Oil, inflation to rock markets; Albo bids for AI model; ETF issuance surges
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What is the main topic discussed in this episode?
Welcome to Fear and Greed, business news you can use today. Investors could be in for a rocky week on the back of rising oil prices and critical inflation numbers. Prime Minister Anthony Albanese says the government is talking to Anthropic about getting access to a super powerful AI model. And Chinese mathematicians solve two separate century old maths puzzles and in doing so win the Fields Medal. Plus, ETF issuance is set to surge and the US levies tariffs on 60 countries. It is Monday, the 27th of July, 2026. I'm Michael Thompson and good morning, Sean Aylmer. Good morning, Michael. Sean, the main story this morning, rising oil prices, big tech earnings and critical inflation data is set to buffet.
The local share market, the bond market, the Aussie dollar, all of it set to cop it a bit this week, starting with the local economy. Inflation figures due for release on Wednesday are likely to determine whether the Reserve Bank will lift interest rates in a little over a fortnight's time.
How will rising oil prices and Middle East tensions affect markets this week?
After figures showing strong growth in the labour market were released last week, more market economists now believe there will be another hike at some point this year. That's right.
Australia's underlying inflation rate is running at 3.6%, well above the Reserve Bank's target band of 2-3%. Unless Wednesday's figures show an appreciable fallback, then a rate rise on 11 August will probably become the consensus forecast. Not a lock-in. but probably the consensus forecast. Bond markets have priced in a 100% chance of a rate hike at some point this year, and the Aussie dollar, trading at close to US$0.70, suggests that traders in that market think there's a rate hike on the way. Other economies, notably Canada and the UK last week, seem to have price rises under control, not Australia. A big challenge for the Reserve Bank is that we have rising oil prices that could flow through to underlying inflation and then to inflationary expectations.
That's when the economy ends up with some real problems.
Yeah, so let's talk about oil prices. Crude hit $100 on Friday, with the Strait of Hormuz effectively closed and Iran-backed Houthis targeting Saudi shipping in the Red Sea. If oil can't get through the Red Sea and it can't get through the Strait of Hormuz, prices will rocket. We're not there yet, but it is a threat. And over the weekend, oil settled at, what, $97 a barrel? Yeah. That's right.
Now, in the short term, most of us feel that in petrol prices, they've risen from the 30 June low of about $1.53 a litre to what they are now, about 182 cents, $1.82 a litre.
Yeah, try filling up with diesel, $2.27 across the weekend. It hurts. Ouch.
So they could, I mean, let's go back to petrol for a moment, Michael. Self-interest enough. Sorry. Back to petrol. Buck 82 could be above $2 early next month. Now, the increase reflects the halving of the $0.32 a litre fuel tax cut from 1 July. So that's why we've sort of gone from 150, or part of the reason it's gone from 150 to 180 or thereabouts. We haven't really had the full flow through of the higher oil prices yet. Now, on AMP, Shane Oliver's numbers, that could add another $0.10 a litre to petrol prices. You lose that fuel excise, you're looking at kind of $0.25 a litre more. That is well and truly above $2 a litre. If you're hoping the federal government will extend the excise fuel relief beyond August, yesterday Prime Minister Anthony Albanese said that isn't the plan.
Hmm. The local share market will also suffer, will certainly suffer if oil can't be transported, if oil prices are very high. Now, the S&P ASX 200 closed lower on Friday. In fact, it fell three quarters of a percent. Futures trading suggests it will open higher this morning, but there's so much going on in the next four or five days. that who knows where the market will end up at the end of the week.
Yeah, it feels like we're in for a pretty bumpy ride. On Wall Street, we've got three of the big tech giants, Microsoft, Amazon, and Meta, all reporting June quarter earnings this week. Amid fears about debt-fueled spending sprees on AI assets, those three, along with Alphabet, have previously forecast, and this is just such a staggering number, isn't it, $700 billion
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Chapters
4 chapters
1
What is the main topic discussed in this episode?
0:06–1:08
2
How will rising oil prices and Middle East tensions affect markets this week?
1:08–5:09
3
Could Australia face an interest rate hike after Wednesday’s inflation read?
5:09–14:32
4
How are higher petrol and diesel prices impacting Australian consumers?
14:32–16:32
Speakers
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