# Stocks Shrug Off Iran War, Australia Budget Preview

An episode of [Bloomberg Daybreak: Asia Edition](https://invisiblenetwork.ai/podcast/1663863437), 12 May 2026, 14 min.

Audio: https://podtrac.com/pts/redirect.mp3/traffic.omny.fm/d/clips/e73c998e-6e60-432f-8610-ae210140c5b1/58e85be7-dbb5-4043-afed-af80014dc0b3/f4fffedc-bc68-46cb-bc7f-b44800236472/audio.mp3?utm_source=Podcast&in_playlist=27143354-63aa-4ac5-965d-af80014dc0d3

Asian stocks edged up 0.4% to near their record as traders stayed bullish on the AI trade. Meantime, crude oil gained and bonds dropped after President Donald Trump cast doubts over the ceasefire with Iran, prolonging the closure of the Strait of Hormuz and keeping energy prices elevated. We heard from Colin Purdie, Manulife Investment Management Global CIO of Public Markets. He spoke to Bloomberg's Paul Allen and Avril Hong. Plus - Australian Treasurer Jim Chalmers aims to deliver a budget that tackles inflation, revives productivity and reins in deficits, a tough challenge at a time when fuel prices are soaring. Bloomberg's Paul Allen speaks to ANU Associate Professor Jill Sheppard for a preview. See omnystudio.com/listener for privacy information.

## Transcript

[0:00] Speaker 1: Bloomberg Audio Studios, Podcasts, Radio News.
[0:10] Speaker 2: Welcome to the Daybreak Asia Podcast. I'm Dan Schwartzman. Doug
[0:14] Speaker 2: Chrisner has a day off. Asian stocks climbed at the
[0:17] Speaker 2: open as trader stayed bullish on the AI trade, even
[0:20] Speaker 2: as the US and Iran failed to reach any peace deal.
[0:23] Speaker 2: That came after Wall Street benchmarks edged up to a
[0:25] Speaker 2: record close on Monday and the Philadelphia Semiconductor Index jump
[0:29] Speaker 2: two point six percent to an all time high. Meantime,
[0:33] Speaker 2: West Texas Intermediate crewit held above ninety eight dollars a
[0:36] Speaker 2: barrel after President Trump said the ceasefire with Iran was
[0:39] Speaker 2: on quote massive life support and rejected the Islamic Republic's
[0:43] Speaker 2: latest peace proposal. From more on the Markets, we heard
[0:45] Speaker 2: from Colin Purdy, Global CIO of Public Markets and Manual
[0:49] Speaker 2: Life Investment Management, and he spoke to Bloomberg's Paul Allen
[0:52] Speaker 2: and April Honk.
[0:53] Speaker 3: So you believe in this AI buildout, specifically for North Asia.
[0:59] Speaker 3: There's this wold a bit about whether this is a
[1:01] Speaker 3: structural or is this a trade? Where are you on
[1:04] Speaker 3: that argument? Is there a case for perhaps a bit
[1:08] Speaker 3: of a pullback in the near term, given how concentrated.
[1:11] Speaker 3: The rally has been.
[1:13] Speaker 4: Well, good morning, Thank you for having me on the show.
[1:17] Speaker 4: We're pretty confident in this in this trade in the
[1:20] Speaker 4: long term. If you look at the size of the
[1:22] Speaker 4: investment into ai into memory and what's happening there, it's
[1:28] Speaker 4: really huge. It's something that has been led by some
[1:31] Speaker 4: of the US companies and we've seen the amount of
[1:33] Speaker 4: capex that's gone into the industry there. But that's really
[1:36] Speaker 4: that leadership is really broadening out now and we're seeing
[1:39] Speaker 4: the benefits of that. You mentioned Career which is up
[1:43] Speaker 4: nearly seventy percent this year. We've got Taiwan as well,
[1:46] Speaker 4: which is which is you know, around forty percent. And
[1:49] Speaker 4: we think this is structural. We think that the effect
[1:52] Speaker 4: on this is going to be felt in the longer
[1:54] Speaker 4: term as well, and that's why we're pretty confident on
[1:56] Speaker 4: that trade. And you know, looking beyond that, it's what
[1:59] Speaker 4: are some of the second round effects as well, So it's
[2:01] Speaker 4: not just in the in the direct sort of beneficiaries,
[2:04] Speaker 4: but I think there's there's wider implications for the trade
[2:06] Speaker 4: as well, which sort of spread throughout North Asia.
[2:11] Speaker 3: On these second round effects, we're also seeing how the
[2:15] Speaker 3: chip stock Valley is being driven by a very strong
[2:18] Speaker 3: demand and to your point, I guess this is you know,
[2:22] Speaker 3: causing upgrade for some of the growth trajectories of these markets.
[2:28] Speaker 3: Do you see a point where there's also prompts inflation
[2:31] Speaker 3: and what might that then mean for fixed income in
[2:35] Speaker 3: these markets?
[2:37] Speaker 4: Yeah, there's always going to be an element of supply
[2:40] Speaker 4: and demand, and inflation could could be one outcome from
[2:43] Speaker 4: this as well, I mean across fixed income markets. Now
[2:46] Speaker 4: we're dealing with a lot of different things. Obviously, the
[2:49] Speaker 4: Middle East conflict is you know, having a massive impact
[2:52] Speaker 4: on headline inflation, and the longevity of that conflict is
[2:57] Speaker 4: going to you know, have an effect on where yields
[3:00] Speaker 4: go from here. So it's certainly something that the market
[3:02] Speaker 4: is looking at. I think right now, you know, equities
[3:05] Speaker 4: have looked through it, fixed income taking a slightly different
[3:08] Speaker 4: approach in that respect. So clearly there's a number of
[3:11] Speaker 4: different things that we're looking at there. What will the
[3:13] Speaker 4: policy response for your central banks as well? I think
[3:15] Speaker 4: we're in a situation where a lot of the central
[3:17] Speaker 4: banks we're thinking about an easy cycle. Certainly that's been
[3:20] Speaker 4: put on hold as well, so that policy response is
[3:23] Speaker 4: going to feed into the inflation dynamic as well. So
[3:26] Speaker 4: there's a lot of different and moving parts in the
[3:29] Speaker 4: inflation question right now. Clearly bond markets have taken a
[3:33] Speaker 4: lead on that, they've got a view, But when it
[3:36] Speaker 4: comes to the sort of supply demand, there are some
[3:38] Speaker 4: supply constraints in this space and that could have an
[3:40] Speaker 4: impact on pricing and the feed through could be into
[3:43] Speaker 4: inflation certainly, but it's not going to be the only
[3:45] Speaker 4: thing that impacts the inflation and fixed income markets from here.
[3:50] Speaker 5: Yeah, Colin, do your point on central bank responses. I mean,
[3:53] Speaker 5: we've had three consecutive right tags here in Australia. But
[3:56] Speaker 5: what's coming for the fit because we've got Goldman Bank
[3:59] Speaker 5: of a Mayoraka saying there's a pretty good case to
[4:02] Speaker 5: be made for LO cuts this year. What's your view?
[4:07] Speaker 4: Certainly, you know the view is changing, the view's being dynamic.
[4:11] Speaker 4: I think that the consensus were certainly for cuts to
[4:14] Speaker 4: come through and a number of cuts to come through
[4:16] Speaker 4: by the end of the year. Again, it comes back to,
[4:20] Speaker 4: I think the longevity of what we're seeing in the
[4:22] Speaker 4: Middle East and some of the pressures that are coming
[4:24] Speaker 4: through there. It's not yet you know, had a massive
[4:27] Speaker 4: impact on the growth impulse growth impulse in the US
[4:31] Speaker 4: that could come through if this goes on, you know,
[4:33] Speaker 4: significantly longer than now. So right now, you know, we
[4:37] Speaker 4: see the FED on hold. If we do get some resolution,
[4:40] Speaker 4: then we'd expect the FED to go back to more of.
[4:42] Speaker 6: An easy bias.
[4:43] Speaker 4: But we're really playing on a wait and see basis
[4:46] Speaker 4: because there's a lot that could still happen in that space.
[4:48] Speaker 4: So really it's there's a number of different competing factors
[4:52] Speaker 4: that the FED are looking at and we have to
[4:53] Speaker 4: see how that plays out.
[4:56] Speaker 5: From an a visiting perspective, we're giving so much focus
[4:59] Speaker 5: at the moment to the AI story that ship to
[5:01] Speaker 5: take story as well, but understandable here as well. But
[5:05] Speaker 5: among all of that noise, where do you see the underachievers,
[5:08] Speaker 5: the unappreciated pockets of the market that maybe others don't see.
[5:13] Speaker 4: Yeah, there's a couple of areas, probably in the equity
[5:16] Speaker 4: market that we'd look at. I mean, I think what's
[5:18] Speaker 4: been in the in the headlines recently has been software
[5:21] Speaker 4: and the software as a service trade and really, you know,
[5:24] Speaker 4: a massive underperformer in the last few months. I think,
[5:28] Speaker 4: you know, we feel that the market believes. You know,
[5:30] Speaker 4: we feel that that's a bit overdone. Essentially, some of
[5:33] Speaker 4: these companies, if you look at the earnings, are still
[5:35] Speaker 4: in pretty good shape. There's this view that AI is
[5:38] Speaker 4: going to disrupt and it's going to disrupt everything equally,
[5:40] Speaker 4: that's something that we don't agree with. There's different business
[5:43] Speaker 4: models and of course a lot of these software companies
[5:46] Speaker 4: will pivot, they will they will develop new ways of working,
[5:49] Speaker 4: new processes, et cetera. And we think there's there's certainly
[5:51] Speaker 4: value in some areas of the software market, not all,
[5:54] Speaker 4: but some, you know, looking one other police, I think healthcare.
[5:58] Speaker 4: Healthcare has look pretty unloved for a little while. Now
[6:01] Speaker 4: again if you look at things like the roll out
[6:03] Speaker 4: of GLP ones, there's some good stuff happening for some
[6:06] Speaker 4: of the firms, and again earnings are looking okay. So
[6:09] Speaker 4: we think that there's pockets of value in healthcare as well.
[6:12] Speaker 2: That was Colin Purdy, Global CIO of Public Markets at
[6:15] Speaker 2: Manu Life Investment Management, speaking of Bloomberg's April Hogue and
[6:19] Speaker 2: Paul Allen. Welcome back to the Dabakas Podcast. I'm Dan Schwartzman.
[6:31] Speaker 2: Doug Prisner has the day off We go to Australia next,
[6:34] Speaker 2: where Treasurer Jim Chalmers hands down the government spending plan.
[6:38] Speaker 2: For a preview, we spoke to Jill Shepherd, Associate professor
[6:41] Speaker 2: at the Australian National University. She spoke to Bloomberg's Paul Allen, professor.
[6:45] Speaker 5: Thanks so much for joining us today, and obviously I'm
[6:47] Speaker 5: for shadowing there some pretty big changes to property reform
[6:51] Speaker 5: in tonight's budget. Is this is going to be enough
[6:53] Speaker 5: to achieve the policy objectives though to help get more
[6:56] Speaker 5: young people into their own homes.
[6:59] Speaker 6: Thank so.
[7:00] Speaker 7: I think there's two things happening simultaneously here. One is
[7:04] Speaker 7: the economic argument, and as you foreshadowed, there's not great
[7:09] Speaker 7: confidence among economists and commentators at the moment that these
[7:12] Speaker 7: changes will do too much to housing prices.
[7:16] Speaker 6: There's still going to be negative gearing from the leaks.
[7:19] Speaker 7: We've had so far on new housing investments and new
[7:22] Speaker 7: housing stopped coming into the market. But we do have
[7:25] Speaker 7: massive constraints on construction supply, on workers, and while we're
[7:29] Speaker 7: having simultaneous debate about migration at the moment, I don't
[7:34] Speaker 7: think there's any sign that that constraint is going to
[7:36] Speaker 7: ease up. Politics though, of this is very interesting and
[7:39] Speaker 7: in twenty nineteen the Labor Party, which was then in opposition,
[7:43] Speaker 7: brought a very similar topic pure policies to the federal
[7:46] Speaker 7: election where they had a really unexpected loss to Scott
[7:50] Speaker 7: Morrison at that time. Now it's been really on the
[7:53] Speaker 7: back burner of Labor Party policy until then, and it's
[7:55] Speaker 7: taken seven years we get back onto the pulls. But
[7:58] Speaker 7: they're doing it tonight and they're obviously calculating that it's
[8:02] Speaker 7: more important politically for them to do something with regards
[8:05] Speaker 7: to Housard's life and looking after younger voters than it
[8:08] Speaker 7: is to do nothing.
[8:12] Speaker 5: As the government. To some degree though on the horns
[8:14] Speaker 5: of a dilemma here because of house prices fall, there's
[8:16] Speaker 5: already a lot of Australians with skin in the game
[8:19] Speaker 5: on negative gearing and capital gainst discounts as well. ATO
[8:24] Speaker 5: data shows that the overwhelming majority of negatively geared homeowners
[8:30] Speaker 5: earn or have a taxable income of under eighty thousand
[8:33] Speaker 5: dollars a year. So is this policy potentially hitting the
[8:35] Speaker 5: wrong people with the risk of political blowback.
[8:39] Speaker 7: Well, it really risks segmenting the electorate in a way
[8:42] Speaker 7: that may flow back on labor badly, and this is
[8:45] Speaker 7: what they found seven years ago I think tonight. Note though,
[8:48] Speaker 7: they're banking on a couple of things. One is that coalition,
[8:51] Speaker 7: which would normally be much more attractive to those voters
[8:54] Speaker 7: with accumulated assets already, is really on the nose. They
[8:57] Speaker 7: haven't been able to decide any publicy these internally, and
[9:01] Speaker 7: they're very unpopular with voters as a consequence.
[9:04] Speaker 6: Also, that group of voters is getting smaller.
[9:07] Speaker 7: Baby boomers are being outnumbered by Gen X and millennials
[9:11] Speaker 7: coming into the housing market who are frustrated that they're
[9:14] Speaker 7: not able to either get access to equity or you know,
[9:18] Speaker 7: they're paying much over the odds for houses that they
[9:20] Speaker 7: don't really feel are worth the money.
[9:23] Speaker 6: So they're making a fairly calculated risk.
[9:26] Speaker 7: I think it will probably be okay, but it's a
[9:28] Speaker 7: risk that we haven't seen for a little while in
[9:29] Speaker 7: Australian politics.
[9:32] Speaker 5: Your property, construction costs. These are just a couple of
[9:35] Speaker 5: the areas where Australians are feeling the impact of inflation,
[9:38] Speaker 5: which is perhaps the even bigger problem to be confronted here.
[9:42] Speaker 5: We've had some rate increases from the RBA, three in
[9:46] Speaker 5: a row. How can fiscal policy best support that, And
[9:49] Speaker 5: what's the difficulty for the government here, Well.
[9:53] Speaker 7: There's a lot of money still floating around the economy,
[9:55] Speaker 7: much more than the government wheels happy about.
[9:57] Speaker 6: At this point.
[9:57] Speaker 7: The interest rates do keep going up, and that's a
[10:00] Speaker 7: lot of external pressure on housing prices that they really
[10:03] Speaker 7: can't afford to do anything about. There's not that many
[10:06] Speaker 7: fiscal leaders that the government will pull at this point. Now,
[10:10] Speaker 7: government coming into this part of the electoral cycle, going
[10:13] Speaker 7: into its second year, might be thinking more about handouts,
[10:16] Speaker 7: you know, splashing some money around, particularly to families who
[10:19] Speaker 7: are doing it hard with the cost of living, But
[10:21] Speaker 7: of course that's just going to be inflationary itself.
[10:24] Speaker 6: So I think these conditions of alsitive.
[10:26] Speaker 7: Dovetail to reduce the closest thing that we will have
[10:29] Speaker 7: to structural reform in a long time. But there'll be
[10:31] Speaker 7: plenty of people watching this now thinking, you know, comparatively speaking,
[10:36] Speaker 7: this is pretty minor scale structural reform. As we say
[10:39] Speaker 7: that the capital gains tax discount for investors is being decreased,
[10:44] Speaker 7: not gotten rid of entirely, So for a lot of
[10:47] Speaker 7: investors that will go from fifty percent to somewhere around
[10:50] Speaker 7: thirty percent and negative gearing.
[10:52] Speaker 6: Incentives to invest in rental properties.
[10:54] Speaker 7: Will still be on the books for new houses, so
[10:59] Speaker 7: you know, these have still fairly marginal reforms, but it
[11:03] Speaker 7: is a step in the right direction.
[11:06] Speaker 5: Another problem this budget's going to seek to solve is productivity,
[11:10] Speaker 5: and the government held a round table on this shortly
[11:12] Speaker 5: after last year's election. Win what reforms you expected to
[11:17] Speaker 5: see in this regard The.
[11:19] Speaker 6: Only leaks we've heard so far again quite minimal.
[11:22] Speaker 7: They're around easing red tape, you know, taking the transaction
[11:26] Speaker 7: cloths off, applying for regular you know, regular free commission
[11:31] Speaker 7: to build houses, things that probably aren't going to make
[11:34] Speaker 7: a huge difference at the center of something like house prices,
[11:38] Speaker 7: but I think it is important that it's still on
[11:40] Speaker 7: the government's again. There At the same time, though, as
[11:43] Speaker 7: they're getting rid of these capital games tax discounts, a
[11:46] Speaker 7: lot of startups are very upset about this. You know,
[11:48] Speaker 7: there's an emergence tech industry, particularly in Sydney, of companies
[11:54] Speaker 7: experiencing really high growth who were threatening to go off
[11:57] Speaker 7: shore if these capital gains tax this fount do get removed. Now,
[12:01] Speaker 7: I don't think that's probably going to happen, but it
[12:03] Speaker 7: does highlight the difficulty for this Labor government in balancing
[12:08] Speaker 7: those two different demands.
[12:11] Speaker 5: There's another wild card here as well, and you know,
[12:14] Speaker 5: if we look back to last weekend's shock by election
[12:17] Speaker 5: and Farah, this is a seat that the Liberal Party
[12:19] Speaker 5: held for seventy seven years and I went to one nation.
[12:23] Speaker 5: How important is this budget in preventing disenfranchised voters from
[12:28] Speaker 5: peeling off the Labor Party next and heading over to
[12:30] Speaker 5: one nation.
[12:32] Speaker 7: We know that voters are pretty unhappy with both major
[12:35] Speaker 7: parties at the moment, and I think that's part of
[12:37] Speaker 7: the reason for Labor tonight to finally engage in some
[12:41] Speaker 7: kind of reform. You know, a lot of commentators, media
[12:44] Speaker 7: economists have been really asking for this the last five
[12:49] Speaker 7: years of this government's life.
[12:52] Speaker 6: Now they've been really reluctant to do anything. Tonight.
[12:55] Speaker 7: I think we'll see that this isn't a huge deal
[12:57] Speaker 7: and that a lot of voters they're still going to
[12:59] Speaker 7: feel pretty disappointed with the extensive reforms to get announced,
[13:03] Speaker 7: but the least again is a step in the right direction. Now,
[13:07] Speaker 7: it's a really difficult budget for the coalition to try
[13:10] Speaker 7: to counter because, as you say, they've just lost one
[13:13] Speaker 7: of their prize seats to a party much further.
[13:15] Speaker 6: On the right than they are.
[13:17] Speaker 7: They're going to have to try to navigate critiquing this
[13:21] Speaker 7: budget while also not looking too much like you don't
[13:25] Speaker 7: want people to have more money in their pockets. So
[13:27] Speaker 7: it's a tough time in politics for the Coalition. It's
[13:31] Speaker 7: probably a quite easier time for labor right now, but
[13:33] Speaker 7: they know that their support is I'm pretty thin iced too.
[13:39] Speaker 2: That was Jill Shepherd, Associate professor at the Australian National University,
[13:43] Speaker 2: speaking to Bloomberg's Paul Allen.
[13:46] Speaker 1: Thanks for listening to today's episode of the Bloomberg Daybreak
[13:49] Speaker 1: Asia Edition podcast. Each weekday, we look at the story
[13:53] Speaker 1: shaping markets, finance, and geopolitics in the Asia Pacific. You
[13:57] Speaker 1: can find us on Apple, Spotifyberg Podcast, YouTube channel, or
[14:02] Speaker 1: anywhere else you listen. Join us again tomorrow for insight
[14:05] Speaker 1: on the market moves from Hong Kong to Singapore and Australia.
[14:10] Speaker 1: I'm Doug Prisoner and this is Bloomberg

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