Markets Overview
- ASX SPI 200 futures up 0.4% to 8,683.00
- S&P 500 up 0.2% to 7,445.72
- Dow Average up 0.6% to 50,285.66
- Aussie little changed at 0.7149 per US$
- US 10-year yield fell 1.6bps to 4.5696%
- Australia 3-year bond yield fell 10 bps to 4.59%
- Australia 10-year bond yield fell 10 bps to 4.97%
- Gold spot little changed at $4,542.50
- Brent futures down 0.1% to $104.89/bbl
Economic Events
Australia’s largest privately held weapons maker Nioa Group sees major opportunities in the nation’s military buildup, planning to expand artillery shell production, partner with drone makers and eventually build missile motors.
Hopes for a diplomatic way out of the war in Iran lifted stocks as oil dropped on speculation that a deal would pave the way for a revival of energy flows through the key Strait of Hormuz.
In a volatile session, the S&P 500 extended this week’s advance. The Dow Jones Industrial Average closed at all-time highs. US crude settled around $96. Iran said the latest Washington proposal partly bridged the gap between the sides, even as a news report that the country plans to keep its uranium stockpile clouded the outlook for a breakthrough in peace negotiations.
Traders have been on high alert for clues on the status of talks that could lead to a reopening of Hormuz. Traffic through the vital waterway has shriveled since the conflict erupted, causing energy prices to soar while rattling economies, companies and markets.
US Secretary of State Marco Rubio said there were “some good signs” that a deal with Iran could be reached, adding that he expected Pakistani mediators to travel to Tehran, according to the Financial Times. Meantime, Iranian President Masoud Pezeshkian said “we will never back down” in talks.
Key sticking points between the sides include Iran’s nuclear enrichment and its stocks of highly-processed uranium. Supreme Leader Mojtaba Khamenei issued a directive that near-weapons-grade uranium should not be sent abroad, according to Reuters. Later, Al Jazeera said no new uranium directive has been issued.
Iran is discussing with Oman how to set up some form of a permanent toll system that will formalize its control of maritime traffic through Hormuz. President Donald Trump said the US wants the strait to be open and free of tolls.
Concerns that a prolonged closure of the waterway could worsen energy disruptions and fuel inflation have unsettled investors, spurring speculation that central banks would be forced to raise interest rates. The danger that comes with higher borrowing costs is that expansion in some economies could grind to a halt.
While US manufacturing activity expanded by the most in four years, that was seen by many as only a temporary boost as customers strived to get ahead of mounting price pressures. In the latest sign of how the war is impacting companies, Walmart Inc. warned rising fuel costs are squeezing its bottom line and could lead to higher prices for shoppers.
Jamie Dimon said interest rates may climb much further, a warning to bond investors at a time when yields have touched multi-year highs.
“They could be much higher than they are today,” the chief executive officer of JPMorgan Chase & Co. told Bloomberg Television. “We may have gone from a saving glut to not enough savings.”
