Australian shares to open lower as chip stocks push Wall Street higher
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The news: The Australian sharemarket is set to open lower despite a rebound on Wall Street overnight, as a US-Iran peace agreement fuelled optimism that the reopening of the Strait of Hormuz could ease inflation pressures. However, investors continue to price in further interest rate increases from the Federal Reserve later this year.
The numbers: Updated at 8:00am AEST:
- ASX futures: down 51 points to 8,854 points
- Wall Street: Dow Jones up 0.14%, S&P 500 up 1.08%, Nasdaq up 1.91%
- Europe: FTSE 100 down 1.04%, CAC 40 up 0.44%, DAX up 0.37%
- Spot gold: down 1.27% to USD4,205 per ounce
- Oil prices: Brent down 0.36% to USD79.26/barrel, US WTI down 0.48% to USD76.43/bbl
- AUD: down 0.01% at 70.15 US cents
- Bitcoin: down 2.44% to USD62,867.
The context: The three major US indices closed higher on Thursday, with the Nasdaq rising 1.9%, led by gains in semiconductor stocks. The Philadelphia semiconductor index surged 6.4%, outperforming the broader market. Intel jumped 10.6% to a record high after Trump said Apple had agreed to work with Intel to design and manufacture its chips in the US.
Elsewhere, oil prices fell to their lowest levels since early March after the US and Iran signed an interim agreement extending the April ceasefire by a further 60 days to allow time for negotiations on a permanent deal. The first commercial vessels resumed transiting the Strait of Hormuz, where shipments of oil, gas, fertiliser and other cargoes had been disrupted since the conflict began.
Iran’s Supreme National Security Council said vessels using the Strait of Hormuz must coordinate with Iranian authorities. The council also said transit tolls would be suspended and covered by Iran for 60 days, under the memorandum of understanding agreed with the US.
Traders are now pricing in around 50% chance of a 25-basis-point rate hike by September and roughly 20% probability of a 50-basis-point hike, according to CME Group’s Fedwatch Tool. The shift followed comments from Federal Reserve chair Kevin Warsh, who vowed to restore price stability after officials left rates unchanged while signalling growing support for further tightening.
Globally, the Bank of England left interest rates unchanged at 3.75% overnight, describing the recent decline in oil prices as “encouraging”, although two of the nine policymakers voted for an immediate quarter-point increase amid concerns about persistent inflation.
