Trump sends mixed messages to Iran

Markets are starting the week on mixed messages from the White House after US President Donald Trump rejected Iran’s latest proposal to reopen the Strait of Hormuz ahead of negotiations between the superpower and Islamic Republic this week.

Microsoft founder Bill Gates joined the growing number of people calling for regulation of artificial intelligence, while OpenAI said a swarm of its agents accessed various US government websites.

TikTok and its Chinese parent ByteDance reached a US$100 million settlement with the state of Alabama that will impose new age limits and tougher verification for users, and put the offer to 40 other states.

And Australia’s ASX is poised to nudge higher when trading opens across the Tasman, with Synlait Milk due to report its annual result and Statistics New Zealand’s monthly jobs figures on the calendar.

Tentative talks

Brent crude oil futures fell 2.1% to US$104.37 heading into the weekend on optimism that a deal could be reached between the US and Iran, although US President Trump tempered that by rejecting an Iranian proposal to reopen the Strait of Hormuz, saying the Islamic Republic overplayed its hand, with the Wall Street Journal reporting that he was sceptical Iran would meet his demands.

The global oil benchmark has diverged with West Texas Intermediate – the US benchmark – amid plans to throttle back American exports of diesel.

“President Trump offered mixed signals, saying he expected negotiations to resume this week despite rejecting Iran’s proposal,” Bank of New Zealand senior interest rate strategist Stuart Ritson said in a note. “Markets remain cautious, however, after repeated diplomatic setbacks and with physical oil markets still tight.”

Meanwhile, five people have been arrested in the UK near an airforce base the US had used in the conflict with Iran, with the men charged on suspicion of planning a terrorist act.

Cheaper oil prices flowed through to financial markets on Friday, with the Dow Jones Industrial Average gaining 0.9%, led by Microsoft, Sherwin-Williams and Amgen. The S&P 500 and Nasdaq Composite were both up 0.5%, while the yield on US 10-year treasuries slipped 2 basis points to 5.17%, still above New Zealand’s equivalent at 5.11%.  

Across the Atlantic, the UK’s FTSE 100 edged up 0.1% on Friday, while Germany’s DAX gained 0.6% and France’s CAC 40 was marginally weaker.

Regulate AI

Meanwhile, Microsoft founder Bill Gates added his voice to regulating AI, telling NBR’s ‘Meet the Press’ programme that nobody thought self-regulation was enough, while Magellan cofounder Hamish Douglass told The Australian newspaper that the technology would probably cripple nations’ ability to recover from recessions by hollowing out employment.

OpenAI chief Sam Altman and Anthropic boss Dario Amodei have been sent requests to appear at Australia’s senate inquiry on AI as the Australian government grapples with OpenAI agents hacking Medicare.

US Federal Trade Commission chair Andrew Ferguson signalled he would hold developers responsible for harm caused by agents, in a speech to the Reuters Momentum AI Austin event.

And The Information reported the Chinese government signalled it would let some domestic companies including ByteDance and Alibaba buy Nvidia chips, following the summit between Trump and China’s President Xi Jinping last week.

The US state of Alabama reached a settlement with TikTok and its parent, ByteDance, imposing new restrictions on the social media platform to protect children, with a US$100 million payment, which would rise to US$400 million if 40 other attorneys general sign up to similar agreements.

Australian futures are pointing to a mildly positive start to the S&P/ASX 200 index when trading opens across the Tasman, while the kiwi dollar traded at 56.62 US cents at 7am in Auckland from 56.53 cents last week.

The Reserve Bank of Australia is expected to hike its target cash rate a quarter-point to 4.6% on Tuesday.

Meanwhile, The Australian Financial Review reported ASB Bank’s incoming chief executive Sinead Taylor was being sent to turn around the lender’s performance against its peers.

Local data today include Stats NZ’s monthly filled jobs and business count indicators, while the Reserve Bank’s foreign currency assets and liabilities, which show its net purchases or sales of kiwi dollars, are also due.

And Synlait Milk reports its annual result today.

Reporting by Paul McBeth. Image from Sunira Moses on Unsplash.