Good morning. Oil jumped overnight after Iran struck tankers near the Strait of Hormuz and the United States revoked the waiver allowing Iranian oil sales, sending Brent up 5.4 per cent to US$75.86 a barrel and WTI up 5.3 per cent to US$72.20. Wall Street slipped as technology led the way down, the Nasdaq falling 1.2 per cent to 25,819 and the S&P 500 0.4 per cent to 7,504, with software and chip stocks the heaviest. Treasuries were little changed, the 10-year yield at 4.48 per cent and the 2-year at 4.13 per cent, and the US dollar firmed, the DXY up 0.2 per cent to 101.08. Gold eased 0.9 per cent to US$4,117.
The retreat in technology came as investors questioned the pace of the AI build-out. Samsung reported its largest quarterly profit in more than two years on AI memory demand, yet its shares fell, and China's DeepSeek is developing its own AI chip to cut its reliance on Nvidia and Huawei. Minutes of the Federal Reserve's June meeting, at which it held rates and signalled a possible increase, are due tonight AEST, with chair Kevin Warsh having said this month that prices remain too high.
Locally, WiseTech shares rose after co-founder Richard White resigned as executive chair while he contests an Australian Federal Police investigation, which he denies. The Reserve Bank flagged the data-centre boom as a fresh complication for its inflation fight, with the cash rate at 4.35 per cent, and the OECD warned that Australian living standards have fallen and real wages will drop further this year. Telstra was investigating a nationwide network outage.
The ASX 200 closed the prior session at 8,831, down 0.2 per cent and up 0.1 per cent over five sessions. The 10-year Australian government bond yield sits at 4.80 per cent, 6 basis points higher on the day and 68 basis points higher over the past year, and the Australian dollar is at US69.33 cents, down 0.3 per cent. Iron ore held at US$98.30 a tonne. The Reserve Bank cash rate remains at 4.35 per cent, with the bank flagging the data-centre boom as a new threat to inflation.
The S&P 500 fell 0.4 per cent to 7,504 and the Nasdaq 1.2 per cent to 25,819, dragged by software and semiconductor stocks. Treasuries were little changed, the 10-year yield at 4.48 per cent and the 2-year at 4.13 per cent, each down 1 basis point, while the US dollar firmed, the DXY up 0.2 per cent to 101.08. Brent crude jumped 5.4 per cent to US$75.86 after Iran attacked tankers near the Strait of Hormuz and the United States revoked its Iranian oil waiver, and gold fell 0.9 per cent to US$4,117.
The Stoxx 600 closed down 0.6 per cent at 646, and the euro eased 0.3 per cent to US$1.1413. Energy producers drew support from the overnight jump in crude. The Bank of England set out plans to ease capital rules for UK lenders, softening the leverage ratio and making capital buffers easier to release, in a move it said is intended to keep banks lending during periods of financial stress.
The Hang Seng rose 1.1 per cent to 23,616 and the Nikkei 225 was little changed at 69,738. The yen stayed subdued, USD/JPY at 162.06, as caution from the Federal Reserve limited any US dollar weakness. Samsung set the regional tone in technology, reporting its biggest quarterly profit in more than two years on AI memory demand, though its shares fell as investors had expected more.
The cash rate remains at 4.35 per cent, and RBA chief economist Sarah Hunter is due to speak today. The government has welcomed the investment even as it adds to demand for scarce industrial land and power.
Real disposable incomes fell markedly as the post-pandemic inflation surge eroded wages and lifted mortgage payments. The OECD sees GDP growth improving to 2.3 per cent in 2026, from 1.8 per cent in 2025.
The base case for no recession sits against last night's renewed jump in crude, and AFR described a trio of bleak data points as evidence the economy is running out of good news.
The Treasury barred new Iranian oil sales after 7 July, with a 10-day wind-down for existing trades. A Qatari LNG tanker and a Saudi vessel were among those hit, and the strait's threat level was raised.
The minutes, from a meeting at which the Fed held rates and signalled a possible increase, are due tonight AEST. Chair Kevin Warsh has said this month that prices remain too high.
The Financial Policy Committee said the changes, part of reform following its latest stress test, are meant to keep banks lending during periods of financial stress and better align UK rules with international standards.
The shares rose on the news, adding close to $1bn of market value, having fallen roughly 70 per cent since allegations about White's personal conduct first surfaced in late 2024.
The disruption hit one of the country's largest carriers and came as customers reported problems making calls and using data.
The update landed as Brent jumped 5.4 per cent to US$75.86 a barrel overnight on the renewed Strait of Hormuz tensions.
The sale marks the latest overseas expansion by Adnoc and continues Shell's pruning of its retail footprint.
The launch comes as investors scrutinise the scale of Meta's AI spending and as the company defends a separate US state case over teen mental health.
“Forward guidance can help speed up policy transmission, but if it is not flexible enough, it can hinder policy transmission.”
“We're all in the price stability business. We've all looked around, and we've seen that prices are too high.”
“A de facto blockade lasting another full month would be consistent with Brent crude climbing toward US$150.”
“Developing superintelligence is now in sight.”
“The FPC will work with the Prudential Regulation Authority and international authorities to pursue broad reform of the capital buffer framework.”
“Australia enjoys high living standards, but real disposable incomes declined markedly as the post-pandemic inflation surge eroded real wages.”
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.