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ASX Live Coverage – Tuesday, June 16
Our live coverage of the Australian Securities Exchange (ASX) begins today, with a flurry of updates expected before the market opens, followed by periodic insights throughout the trading day. We’ll conclude our updates around 2:00 PM AEST. We welcome feedback to enhance this experience—share your thoughts here.
US Markets Surge Amid US-Iran Agreement
[8:35 AM] US stock indices have rallied for the third consecutive session, buoyed by a diplomatic agreement between the US and Iran to conclude the ongoing conflict and reopen the crucial Strait of Hormuz. Despite this diplomatic progress, several details remain to be finalised.
Key Market Movements:
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Indices Performance: The Dow Jones rose by 0.92%, the S&P 500 gained 1.65%, the Nasdaq soared by 3.07%, and the Russell 2000 increased by 0.72%. Notably, both the Dow and the Russell 2000 achieved record closing levels, while the S&P 500 and Nasdaq paced 1-2% below their historical peaks.
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US-Iran Agreement: A Memorandum of Understanding (MoU) is set to be signed in Switzerland on Friday, which will allow the reopening of the Strait of Hormuz. However, the US will maintain its blockade until the agreement is formalised, and discussions on nuclear issues will continue.
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Iran’s Stipulations: Iran has consented to ensure free passage through the Strait during a 60-day negotiation window, with potential charges applying thereafter. In contrast, Trump is advocating for permanent toll-free passage.
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Sector Performance: The tech sector, including memory and semiconductors, saw significant gains, with five major technology stocks rising by over 2%. Additional strong performers comprised software, fintech, investment banks, private equity, along with the airline and cruise industries.
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Market Outlook: Investors are pricing in an anticipated 17 basis points of Federal Reserve interest rate hikes before year-end, supported by record global merger and acquisition announcements, positive seasonality trends, and increased managed futures buying, all of which contribute to a bullish market sentiment.
- Bearish Pressures: Factors such as concerns over AI capital expenditure and return on investment, as declining token costs raise questions, along with new US export controls limiting access to certain AI models, elevated equity and debt supply levels, and ongoing worries about private credit, pose challenges to market optimism.
Morning Update from the ASX
[8:31 AM] ASX 200 futures have dropped by 98 points (-1.10%).
Recap of Overnight Trading:
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Following Trump’s declaration of the conclusion of the US-Iran conflict and authorisation of the reopening of the Strait of Hormuz, the S&P 500 and Nasdaq have surged, yet remain 1-2% shy of their record highs.
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Oil prices have fallen to their lowest levels since March, with both Brent and WTI crude near the low US$80s mark, as the likelihood of restored oil flows diminished the previous war risk premium.
- Fox Corporation’s stock plummeted by approximately 15% after announcing its acquisition of Roku for around $22 billion. Conversely, SpaceX continued its substantial IPO rally ahead of an anticipated swift entry into the Nasdaq-100.
As political and economic developments continue to unfold, we will keep you updated on market movements and significant events affecting the ASX throughout the day. Stay tuned for continuous updates and insights!
