Today’s News

The Big Picture

• Inflation panic takes hold. Bonds sold off on Friday as investors grew concerned about a prolonged closure of the Strait of Hormuz and what that will mean for inflation. The US 30-year Treasury yield jumped to 5.12%, its highest closing level since 2007. US markets are pricing a 50% chance of a rate rise by the end of 2026. Meanwhile Japan’s 30-year bond topped 4% for the first time since they were issued in 1999 and in the UK the 30-year hit its highest level this century at 5.85%. (FT | Reuters)
  
  

• Confusion reigns over Australia’s gas reservation scheme. Last week, the Albanese government announced all gas producers would be required to sell 20% of their gas to Australian customers, rather than selling overseas. This has caused confusion in WA, where the state has had a 15% gas reservation scheme for years. It is not clear how the state and federal scheme will operate together. (AFR)
  
  

• Trump-Xi summit produces no concrete outcome. The US President returned from his visit to China with no major announcements, the largest being China agreeing to buy 200 Boeing planes. Speaking to reporters on the way home, Trump said he had not made a decision on a pending US$14 billion arms sale to Taiwan. Xi will next visit the US in the second half of the year. (Reuters)
  
  

• China bans export of sulphuric acid. The world’s most used industrial chemical is critical for batteries, fertiliser, clothing, computer chips amongst many other applications. China is the world’s largest exporter of sulphuric acid, but half of the world’s supply of sulphur comes from the Middle East. With supplies disrupted, Beijing has banned the export of sulphuric acid to ensure it has enough domestically.  (ABC)
  
  

• Iran tells America to get serious. Iran’s foreign minister, Abbas Araghchi, said Iran has “no trust” in the US and is only interested in negotiating with the US if it is serious. Meanwhile Trump said a 20-year moratorium on Iran’s nuclear program would be enough for America to end the war. (NBC)
  
  

• Clear challenger emerges for British PM. Mayor of Manchester Andy Burnham has been endorsed by the Labour Party for an upcoming by-election to enter the House of Commons. If he beats the Reform UK candidate and wins the seat, Burnham is expected to challenge Prime Minister Keir Starmer for the leadership, with many Labour MP’s already lining up behind him. (AFR)

Companies in the news

• SpaceX ready for liftoff. Elon Musk’s space company is targeting 12 June for its much-anticipated IPO. The company will trade under the ticker SPCX and will reportedly try to raise US$75 billion at a $1.75 trillion valuation - making it the largest IPO of all time. (WSJ)
  
  

• Elon secures another trillion-dollar pay package. As part of the SpaceX IPO, the FT reports that investors will be asked to sign off on a trillion-dollar incentive package for Elon and a guarantee that he cannot be fired. Musk already has a trillion-dollar incentive package at Tesla which is contingent on selling millions of humanoid robots. For the SpaceX package, it will likely be linked to establishing a colony on Mars. (FT)
  
  

• ABC flags cuts to TV programming. Managing Director Hugh Marks warned that some decades-old shows will be axed from the national broadcaster over the next year or so, with the money being redirected to new platforms. He wouldn’t say which particular shows face the axe. (ABC)
  
  

• Australian neocloud IREN raises $4.1 billion. The AI data centre company has 4 data centres in North America, another 2 under development, and is scoping out projects in Australia and Spain. (Capital Brief)
  
  

• Mineral Resources drop 8% on Chris Ellison sale. Ellison, the founder of the mining services business, sold $122 million of shares for “personal financial planning purposes”. Ellison remains the largest shareholder with 10.5% of the company. (Capital Brief)

What the…?

Firmus forced to remove unauthorised UN logo from website. The Australian AI infrastructure company has been forced to remove the logo, where it appeared unauthorised for more than a year.

The company has also recently removed environmental claims from its website, including those of reduced land use and a lower carbon footprint than rivals. It adds to a growing list of red flags as Firmus nears a $12 billion ASX listing. (SMH)

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Today’s Insight

Key rules for Portfolio Construction

Financial adviser Matt Ingram from Northhaven answered one of our community questions about what his key rules of portfolio construction are.

What are your key rules of portfolio construction?

It’s not the best analogy, but try follow along…I tend to think about portfolio construction like building a house. First, you need a strong foundation. That’s the core of the portfolio. For most people, that might be broad index ETFs, a few high-quality managed funds, or some established blue-chip companies. The point of the foundation isn’t to be exciting. It’s to be stable. It should carry most of the weight and do most of the long-term compounding.

Once the foundation is in place, you add the structural beams that hold everything together. In a portfolio, that’s diversification and negative correlation. Different sectors. Different asset classes. Investments that don’t all move in the same direction at the same time. When one part of the portfolio is under pressure, another part should ideally be holding up. That balance is what keeps the whole structure standing. You don’t build a house only for sunny days. You build it to handle storms, heat, cold, maybe even earthquakes. A portfolio should be the same. It should be built to survive unexpected shocks. You hope for strong returns, but you prepare for tough periods. If the structure is solid, you don’t need to panic every time the weather changes. The goal isn’t to predict every storm, but rather to build something resilient enough to handle whatever comes.

Interested in speaking to Matt or any of our hand-picked financial advisers? Fill out the form on our website and we’ll put you in touch with an adviser that suits your needs.

Today in Equity Mates