Good morning. Brent crude fell 6.1 per cent to US$78.69 a barrel and West Texas Intermediate 6.5 per cent to US$75.14 after United States Treasury Secretary Scott Bessent said a deal with Iran to reopen the Strait of Hormuz could be signed within a day or two. The S&P 500 closed at a record, its first in two months, and Treasury yields fell.
Advanced Micro Devices and SpaceX both reported after the closing bell, both beat on revenue and both fell in extended trading, on the same objection from investors about what artificial-intelligence capacity costs to build. In London before the open, HSBC restarted share buybacks and BP reported a profit built on the oil price that has just fallen away.
Locally, Pinnacle Investment Management lodged its full-year result after Tuesday's close, opening a reporting season that runs to the end of the month. Household spending for June, published by the Australian Bureau of Statistics on Tuesday, beat expectations for a second month, a week out from the Reserve Bank's 11 August decision.
The ASX 200 finished Tuesday's session up 1.4 per cent at 9,146, a five-month high and about 55 points short of its record close of 9,200.9. Information technology led with a 3.9 per cent gain and financials added 1.9 per cent to a record, with only utilities and consumer staples finishing lower. The Australian dollar rose 0.7 per cent to US70.45 cents. The local market has not traded since the overnight moves in oil and United States equities.
The S&P 500 rose 1.8 per cent overnight to 7,737, its first record close in two months, and the Dow Jones Industrial Average gained 1.7 per cent to 54,086, its first close above 54,000. The Nasdaq Composite added 2.6 per cent to 26,585. The 10-year Treasury yield fell 6 basis points to 4.63 per cent and the US dollar index eased 0.1 per cent to 99.89. The VIX rose 4.0 per cent to 16.50.
The Stoxx 600 closed 0.7 per cent higher at 657, the DAX added 0.8 per cent to 26,202 and the FTSE 100 rose 0.2 per cent to 10,879, the smallest gain of the three. The session's two largest results, from HSBC and BP, both came out of London before the open. The euro was at US$1.1531, up 0.2 per cent.
At Tuesday's Asian close, the Nikkei 225 rose 0.3 per cent to 63,958 and the Shanghai Composite 0.3 per cent to 3,822, while the Hang Seng fell 0.6 per cent to 25,853. The yen was at 157.78 to the US dollar, 0.2 per cent weaker on the day. None of the three markets has traded since Bessent's comments on the Strait of Hormuz.
Discretionary spending rose 1.2 per cent for a second month. Transport led at 3.0 per cent on new vehicle sales, particularly electric vehicles, followed by recreation and culture at 1.4 per cent and alcohol and tobacco at 1.0 per cent. Clothing and footwear fell 0.7 per cent, miscellaneous goods and services 0.6 per cent and hotels, cafes and restaurants 0.1 per cent. The print lands a week before the Reserve Bank's Monetary Policy Board decision on 11 August, and Reuters reported that markets are not fully pricing a further increase this year.
Bowen said the change cuts installation costs for commercial, industrial and agricultural rooftops by about 20 per cent, and is budget neutral because the scheme runs through a certificate market rather than direct outlays. He has also asked the Australian Energy Market Commission to require network providers to approve commercial and industrial solar connections faster, which he identified as the binding constraint on the rollout.
The levy was lifted to 2.5 per cent from 2.25 per cent last week and is now calculated on Australian advertising revenue rather than total revenue. It applies to search and social platforms with local revenue above $250 million, capturing Meta, Google, TikTok and, after an exclusion was removed, LinkedIn. The Computer and Communications Industry Association put the cost to United States firms at about US$140 million a year.
Bessent said hundreds of ships are waiting in the waterway to get out, and that he expects prices to fall further once it reopens. The strait has been closed to commercial traffic through the conflict and no deal has been signed. Gold rose 2.5 per cent to US$4,134 an ounce, which FX Street attributed to the deal reports and to lower United States yields.
It is the first back-to-back monthly decline in nearly a year. Non-durable goods orders fell 1.2 per cent to US$321.1 billion on lower chemical and petroleum prices, while durable goods orders rose 0.5 per cent, holding most of May's 4.0 per cent fall.
Imports of goods and services fell 1.8 per cent to US$388 billion, the first decline since the start of the year and broadly based, while exports fell 0.9 per cent to US$314.7 billion. The deficit narrowed 5.6 per cent on the month.
The tariffs were imposed under Section 301 of the Trade Act of 1974 rather than the emergency powers the Supreme Court struck down on 20 February, so that ruling does not decide this case. Oregon leads the coalition, with Arizona, California and New York among the states joining.
Multi-strategy funds held up best at minus 2.2 per cent for the month. Global quantitative equity funds averaged minus 5 per cent and Asia-Pacific stock pickers minus 9.4 per cent, after a spike in crude prices set off a selloff in chip stocks. JPMorgan said the reduction in gross exposure through July was more pronounced than in any year other than 2020 and 2022.
The draft would extend existing restrictions on Chinese telecommunications gear into the buildings absorbing the bulk of current artificial-intelligence capital spending. No rule has been published and the scope of covered devices is not settled.
Underlying net profit was $138.0 million, up 21 per cent on the prior year. Funds under management were $229.4 billion at 30 June, up 28 per cent, on record net inflows of $33.4 billion. The final dividend is 31.0 cents a share franked to 65 per cent, taking the full year to 60.0 cents, unchanged on last year. No published consensus for the result could be confirmed, and the shares have not traded since the filing.
Every passenger keeps one free underseat bag with no weight limit. A second, larger bag for the overhead locker starts at $25 one way, varies by route and includes earlier boarding. Qantas Classic Flight Rewards booked on Jetstar will include the overhead allowance in the fare.
Adjusted earnings were US$1.66 a share against the US$1.62 consensus, on revenue against a US$11.3 billion consensus, and data centre revenue beat the US$6.5 billion expected. The shares fell more than 8 per cent in extended trading. Data centre now accounts for 58 per cent of group revenue, and chief executive Lisa Su said the company expects that segment to more than double again in 2027.
Revenue beat the US$6.93 billion consensus and the loss was far smaller than the 26 cents a share analysts expected. Capital spending rose more than sixfold from a year earlier to US$18.37 billion, of which US$15.83 billion went to the artificial-intelligence business, and the shares fell about 7 per cent in extended trading. Starlink revenue rose 66 per cent while average revenue per subscriber fell 22 per cent as the service expanded into lower-priced international markets.
The profit compares with a US$9.51 billion consensus, and first-half pre-tax profit was US$19.5 billion, up 23 per cent on a year earlier. The bank lifted its organisational simplification savings target to US$2 billion from US$1.5 billion and declared a second quarterly interim dividend of 10 US cents a share. Buybacks had been paused for three quarters after the Hang Seng Bank privatisation was announced. The shares finished the London session close to flat.
The profit was US$2.5 billion higher than the first quarter, on stronger liquids and gas prices and wider refining margins. Net debt fell more than 11 per cent from the prior quarter to US$22.25 billion, and BP is now targeting US$8 billion to US$9 billion of divestment proceeds for 2026. It bought Archaea in 2022 for US$4.1 billion. The shares closed 0.1 per cent lower on Tuesday.
First-quarter net profit was 1.48 trillion yen, up 76 per cent on a year earlier, on revenue of 13.5 trillion yen, up 10 per cent. Operating profit fell 9 per cent, a fifth consecutive quarterly decline, on weaker China sales and Middle East disruption. The yen averaged 160 to the US dollar in the quarter against 145 a year earlier. The buyback covers 4.22 per cent of shares on issue, and the shares fell on the day, Reuters reported.
Adjusted earnings were US$3.38 a share against the US$3.35 consensus, while revenue of US$7.1 billion, up 4 per cent, came in about US$100 million short of expectations. Global comparable sales rose 1.3 per cent. Chief executive Chris Kempczinski attributed the United States slowdown to inconsistent execution of the new Every Day Affordable Price menu and a pullback in digital offers. The shares rose 2.8 per cent in premarket trading on Tuesday.
Second-quarter adjusted earnings were US$0.77 a share against a US$0.68 consensus, on revenue of US$15.03 billion against US$14.40 billion expected, led by the blood thinner Eliquis and acquired products. Pfizer lifted expected net cost savings from its realignment programme by a further US$1 billion, to US$6.7 billion through 2029.
Revenue was 4.78 billion euros, up 14 per cent and in line with company guidance, with subscription revenue up 15 per cent and advertising up 1 per cent. Gross margin hit a record 33.4 per cent against 33.1 per cent guided, and operating income of 655 million euros beat the 630 million guided. The shares traded lower on Tuesday after the company guided to weaker-than-expected profit on slowing growth in Western markets.
“There is a chance we may have a deal today or tomorrow to open the strait and move towards a more normalized position in this conflict.”
“We enter the second half with strong momentum as EPYC demand accelerates, Instinct deployments scale and Helios begins to ramp.”
“This is my first full quarter at bp, and it has been marked by one of the most disrupted periods in the global energy market.”
“Global comparable sales grew 1.3%, reflecting a challenging consumer environment that saw QSR industry traffic in several of our largest markets continue to be flat to negative.”
“We grew fee and other income in wholesale transaction banking by 4%. As the world's trade bank, this shows the central role we are playing and the growing market share we are taking as our customers adapt to new patterns of trade.”
“The increase in EBITDA was primarily due to higher volumes, increased joint venture earnings and positive pricing, partially offset by tariffs and higher variable compensation expenses.”
For wholesale clients only. Prepared by Arc Point OCIO Pty Ltd (ACN 693 569 765), Corporate Authorised Representative (CAR 1319046) of Capella Advisory (AFSL 550125), for wholesale clients within the meaning of the Corporations Act 2001 (Cth); it is not intended for, and should not be relied on by, retail clients. This note is factual market reporting and general information, with any arcpoint view clearly labelled as such. It is not personal advice and does not take into account any person's objectives, financial situation or needs. Information is drawn from sources believed to be reliable but its accuracy and completeness are not guaranteed. Past performance is not a reliable indicator of future performance.
Sources: Yahoo Finance, FRED, RBA, company filings.