Australian Market Rises as AI Stocks Drive Nasdaq to Record High

The Australian share market started its day higher after Wall Street's AI stocks surged, pushing the tech-heavy Nasdaq index to a new record high.

Oil prices fell to their lowest level since early September on investors' renewed hopes for a diplomatic breakthrough to end the US-Iran war.

Market snapshot

ASX 200: +0.2% at 8,753 points (live data below)

Australian dollar: +0.1% to 71.2 US cents

Wall Street: Dow Jones (+0.7%), S&P 500 (+1.5%), Nasdaq Composite (+2.3%)

Europe: Stoxx 600 (+1%), DAX (+1.1%), FTSE (+0.8%)

Asia: KOSPI (+1.7%), Nikkei (+1.4%), Hang Seng (+0.6%)

Spot gold: +0.1% at $US4,349/ounce

Oil (Brent future): +0.7% at $US101.02/barrel

Oil (WTI futures): +0.4% at $US96.19/barrel

Iron ore: +0.2% to $US97.35/tonne

Bitcoin: -1.4% to $US85,730

10-year bond yields: US 4.95%, Australia 5.27%

Binance under US scrutiny over possible Iran sanctions violations

US federal prosecutors are investigating whether cryptocurrency exchange Binance violated sanctions on Iran by failing to prevent certain trading activity on its platform.

The Manhattan US Attorney's Office is leading the probe, with the Justice Department's criminal division in Washington also involved, adding that authorities are examining whether Binance knowingly allowed the trading.

Binance said in a statement that it has a zero-tolerance approach to sanctions violations.

"We fully cooperate with law enforcement, and we remain committed to rooting out and shutting down bad actors," the statement said.

The DOJ declined to comment, while the Manhattan US attorney's office could not immediately be reached for a comment outside regular business hours.

AI 'the great white hope to improve productivity', says Bullock

RBA governor Michele Bullock says she and her central banking colleagues around the world are optimistic about the potential long-term productivity benefits of artificial intelligence.

"AI is the great white hope to improve productivity," she says.

"When I talk to colleagues around the world about this, I think everyone thinks that. "

However, that potential longer-term benefit is coming with a short-term headache, as AI providers scramble to build data centres and other enabling infrastructure.

"But I think everyone also agrees that there are very few signs yet that AI is actually influencing the supply side of the economy," Ms Bullock adds.

"There's lots of evidence that it's influencing the demand side of the economy."

So we've got this sort of awkward sequencing event at the moment where, in Australia at least, we are in a situation of excess demand and the AI boom is adding to that demand ahead of any potential supply impacts that it might have going forward.

Rising mortgages are a cost of living, not inflation, explains Bullock — analysis

RBA governor Michele Bullock is at pains to explain why interest rate rising are the solution to inflation, not a contributor to it.

"I want to distinguish here between what people might think of as their cost of living," she says.

So as interest rates go up, they see what it costs them just to live now as going up.

"Inflation is a different thing to that. Inflation is about what's happening to prices in the economy, not interest rates, because interest rates are about the price of money."

Michele Bullock then makes a critical point:

"We need people to understand what inflation is and how we're trying to bring it down and be convinced that we are going to bring it down, because if they aren't convinced of that, then it will perpetuate itself."

RBA Governor Michelle Bullock at CEDA

The Reserve Bank governor Michele Bullock is speaking at a Committee for Economic Development Australia (CEDA) function in Sydney.

RBA governor Michele Bullock speaks in Sydney

The Reserve Bank governor Michele Bullock is speaking at a Committee for Economic Development Australia (CEDA) function in Sydney.

"We need to be very careful to ensure that policy is set in a way that minimises the second round and indirect effects which might perpetuate ongoing inflation," she said of the energy and other global supply shocks that are driving prices higher.

"I think monetary policy really just needs to continue to focus on making sure that we limit indirect effects and we try to keep inflation expectations anchored."

This comment will only reinforce the view that most economists and the traders have that there will be a rate rise next week.

Major banks hike interest rates on mortgages, before RBA meets next week

CBA has hiked fixed rates for owner-occupier and investor loans for its new customers by up to 0.48 percentage points, further signalling the RBA will hike interest rates next week.

The move from CBA follows similar changes by Westpac, NAB, and ANZ last week.

The lowest fixed rate available from one of the major banks is now 6.49%, for a 1-year term from ANZ, and a 2-year term, from both NAB and ANZ.

The price of petrol and diesel continue rising

The average diesel price ($2.91 / litre) is at a five-month high.