The Overnight Report: Yields Ease, Markets Up

Array
(
    [0] => Array
        (
            [0] => ((BHP))
            [1] => ((COL))
            [2] => ((WDS))
            [3] => ((EGH))
            [4] => ((INA))
            [5] => ((ACU))
            [6] => ((AMC))
            [7] => ((ASH))
            [8] => ((BHP))
            [9] => ((BLX))
            [10] => ((CCV))
            [11] => ((COL))
            [12] => ((CUV))
            [13] => ((EZL))
            [14] => ((FEX))
            [15] => ((FRI))
            [16] => ((GTN))
            [17] => ((IBC))
            [18] => ((JIN))
            [19] => ((JMS))
            [20] => ((KOV))
            [21] => ((KSL))
            [22] => ((LBL))
            [23] => ((MEZ))
            [24] => ((MVF))
            [25] => ((MYG))
            [26] => ((NHF))
            [27] => ((NHF))
            [28] => ((PAC))
            [29] => ((PPS))
            [30] => ((PWR))
            [31] => ((QAL))
            [32] => ((QRI))
            [33] => ((RHC))
            [34] => ((RMC))
            [35] => ((SFC))
            [36] => ((SIG))
            [37] => ((SYL))
            [38] => ((TPC))
            [39] => ((WDS))
            [40] => ((WOT))
        )

    [1] => Array
        (
            [0] => BHP
            [1] => COL
            [2] => WDS
            [3] => EGH
            [4] => INA
            [5] => ACU
            [6] => AMC
            [7] => ASH
            [8] => BHP
            [9] => BLX
            [10] => CCV
            [11] => COL
            [12] => CUV
            [13] => EZL
            [14] => FEX
            [15] => FRI
            [16] => GTN
            [17] => IBC
            [18] => JIN
            [19] => JMS
            [20] => KOV
            [21] => KSL
            [22] => LBL
            [23] => MEZ
            [24] => MVF
            [25] => MYG
            [26] => NHF
            [27] => NHF
            [28] => PAC
            [29] => PPS
            [30] => PWR
            [31] => QAL
            [32] => QRI
            [33] => RHC
            [34] => RMC
            [35] => SFC
            [36] => SIG
            [37] => SYL
            [38] => TPC
            [39] => WDS
            [40] => WOT
        )

)

This story features EUREKA GROUP HOLDINGS LIMITED, and other companies.
For more info SHARE ANALYSIS: EGH

US markets lifted as job hiring cooled and bond yields weakened.

The Australian market recovered off intraday lows yesterday, but still closed down almost -1%.

ASX200 futures are pointing to a positive start on Thursday morning.

HSBC's economist Paul Bloxham, is now expecting back-to-back RBA rate hikes at the September and November meetings, having forecast no further rate hikes previously.

Good Morning,

The Australian market fell -68 points or -0.97% on Wednesday. Still the index recovered off its low of being down -131 points, to close at 8978.40. Materials and Technology led the index lower with Energy and Financials firmer.

BHP Group ((BHP)), Coles Group ((COL)) and Woodside Energy ((WDS)) are going ex-dividend today.

To stay in touch with which companies are going ex-dividend, check out the FNArena Calendar https://fnarena.com/index.php/financial-news/calendar/

Don’t forget the FNArena corporate results monitor to see how the August reporting season fared.

https://fnarena.com/index.php/reporting_season/

Today’s Big Picture, J.L. Bernstein extract

Yields blinked first

Traders walked in this morning pricing a September hike at close to seven in ten odds, up from about one in three a week ago.

Then John Williams said the case for one is not firm yet, and yields reversed across the curve.

One sentence from the number two man at the Fed undid the entire overnight move.

That is positioning unwinding, not something breaking.

Hiring cooled, and that helps

Private employers added 38,000 jobs in August against the 47,000 economists expected, with health care doing most of the lifting.

A softer labor market is the cleanest argument the doves have going into the September 15-16 meeting.

Friday’s government report is the last big number before that call, and right now it is the one that can take the hike back off the table.

Dell says the AI demand scare is overdone

Dell closed the quarter with a US$95 billion backlog, booked US$60.9 billion in AI server orders, and raised its full-year revenue target by US$25 billion.

That is not what peak demand looks like.

Broadcom reports after the close tonight and gets the chance to say the same thing twice.

ANZ Bank, Australian Morning Focus

Equity markets were firmer in the US but down in Europe.

The US S&P500 was up 0.5%. The EuroStoxx50 and the FTSE100 indices ended the session -0.1% and -0.3% lower, respectively.

The yield on the bellwether US 10y Treasury bond was unchanged at 4.79%. The active WTI oil future fell -0.1% to US$90.63/bbl, and spot gold rose 1.6% to US$4,388/oz.

US Private Sector ADP jobs slowed to 38k in August, down from 46k in July and the lowest reading since January. Employment was mainly concentrated among large firms with 500-plus employees. Jobs in that cohort rose 34k.

Small businesses, which employ 50% of US private sector workers, saw jobs rise 3k. ADP reported average wage growth of 3.2% y/y in August, down from 3.3% in July.

The Bank of Canada left its policy rate unchanged at 2.25%, citing heightened global uncertainty, new US tariffs and tighter financial conditions owing to higher bond yields.

The Governing Council noted that the economy was evolving as forecast at its last meeting in July. While it said the upside risks to inflation have increased owing to higher energy prices, it noted that “so far, there has been little evidence of higher energy prices spreading to other components of inflation”, and that “new tariffs make growth prospects more uncertain”.

Australia growth slowing gradually: GDP rose 0.4% q/q in Q2 2026, with the yearly increase at 2.1%. Taking Q1 (GDP growth of 0.3% q/q) and Q2 together points to an economy growing a little below potential, which is consistent with the drift higher in the unemployment rate over 2026 to date.

Relative to our forecast of 0.5% q/q and 2.0% y/y, GDP growth was marginally weaker in the quarter but marginally stronger over the year (the latter reflecting revisions). At 2.1% y/y, GDP growth is around the RBA’s estimate of potential, although that reflects a robust second half of 2025, not strength in 2026.

We expect the RBA will need to see a further easing in year-on-year growth and ongoing weak quarterly growth outcomes to bring demand into balance with supply.

As far as our November rate hike call is concerned, these data take a back seat to inflation, so have little impact on the near-term path of policy.

The data also do not give the RBA Board a strong reason for a September rate hike.

Commodities

Crude oil prices rose as the Middle East conflict escalated. The US military carried out a second wave of strikes in three days. Iran retaliated with drone and missile attacks on US bases across the Middle East. The risk to vessels transiting the Strait of Hormuz remained high.

The US struck two Iranian vessels under a new “tanker-for-tanker” policy approved by President Trump, according to Axios. Earlier this week, two oil tankers attempting to exit Hormuz were reportedly hit by projectiles.

US Treasury Secretary Bessent said that 17mbbl of crude exited Hormuz on Monday. Later, US Energy Secretary Chris Wright reiterated that figure and added that exports are averaging around 8mb/d.

Nevertheless, pressure is building in the refined fuel market. Inventories of gasoline in the US fell by -1,173kbbl last week to their lowest level in a decade. That was despite a drop in demand as the official end to the US summer driving season approaches. Distillate supplies on the East Coast are now at a record low.

Total commercial oil inventories fell by -4,450kbbl last week after a four-week build, as refineries run at full capacity.

Natural gas prices in Europe and Asia also rose as supply disruptions persist. European natural gas prices hit their highest level since January 2023, as the region faces difficulties in attracting LNG to help refill storage facilities.

Across the continent, they are 63% full, well below the average of 80% for this time of year. Britain’s stocks are even lower, prompting warnings the country may end up paying high prices to secure supplies over winter.

Gold rebounded as a weaker USD boosted investor demand. The precious metal rose as much as 1.6% as the USD fell following a sharp increase in the JPY. There was also push-back from Fed Governor Williams on inflationary concerns.

He said there’s evidence inflation is easing as the impact of tariffs fades, while higher energy prices are not spreading to other services.

Nickel gained as Morowali Industrial Park, a processing plant on the island of Sulawesi, may have to cut production if new sources of water are not found. The company warned that the reduction in output could be -30%–40%.

The water shortages are the result of the El Nino weather pattern. Adding to the issues are reports that several Chinese-owned nickel smelters are weighing up coordinated output cuts as pressure mounts on profitability due to weak prices.

The rest of the base metals complex tracked lower on worries about the global economy. The escalation of fighting in the Middle East is raising concerns that subsequent high energy prices could hit economic activity.

Ongoing production issues limited the downside for copper. Chile’s output fell -9.4% y/y in July to 403.4kt, according to statistics agency INE, attributed to severe storms that hit mining regions.

Short-term availability of copper on the LME remains tight, with spot prices trading more than USD100/t above the benchmark three-month futures.

China stands alone, Ipek Ozkardeskaya, Swissquote extract

The major driver of the market action remains the rising oil prices, with US crude trading above US$93pb this morning before retreating. Brent crude shortly traded at US$97pb.

The latter fueled global inflation expectations and sent global yields higher – in some cases up to levels not seen since 2008. The US 2-year yield – that captures Federal Reserve (Fed) rate bets – topped 4.20%, the German 10-year yield hit 3.36%, while the Japanese 10-year yield hit the 3% mark.

Yes, we are there. At 3%, the 10-year JGB is around 125bp higher than the levels that investors once considered would make sense for Japanese institutional investors to repatriate their funds back to Japan, triggering a reverse carry trade.

The Japanese investors haven’t sold their foreign assets in a way that would trigger a significant reversal of the carry trade. Perhaps the rise in US yields has also helped keep the US-Japan yield gap wide enough to avoid a notable selloff. But the Japanese government sold US bonds to intervene in the FX markets, to stop the heavy bleeding in the yen.

The latter, in turn, increased the pressure on the US yields, and brought Bessent to cooperate with the Japanese to slow the yen’s depreciation.

But at the end of the day, the USDJPY recovered half of the retreat following the latest US/Japan intervention, and the US 30-year is close to levels that triggered the US Treasury’s announcement to buy back more bonds to counter the selling in US bonds.

This means one thing, there is only so much you can do by intervening. Interventions buy time, but they don’t change fundamentals. The reality is that the war in the Middle East escalates, oil prices rise, inflation eats a part of weak growth numbers, and a global trade war is on its way of destroying decades of cooperation, that helped global economies grow together.

All against China

And make no mistake. The US is very aggressive, yes but the other G20 nations are also adding their two cents. Yesterday, the G20 meeting showed an interesting split between China and the rest of the nations. The split was mainly about China’s trade surplus and its economic model.

The US, EU, Japan unsurprisingly pointed at China’s industrial subsidies, weak domestic consumption and export-led growth as creating excess capacity that is then pushed onto world markets through cheap exports. 

China rejected that diagnosis and argued that it does not deliberately pursue a trade surplus. It also disagreed on several other points: it opposed restrictions on critical-mineral exports, calls for countries like China to consume more at home and rely less on exports, and language about keeping key shipping routes open and predictable.

Beijing was also unhappy with parts of the discussion on sovereign debt, where China is a major lender.

But what was really interesting is that, the split between the DM (US, EU, Japan, Australia) and China is nothing new, but the other EM nations alignment with the communique is! Because G19 includes countries Brazil, India, Saudi Arabia, South Africa, Indonesia, that aren’t automatically aligned with Washington.

That means that we have a bigger story than just “US vs China” unfolding: concern about China’s export-heavy model and industrial overcapacity is broadening internationally.

Even the IMF says excess global imbalances widened sharply in 2025 and argues that surplus economies should boost domestic demand while deficit economies need fiscal consolidation.

Guess what, China was trying to do so but because they have an aging population due to a terrible policy mistake of imposing that ‘one child’ policy for 35 years, because the aggressive Covic policies had a terrible impact on consumer confidence and because the deepening property crisis hit households savings big time, the option to revive demand at home make had to be taken off the table.

Xi had to go back to boosting exports to keep the ball rolling. So here we are.

China grows by exporting cheap products, others are not happy because they can’t produce as cheap as China does, the latter costs jobs at home and results in a wider trade deficit. In simpler terms, money is flowing into China’s pockets through cheap exports.

But on the other hand, the cheap Chinese products helped keeping inflation so low in the West for years, and it is a curious time to move production elsewhere. It would aggravate the cost-of-living crisis, push yields further up, and weigh on valuations.

Shein goes public at worst possible time!

It’s in this complicated global context that Shein went public, it had a chaotic first day, the stock price tanked nearly -10% shortly compared to the IPO price, which was already reflecting a nearly -75% valuation loss compared to the 2022 valuation levels, before ending the day near flat.

That first day performance came in contrast to a few spectacular IPOs from Chinese companies like CXMT and Unitree that rallied more than 400%-500% during their first day of trading in Shanghai.

The value loss was partly due to ethical issues regarding cotton sourced from Xinjiang, where China is accused of forced labour, fierce competition and an aggressive price war with other Chinese players like Temu and AliExpress that compressed margins, but more importantly, the sharp change in global trade rules, as the US and the EU moved to scrap exemptions for low-value parcels and impose tariffs and additional fees on the cheap packages that Shein ships directly to consumers.

And Shein – as its peers – will have a hard time absorbing these additional costs due to its low margin business model. The company sells very cheap clothes and accessories with very thin margins, meaning that a good part of these additional costs will have to be passed on to consumers.

The problem is Shein’s customer base is very price-sensitive: even a small increase in prices could lead to a significant drop in sales volumes — and therefore profits. 

So Shein is down more than 2% on its second day of trading, Alibaba is down 1.80% in HK while PDD remains under pressure on the Nasdaq. The outlook remains bearish unless these companies change direction and find other lucrative markets, or adopt their business model to the new rules of the trade game.

But in the short/medium run, the fact that Shein trades at around 15 times forward earnings — roughly double Temu’s parent company PDD — suggests that there is room for a further downside correction.

That said, I like Chinese tech – as you know – and would continue to stick with AI and robotics players that have bigger potential today, than companies dealing with bigger and growing trade barriers.

Corporate news in Australia:

• HSBC has launched an auction for around $20bn of Australian retail deposits as it completes its exit from Australian retail banking, with Citi approaching major local banks about the portfolio
• Pengana Capital is seeking Takeovers Panel intervention over concerns Wilson Asset Management could increase its holding in Pengana International Equities to more than 20% through PIA’s proposed buy-back
• Eureka Group Holdings ((EGH)) is reportedly considering the acquisition of non-core holiday park assets from Ingenia Communities ((INA)) as Eureka prepares to announce a material acquisition
• Former Carlyle dealmakers have entered the data centre sector through Arcadia, backed by family office capital
• Wiluna Mining is preparing to file for an ASX relisting via an IPO targeting a valuation of around $500m, despite suspended processing operations and pressure from lenders

On the calendar today:

-NZ 2Q ToT

-AU Aug PMI (final)

-AU July Trade Bal

-AU RBA Assistant Governor Jones panel

-JP Aug PMI (final)

-CH Aug Caixin PMI

-EZ Aug PMI (final)

-EZ July PPI

-UK Aug PMI (final)

-US 2Q ULC (final)

-US Aug ISM services

-US July Trade Bal

-XX Global PMIs

-CA Aug PMI

-CA July Trade Bal, Aug PMI

-GE Aug PMI (final)

-GE Aug Services & Composite PMI (final)

-ACUMENTIS GROUP LIMITED ((ACU)) ex-div 0.45c (100%)

-AMCOR PLC ((AMC)) ex-div 92.00c

-ASHLEY SERVICES GROUP LIMITED ((ASH)) ex-div 1.15c (100%)

-BHP GROUP LIMITED ((BHP)) ex-div 139.20c (100%)

-BEACON LIGHTING GROUP LIMITED ((BLX)) ex-div 3.40c (100%)

-CASH CONVERTERS INTERNATIONAL LIMITED ((CCV)) ex-div 1.00c (100%)

-COLES GROUP LIMITED ((COL)) ex-div 37.00c (100%)

-CLINUVEL PHARMACEUTICALS LIMITED ((CUV)) ex-div 5.00c (100%)

-EUROZ HARTLEYS GROUP LIMITED ((EZL)) ex-div 5.00c (100%)

-FENIX RESOURCES LIMITED ((FEX)) ex-div 1.00c (100%)

-FINBAR GROUP LIMITED ((FRI)) ex-div 3.00c (100%)

-GTN LIMITED ((GTN)) ex-div 5.24c (15%)

-IRONBARK BALANCED INCOME LIMITED REGISTERED ((IBC)) ex-div 0.60c (100%)

-JUMBO INTERACTIVE LIMITED ((JIN)) ex-div 15.00c (100%)

-JUPITER MINES LIMITED ((JMS)) ex-div 0.75c

-KORVEST LIMITED ((KOV)) ex-div 40.00c (100%)

-KINA SECURITIES LIMITED ((KSL)) ex-div 3.83c

-LASERBOND LIMITED ((LBL)) ex-div 0.80c (100%)

-MERIDIAN ENERGY LIMITED ((MEZ)) ex-div 13.21c

-MONASH IVF GROUP LIMITED ((MVF)) ex-div 1.30c (100%)

-MAYFIELD GROUP HOLDINGS LIMITED ((MYG)) ex-div 2.40c (100%)

-NIB HOLDINGS LIMITED ((NHF)) ex-div 16.00c (100%)

-NIB HOLDINGS LIMITED ((NHF)) ex-div 5.00c (100%)

-PACIFIC CURRENT GROUP LIMITED ((PAC)) ex-div 28.00c (18%)

-PRAEMIUM LIMITED ((PPS)) ex-div 1.25c (100%)

-PETER WARREN AUTOMOTIVE HOLDINGS LIMITED ((PWR)) ex-div 0.60c (100%)

-QUALITAS LIMITED ((QAL)) ex-div 7.75c (100%)

-QUALITAS REAL ESTATE INCOME FUND ((QRI)) ex-div 1.07c

-RAMSAY HEALTH CARE LIMITED ((RHC)) ex-div 48.50c (100%)

-RESIMAC GROUP LIMITED ((RMC)) ex-div 6.00c (100%)

-SCHAFFER CORPORATION LIMITED ((SFC)) ex-div 45.00c (100%)

-SIGMA HEALTHCARE LIMITED ((SIG)) ex-div 2.00c (100%)

-SYMAL GROUP LIMITED ((SYL)) ex-div 4.90c (100%)

-TPC CONSOLIDATED LIMITED ((TPC)) ex-div 10.00c (100%)

-WOODSIDE ENERGY GROUP LIMITED ((WDS)) ex-div 79.51c (100%)

-WOTSO ((WOT)) ex-div 1.45c

FNArena’s four-weekly calendar: https://fnarena.com/index.php/financial-news/calendar/

The Australian share market over the past thirty days…

For more detail go to FNArena’s Australian Broker Call Report, which is updated each morning, Mon-Fri.

All overnight and intraday prices, average prices, currency conversions and charts for stock indices, currencies, commodities, bonds, VIX and more available on the FNArena website.  Click here. (Subscribers can access prices on the website.)

(Readers should note that all commentary, observations, names and calculations are provided for informative and educational purposes only. Investors should always consult with their licensed investment advisor first, before making any decisions. All views expressed are the author’s and not by association FNArena’s – see disclaimer on the website)

All paying members at FNArena are being reminded they can set an email alert specifically for The Overnight Report. Go to Portfolio and Alerts on the website and tick the box in front of The Overnight Report. You will receive an email alert every time a new Overnight Report has been published on the website.

Find out why FNArena subscribers like the service so much: “Your Feedback (Thank You)” – Warning this story contains unashamedly positive feedback on the service provided. www.fnarena.com

FNArena is proud about its track record and past achievements: Ten Years On

Click to view our Glossary of Financial Terms