Markets React to Gulf Tensions, Apple Sues OpenAI, Wheat Prices Soar

Market snapshot

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By Stephen Letts

ASX 200 futures: +0.5% to 8,814 points

ASX 200 (Friday): +0.5% to 8,806 points

Australian dollar: flat at 69.46 US cents

Wall Street (Friday): S & P 500 +0.4%, Dow +0.3% Nasdaq +0.3%

Europe (Friday): Dax -0.2%, FTSE +0.2%, Eurostoxx -0.2%

Spot gold: flat at $US4,120/ounce

Oil: Brent futures -04% to $US71.01/barrel, WTI futures -0.9% to $U71.41/barrel

Iron ore (Friday): +0.6% to $US99.30/tonne

Copper (LME, Friday): +2.4% to $US13,481/tonne

Bitcoin: -0.3% at $US64,153

Prices current at around 7:00am AEST

ASX 200 opens 0.2% higher

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By Stephen Letts

Despite mounting tensions in the Gulf, the ASX 200 has eked out a 0.2% gain on opening (10:10am AEST).

Aussie dollar slips along with Wall Street futures as oil rises

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By Stephen Letts

The escalation in missile and drone fire over the Gulf has sparked a busy morning across trading desks this morning.

Here are some early takes:

AUD/USD: -0.2% to 69.37 US cents

Brent Crude: +3.1% to $US78.39/barrel

Gold: -1.1% to $US4,072/ounc

S & P 500 futures: -0.1%

Nasdaq futures: -0.3%

Dow futures: -0.1%

Regis bails out on Vault Minerals takeover battle

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By Stephen Letts

Australian gold producer Regis Resources says it will not match a $5.6 billion bid from Genesis Minerals to buy Vault Minerals, as the returns would not meet its targets.

Vault, in a separate ASX filing, said it intends to terminate the Regis scheme of arrangement and enter into a definitive agreement with Genesis for its offer.

Regis' board concluded that the terms that would be required to match the Genesis Proposal do not meet the value and return thresholds that it applies to all growth opportunities, the company said in a statement.

Regis says the termination of the scheme will result in a break fee of around $50.7 million payable to the company.

Separately, Genesis confirmed that the terms of its proposal for Vault are unchanged and remain open for acceptance pending the termination of the Regis scheme.

Reuters

War and weather drive wheat prices higher

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By Stephen Letts

Benchmark global wheat prices are continuing to rise, spurred on by wilting northern hemisphere crops and the potential closure of Russian exports.

Euronext wheat climbed more than 5% on Friday to a seven-week high as rumours about a closure of the Sea of Azov to shipping sparked concern about disruption to exports from Russia, the world's biggest wheat supplier, traders said.

September milling wheat on Paris-based Euronext settled 5.5% up at €216.25 a metric ton.

Chicago Board of Trade wheat also rallied to a seven-week peak.

Ukraine has struck Russian tankers in the Sea of Azov that connects with the Black Sea, and traders said there was talk in about a possible closure by Russia to all shipping.

"It's the reason for the rally on Matif (Euronext) and CBOT," a futures trader said, noting that the risk to a route that accounts for millions of tons of Russian wheat exports unsettled investors.

The idea of disruption to Russian exports caught off-guard market participants who had been focused on forecasts of large harvests this summer in Russia and elsewhere in the Black Sea export region.

Favourable crop conditions in the Black Sea zone have tempered reaction to recent torrid weather in Western Europe.

Grain trade association Coceral cut its outlook for this year's soft wheat production in the European Union and Britain in a special update following extreme heat in Europe though, like other forecasters, it made a steeper cut to its maize harvest estimate.

November maize on Euronext settled 2.7% up this week as more hot weather in France threatened further damage to maize crops.

Reuters

Telstra: Employees affected by outage won't be penalised

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By Alison Branley

Telstra has told the ABC its employees and frontline team members should not, and will not, be disadvantaged as a result of last week's Telstra outage.

Amid the chaos, an audience member got in touch with us concerned that Telstra call centre workers at its head office in Exhibition Street, Melbourne couldn't make it to work because of the associated V/Line outage.

"Their rosters have been marked with unpaid absences. One coworker was two hours late and was asked to make up the hours as time-in-lieu the next day," they told us.

Telstra said in a statement it had reinforced with its teams that no-one should be disadvantaged "and have asked our partners to take the same approach".

"We're sorry for any instances where this may not have occurred. We will undertake a full review to identify and rectify any cases where employees were adversely impacted as a result of the outage," a company spokesperson said in a statement.

NZ dairy giant trims milk prices on weak demand and global oversupply

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By Stephen Letts

In a move likely to have a flow-on impact on Australian dairy farmers, the big New Zealand player Fonterra has trimmed the top end of its milk price forecast for the 2026/27 season as softer-than-expected demand and robust global supply drag down prices.

The dairy producer cut the annual forecast for farmgate milk price — the price it pays to farmers for milk — to the range of $NZ8.00 to $NZ10.50 per kilogram of milk solids (kgMS) from $NZ8.00 to $NZ11.00 per kgMS.

Reuters

Oil jumps on opening trade

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By Stephen Letts

It's hardly surprising given the escalation in Gulf hostilities over the weekend and the targeting of commercial vessels in the Strait of Hormuz by Iranian drones, but the price of oil has spiked this morning in early trade.

At 8:20am AEST:

Brent crude futures: +3.8% to $US78.92/barrel

West Texas Intermediate crude futures: +3.8% to $74.13/barrel

Apple sues OpenAI, two former employees for trade secrets theft

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By Stephen Letts

Apple has sued OpenAI and two former employees, alleging misappropriation of its trade secrets to benefit the ChatGPT-owner's foray into consumer hardware, a dramatic escalation of already simmering tension between the two companies.

The complaint accuses OpenAI of orchestrating a broad effort to systematically acquire and exploit Apple's confidential information through former employees, recruiting practices and supplier relationships to accelerate its push into the consumer hardware business.

"We have no interest in other companies' trade secrets," OpenAI said in a statement.

"We remain focused on building innovative technology that empowers people everywhere."

The lawsuit sets up a battle over who will control future AI devices that may not use traditional apps or operating systems — devices which, if successful, would direct consumer attention away from Apple's best-selling iPhone.

Analysts believe OpenAI is working on a phone or other device of its own.

Tensions between the two tech companies have strained their relationship, as the race to develop AI products has intensified competition for talent and proprietary technology.

"Apple sees OpenAI moving from partner to potential rival, while OpenAI is trying to reduce its dependence on the iPhone and build a direct relationship with consumers," PP Foresight analyst Paolo Pescatore told Reuters.

"Even if the allegations are not proven, the lawsuit could delay OpenAI's hardware ambitions and further weaken what is already becoming an increasingly fragile partnership."

Apple's lawsuit, which was filed in the US District Court for the Northern District of California, comes just after OpenAI successfully fended off a legal challenge from Elon Musk's xAI.

The two former Apple employees named in the suit are Chang Liu, a former senior system electrical engineer, and former vice president of product design for iPhone and Apple Watch, Tang Yew Tan. Neither immediately responded to a request for comment.

Apple alleged that Liu failed to return a company-issued work laptop and later used an authentication bug to access Apple's internal network, downloading "dozens of Apple's confidential hardware-related files."

The iPhone maker also claimed that OpenAI's hardware chief Tan had been "methodically using Apple's confidential information to benefit OpenAI" before his departure by emailing himself information about Apple suppliers and internal industry summaries.

Tan worked on the iPhone for most of his 24-year tenure at Apple, according to his LinkedIn page.

Apple alleged that Tan encouraged Apple employees to bring parts from Apple to job interviews at OpenAI for "show and tell" sessions, citing an incident in its filing where one OpenAI job candidate allegedly said that he "didn't even know we could take those from the office."

OpenAI Foundation, OpenAI Group PBC, the company's commercial arm, and io Products, which OpenAI acquired, were also named as defendants.

Reuters

US earnings season opens with big banks reporting

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By Stephen Letts

The big investment banks lead off Wall Street's second-quarter results season this week.

Expectations are pretty bullish, with earnings across the S & P 500 expected to be about 24% higher than this time last year.

Apart from the likes of Citi, Goldman Sachs, JP Morgan and Bank of America, other high-profile companies tabling results include Netflix, BlackRock and Johnson & Johnson.

Strait of Hormuz looking empty

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By Stephen Letts

Just a quick check on shipping activity in the Strait of Hormuz, via energy investment consultancy HFI Research.

HFI's take from this morning is commercial vessels are again not prepared to risk a crossing.

"Some traffic in Iran's lane, but it's very dead," HFI said, which we assume is more a metaphorical than literal assessment.

This week: Are businesses and consumers still gloomy? Chinese economy likely to slow further

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By Stephen Letts

Australia:

Tue: NAB business conditions (Jun), Westpac consumer sentiment (Jul)

Thu: CBA household spending insights (Jul)

International:

Tue: US — CPI (Jun)

CN — Trade balance (Jun)

Wed: CN — GDP (Q2), Retail sales, industrial production, infrastructure spending (Jun)

US — Fed Chair Kevin Warsh speaks, PPI (Jun)

CA — Bank of Canada rates decision

Thu: US — Retail sales (Jun)

Fri: US — Industrial production (Jun)

It's another data-light week with the only local numbers of interest coming from private sector surveys of business conditions and consumer sentiment.

On Westpac's reading, consumers are deeply pessimistic. Tuesday's figures are unlikely to show much improvement.

NAB's business survey, also on Tuesday, is also likely to show business owners are glum, although conditions are not that bad.

Offshore, most interest will centre on US consumer inflation (Tuesday) and producer inflation (Wednesday). Any increase in core measures would materially increase the likelihood of a rate hike at the Fed's July meeting.

China publishes its second-quarter GDP numbers on Wednesday. The consensus is growth will have cooled noticeably to around 4.4% year-on-year as weak domestic consumption and property activity outweigh resilient exports and a rebound in industrial activity.

Markets on edge as Gulf hostilities resume, ships attacked in the Strait of Hormuz

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By Stephen Letts

Wall Street finished the week on a positive note, with the S & P 500 closing just shy of a record high.

S & P 500: +0.4%

Nasdaq: +0.3%

Dow: +0.3%

Sentiment was buoyed by the robust Nasdaq debut of South Korea's SK Hynix as well as forecasts of another solid rise in corporate earnings in Wall Street's second quarter results that will start rolling out this week.

Analysts are expecting S & P 500 earnings to surge 24% from a year ago, with technology companies driving much of the growth, according to LSEG.

Chipmaker SK Hynix shares jumped 14% on their Nasdaq debut, after the firm raised about $US26.5 billion, indicating strong investor appetite to gain exposure to the AI supply chain.

The offering, which will finance new factories and equipment to meet surging AI chip demand, is set to be the world's second-biggest share sale after SpaceX's record-breaking IPO last month.

While ASX 200 futures pointed to a positive start (+0.4%) when trading closed on Saturday morning, that was before the missiles started flying.

Oil prices edged lower, despite US President Donald Trump declaring an end to the Gulf ceasefire, while firing off more verbal salvos at Iran's leadership.

"Oil prices have also remained remarkably calm despite the conflict spilling over (once again) into some neighbouring countries," BMO Senior Economist Carl Campus wrote in a research note.

"While there are several factors that could be helping prevent a bigger surge … perhaps it's simply a reflection of the underlying optimism regarding ongoing talks."

Well, that was Friday.

The optimism will be sorely tested by a resumption of US attacks on Iran and Iranian attacks on other Gulf states and shipping in the Strait of Hormuz.

Tanker traffic has again slowed to a trickle and oil prices are expected to come under renewed pressure this morning.