9%. This is a company that makes software that helps hotels sell rooms online and also manage their bookings. So you can think of brands like Booking.com and Expedia, for example.
And without software like this, they run the risk of double bookings, difficulty managing pricing as well. So today, for the first time, they launched a new bit of technology which allows some of these hospitality companies to integrate its own tech directly within their own platforms. Because at the moment, they've had to basically use the full SiteMinder platform directly.
So the shares are up today.
Centuria has also been in focus. It's actually the second best performer as we speak. This is after giving investors an update on its Reset Data venture, which is basically its big push into AI infrastructure. So it's saying it plans to build up to 200 megawatts of AI data center capacity. And they're going to do this by turning older office buildings into AI infrastructure hubs.
That's to meet the massive demand for AI computing capacity. Now, what really caught investors' attention, though, was the mention of NVIDIA. It said these AI factories are being built to support NVIDIA-powered systems, which are considered the gold standard for training and running AI models. So investors are seeing this as Centuria trying to tap
directly into the global AI boom by building the infrastructure that actually powers it. So its shares have jumped to a two-month high.
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Chapter 5: How are US-Iran tensions affecting market sentiment?
They're up a little over 6% as we speak.
The second worst performer on the market is Eagers Automotive, which is a car dealership group. It's down by almost 10% on the receiving end of four brokers, basically reducing their price targets for where they reckon the share price might be in 12 months' time.
Yesterday, it updated the market at its AGM, basically saying that on the one hand, it's receiving a bunch of new orders that are coming through, but on the other, there have been supply constraints. So the spike in fuel prices we've had in recent months because of the conflict in the Middle East has...
created a bit more demand for electric vehicles, and that in turn is straining, I guess, the retail supply chain.
On the back of everything going on, we've also seen gold prices falling to a two-month low, which has certainly clouded the outlook for those peace talks. So gold currently hovering near $4,400 US an ounce. The gold subsector is down a whopping 7.4% today, and that's why the losers list is largely made up of gold miners. So Genesis Minerals is plunging 10%. It's the worst performer.
Then we have the likes of Perseus Mining, Regis Resources, Evolution, and Northern Star following closely behind, and they're all within the 10 worst performers. I had a look and saw that the gold subsector is down 17% so far this year.
Yeah, well, so the strengthening US dollar is weighing on gold prices, eight of the worst teneral gold miners, as you say. Endeavor is also under pressure today. It's down by in the order of around 4.5%. This is the group that owns Dan Murphy's and BWS chains. It continues to be sold off.
A reminder that yesterday it flagged a major restructure where it's shutting some of its wineries and reducing its dividend as well. So it wants to cut cost. A bunch of brokers have also reduced their share price targets today as well.
I'll also quickly mention Select Harvests. It was out with half-year results and the almond producer highlighted improving earnings, strong almond prices and solid demand as well. Now, it reinstated its dividend for the first time since early 2023 and it announced an on-market buyback of up to 10% of issued capital, which will be around 14.2 million shares.
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