The ASX is likely to slip in early trading today, with ASX futures falling 0.2% or 17 points over night.
The international markets made broad progress yesterday, particularly in the US where the Dow, S&P 500 and Nasdaq all gained 0.3% by end of US trading.
Shares in Google’s parent company Alphabet (NASDAQ:GOOGL) dipped 4% after it was revealed Samsung (KS:005930) is considering replacing Google with Microsoft (NASDAQ:MSFT) parent Bing as the default search engine on its devices.
With Bing’s recent adoption of generative AI technology ChatGPT as part of its search engine offering, some believe Google is falling behind its competitors in the AI arms race.
The search engine giant still holds an incredible 90%+ of the international search engine market share but has not yet been able to produce an AI search assistant on the same level as OpenAI’s ChatGPT.
US long-term government bonds rose on Monday, buoyed by predictions the Fed will raise interest rates a further 25 basis points next month.
10-year yields rose by 8 points to 3.61% while 2-year yields rose by 10 points to 4.20%.
The mood in Europe was mixed.
The FTSE Eurofirst 300 fell 1.14 points or 0.1% but the UK FTSE 100 gained 7.6 points or 0.1%
The European bourse had been on a five-day positive streak last week but faltered on Monday ahead of some major earnings data set to be released on Wall Street this week.
Government calls for stronger ties
Federal Minister for Foreign Affairs Penny Wong made a National Press Club Address on ‘Australian interests in a regional balance of power’ where she called for a calm, measured approach to diplomacy in the Pacific region.
Acknowledging that China would continue to pursue its national interests in the area, Senator Wong emphasised that speculation over potential military flashpoints was the “most dangerous of parlour games”.
“Because let me be absolutely clear. A war over Taiwan would be catastrophic for all,” Senator Wong stated.
“We know that there would be no real winners and we know maintaining the status quo is comprehensively superior to any alternative.
“It will be challenging, requiring both reassurance and deterrence, but it is the proposition most capable of averting conflict and enabling the region to live in peace and prosperity.
“So, I will say it now to the National Press Club – to avoid any possible misunderstanding: our job is to lower the heat on any potential conflict while increasing pressure on others to do the same.
“In our China relationship specifically, the Albanese Government will be calm and consistent, and continue to do as we have since coming to office: cooperate where we can, disagree where we must, manage our differences wisely and above all else, engage in and vigorously pursue our own national interest.”
The Senator highlighted the importance of China as a trading partner but accepted that the global power would continue to “deploy this strength and utilise this influence to advance its national interests.”
Striking a careful tone that sort to neither provoke nor capitulate, the Senator called for greater Australian independence and sovereignty within the context of energy, education, social institutions and both economic and cyber security.
Repeatedly, the Foreign Affairs Minister emphasised that Australia is not interested in allowing a single superpower to dictate foreign policy in the region – instead, the Federal Government is strongly pursuing diplomatic and economic cooperation within the Pacific.
“That’s why the Albanese Government has made engagement with ASEAN and its members a core priority,” Senator Wong said.
“By the first anniversary of our government, I will have visited every country in Southeast Asia as foreign minister, except Myanmar.
“This diplomatic effort must be complemented by increased economic engagement.
“The government’s Southeast Asia Economic Strategy to 2040, due for release later this year, is central to that, as is our web of free trade agreements with regional partners.”
Senator Wong acknowledged that diplomacy, by necessity, would be supported by military deterrence, citing the AUKUS agreement as a turning point in Australia’s defence capability.
“In a diverse region of more than 675 million people, we have to be targeted about how we can maximise our impact, and work with partners to reinforce and multiply that effect,” Senator Wong continued.
“To create opportunity together, and to demonstrate to the region that there are interests to nurture beyond security interests.
“To build the assurance that comes with knowing that their success is our success.
“We are investing in our national power, not just to guard against regional contest, but to shape and influence it to advance our national and shared interests.”
Oil and gold prices fall
Oil fell yesterday, slipping on average by about 2.0%.
The strengthening US dollar drove down the buying power of other major currencies, even as Reuters reported that shale crude production is expected to rise by 49,000 barrels per day in May to 9.33 million barrels per day, the highest on record.
Brent Crude fell 1.8% or US$1.55 to US$84.76 a barrel.
US Nymex slipped 2.0% or US$1.69 to US$80.83 a barrel.
Gold also fell 0.4% or US$8.80 to US$2,007 an ounce, while iron ore futures rose US$0.90 or 0.8% to US$120.01 a tonne.
Base metals were mixed, with copper futures falling 1.0% and aluminium futures 0.1% while tin enjoyed a 10.9% jump with the threat of a tin mining ban in Myanmar and nickel rose 2.5%.