The Overnight Report: A New High For Copper

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This story features INGENIA COMMUNITIES GROUP, and other companies.
For more info SHARE ANALYSIS: INA
The company is included in ASX200, ASX300 and ALL-ORDS

Asian markets rallied on Monday, while European markets were relatively subdued, with US markets closed for Labor Day.

The standout was copper, which touched a new all-time high.

After a flat to positive day yesterday, ASX200 futures are indicating a flat to softer start for Tuesday.

Good Morning,

The Australian market rose 5 points, or 0.06%, to 9010.90, led by Energy, Materials and Industrials.

Consumer Discretionary, Consumer Staples and Telcos retreated.

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

ANZ Bank, Australian Morning Focus

European equity markets were mixed, while bond yields and oil prices moved higher as geopolitical risks weighed. US markets were closed for Labor Day.

The EuroStoxx50 rose 0.2% and the FTSE100 fell -0.1%.

The yield on the German 10y Bund rose 4.8bp to 3.38%.

Oil prices rose following an attack on oil facilities in Saudi Arabia. The active WTI future rose 1.3% to US$92.7/bbl. 

Euro area: Q2 GDP growth was revised up to 0.6% q/q from 0.4% q/q, marking the strongest quarterly growth rate since Q2 2022.

The upward revision was boosted by a 10.2% q/q rise in Ireland’s GDP. Ireland alone added around 0.3 percentage points (ppt) to the headline growth figure.

Net exports contributed 0.9ppt to growth in Q2, although this was partly offset by a -0.5ppt drag from changes in inventories. Household consumption contributed 0.2ppt, while the contributions from gross fixed capital formation and government consumption were negligible.

Growth across the bloc’s three largest economies provides a better gauge of underlying momentum. Germany grew 0.3% q/q, Italy grew 0.2% q/q, while France was flat (0.0% q/q). Growth has proven resilient, but it does not point to significant demand-driven inflationary pressures.

ECB in focus: A solid euro area growth outcome in Q2, notwithstanding the outsized contribution from Ireland’s typically volatile GDP data, should strengthen the ECB’s resolve to raise interest rates by 25bp at its meeting on Thursday.

The surprising resilience of growth in the face of the energy shock weakens the case against a rate hike this week, particularly given that a further 25bp increase would lift the benchmark deposit facility rate to the upper end of the ECB’s estimated neutral policy rate range.

That should ease concerns that monetary policy will materially restrict the real economy, while reinforcing the ECB’s commitment to price stability. With markets fully pricing in a hike this week, attention will turn to the ECB staff’s updated forecasts and President Lagarde’s tone at the press conference.

With little evidence that higher energy prices are feeding through to underlying inflation, and with inflation expectations remaining well anchored, we doubt policymakers will provide a strong signal about the future policy path.

The outlook remains heavily dependent on developments in the Middle East conflict and energy markets. In that environment, maintaining optionality through an iterative approach to policymaking remains the most prudent course of action.

Copper surged to an all-time high amid strong fundamentals and tightening inventories. The benchmark three-month futures price touched US$14,533/t, beating the previous record set in January 2026.

Ongoing supply-side issues have been mounting in recent months. Chile, the world’s largest copper producer, saw its copper shipments sink to their lowest level in more than a year in August.

Copper exports were valued at US$4.62bn, down -14% y/y, according to central bank data. That came despite copper prices averaging 40% higher than a year earlier.

Earlier this week, the International Copper Study Group said that global output fell -1.1% in the first half of the year. Strong demand from new technology sectors is also playing its part.

The race to boost AI computing infrastructure has seen demand for high-speed copper cables and other electrical-related items rise, according to Foxconn.

Compounding the tightness are rising concerns about US import tariffs being applied to refined metal. Global stockpiles are heavily concentrated in the US, resulting in a shortage in LME warehouses globally.

Gold edged lower as higher energy prices raised concerns that inflation will remain elevated and force the US Federal Reserve to hike rates.

Traders are now pricing in roughly a 60% chance that the Fed will increase interest rates at its September meeting.

Nevertheless, the emergence of central bank buying and the so-called debasement trade should provide ongoing support for the precious metal.

From the US Market Desk: Bonds, Worth a Look? Franklin Templeton, Chris Galipeau extract

We are constructive on US equities and have established a year-end target range of 7400-7800 for the S&P 500, driven by 15%-plus year-over-year (Y/Y) earnings-per-share growth.

All in, earnings power has been very strong in the first six months of the year. Consensus expectations for 2026 now sit at US$365.04, up 11.23% Y/Y. For 2027, the consensus earnings estimate is US$413.62, representing a 13% Y/Y growth rate versus 2026.

If we assume the consensus earnings estimates are reasonably correct, that puts the tape at 21x this year’s earnings and 18.54x 2027 estimates. The long-term historical forward multiple is about 17x.

Portfolio managers are now focusing their efforts on corporate earnings power for calendar year 2027. I can’t make a strong argument that the tape is “cheap” here, but I also can’t make the argument that an 18.54x forward multiple is rich either—unless bond yields move significantly higher.

We don’t expect that, but that is a risk.

Through the end of August, the equity performance leaderboard looks like this: MSCI Emerging Markets Index +24.33%; Russell2000 Value Index +23.66%; Russell1000 Value Index +23.09%; MSCI Japan Index +21.17%; Russell2000 Index +20.19%; S&P 400 MidCapGrowth Index +17%; Russell2000 Growth Index +16.98%; S&P500 Equal Weight Index +15.57%.

Bringing up the rear are MSCI India -8.32%; Russell1000 Growth +4.06%; the Magnificent Seven +4.75%; and the MSCI Europe Index +11.82%. The S&P500 Index is +13.12%.

Value over growth. The “average stock” over the cap-weighted index. Broad. Strong. To us, that’s bullish.

That said, the dispersion is remarkable. Year-to-date (YTD), 206 S&P500 components (41%) have outperformed the index, while 295 S&P500 components (59%) have underperformed.

YTD, 172 S&P 500 components (34%) are down. In our view, systematic tax-loss harvesting is a must-have tool in your kit.

Bottom line: We think it’s prudent to have a diversified equity playbook that includes US large-, mid- and small-cap exposure with a balance of growth and value.

The same can be said for ex-US equity exposure; emerging markets and Japanese stocks look attractive. That involves reducing concentration and spreading one’s bets.

We think buying on pullbacks makes sense.

Weekly Macro Talking Points, MFS Investment Management, Benoit Anne extract

• The last five years have been unkind to fixed income, but it is time to re-evaluate
• Global central bank watch
• Why have higher yields not killed the equity rally?

The lost quinquennium. The past five years have been painful for global fixed income, and some investor frustration is understandable. Most major fixed income segments are only just back to where they were five years ago.

The culprit is clear: the inflation shock and aggressive central bank tightening cycle of 2022 left a deep performance hole that markets are still climbing out of. US IG, for example, has delivered a broadly flat return over the period.

That still compares favorably with US Treasuries, where annualized returns have been modestly negative at -0.61%, and the Global Agg, where returns have been weaker still at -1.36% annualized. But markets do not move in straight lines.

Past performance is not indicative of future returns, and for fixed income it is probably a good thing.  Current yields may offer a more supportive backdrop than investors have seen for much of the past decade.

In US IG, a starting yield of 5.54% has historically been associated with a subsequent median annualized return of 6.82%, with a range of 5.08% to 8.08%.

Put simply, yield has historically tended to be a guide to future returns. The carry cushion is also meaningful. At today’s levels, US IG yields would need to rise by around 84bp over the next year before total returns turn negative, while the cushion in US high yield is closer to 250bp.

Finally, 2026 is not 2022. Some central banks are hiking again, but we do not expect a repeat of the long, brutal tightening cycle that defined the last inflation shock. After a lost five years, the future of fixed income appears more constructive, in our view.

We are going on a hike, at least in Europe. September is lining up to be an important month for global central banks. Starting with the ECB, which is widely expected to raise its policy rate by 25bp this week. The main focus of the policy meeting will be on any signal about what happens next.

According to Peter Goves, our head of DM strategy, the current market pricing is somewhat generous, with three hikes priced in over the next 12 months. In our view, the market may overestimate the risk of a meaningful inflation shock.

Moving on to the Fed, the momentous meeting is scheduled for September 16th. The jury is out on this one. There are indeed good arguments on both sides.

The hiking camp is likely to refer to the hawkish tone delivered in Jackson Hole, the strong payroll numbers, and the idea that the Fed could deliver a hike with the goal of boosting its credibility. Indeed, nothing beats action when it comes to establishing your inflation-fighting credentials.

But at the same time, there seems to be no urgency to act, and a rate move could actually introduce more confusion over the Fed’s monetary policy strategy. Besides, the ongoing inflation concerns mainly pertain to supply-side issues, some of which may be temporary in nature.

This is also why some market participants believe that underlying inflation may be lower than headline readings may suggest.

Against this backdrop, this week’s US CPI release will play a critical role in shaping policy expectations. A benign reading could reinforce Market Insights’ view that the Fed may remain on hold for now.  

Why have higher yields not killed the equity rally? The answer is profits. The Fed has stayed put, but markets have not: the 10-year Treasury yield is up roughly 60 bp year-to-date. Normally, that would be a clear headwind for equities. Yet the S&P500 is up about 14%.

This is not a yield-insensitive rally. It is an earnings-led rally strong enough to absorb a higher discount rate. Good economic news has also been good equity news. Higher yields can still bite, but the cause matters.

An inflation-driven rise would be more damaging because it raises the risk of renewed Fed tightening and lower multiples.

A real-rate move is more durable—and more equity-friendly—because it points to stronger growth and rising profits. So far in 2026, strong nominal growth, resilient margins and upward earnings revisions have offset the drag from higher Treasury yields.

Higher yields still matter; they matter most when earnings fail to keep up. With the equity risk premium still historically thin, investors have little valuation cushion if estimates disappoint.

But as long as earnings remain robust and revisions hold, equities can continue to digest higher yields.

This may support an earnings-led approach: focus on companies where growth is real, not assumed—selected cyclicals and energy tied to stronger nominal growth, and technology firms where AI-related investment supports structural demand.

In our view, the broad market can live with higher yields, provided profits keep validating the move.

Corporate news in Australia:

• Ingenia Communities ((INA)) rejected Warburg Pincus’ takeover proposal and is sticking with its planned acquisition of Peet ((PPC))
• Austal ((ASB)) confirmed preliminary discussions with US-based Wildcat Infrastructure over its US business, potentially creating competition for Hanwha’s existing $1.7bn offer, although no proposal has yet been received
• Macquarie Asset Management ((MQG)) agreed to acquire Aware Super’s 50% stake in Victoria’s land titles registry SERV for around $4bn
• Macquarie Asset Management ((MQG)) has opted against making a standalone bid for Stack Infrastructure’s $28bn-plus Asia-Pacific data centre portfolio as the auction moves through first-round offers
• Canadian pension fund OPTrust appointed Lazard Australia to explore the sale of electricity retailer Flow Power, with indicative bids expected in around four weeks
• AUB Group ((AUB)) is again the subject of private equity takeover speculation following former suitor EQT’s $2.8bn investment in insurance broker McGill and Partners, although no fresh approach for AUB has emerged
• Pacific Equity Partners and other shareholders in Opal HealthCare are considering a potential sale amid strong valuations and renewed private equity interest in the aged-care sector
• Tribeca Investment Partners is seeking cornerstone investors for a proposed $250m credit LIT, targeting an ASX listing by the end of October
• Barings launched an $86.25m capital raising for its ASX-listed Gryphon Capital Income Trust ((GCI))
• Santos ((STO)) is increasing its interest in the US$14bn Papua LNG project as TotalEnergies reduces its stake to 20%, leaving Santos as the second-largest foreign partner behind ExxonMobil
•  Jio Platforms is preparing to begin global investor marketing for a targeted November IPO, which could rank among India’s largest-ever listings

On the calendar today:

-NZ 2Q Manufacturing activity

-AU ANZ-Roy Morgan Consumer Confidence

-AU Aug NAB Business Survey

-AU RBA Assistant Governor Hunter fireside chat at AFR Property Summit

-AU RBA Deputy Governor Hauser interview on ABC 7:30

-JP 2Q GDP (final)

-JP July BoP & Trade Bal

-JP July Earnings

-CH Aug Trade Bal

-US Aug NFIB

-US July Consumer credit

-GE July Trade Bal

-AUB GROUP LIMITED ((AUB)) ex-div 71.00c (100%)

-BLUESCOPE STEEL LIMITED ((BSL)) ex-div 65.00c

-BLUESCOPE STEEL LIMITED ((BSL)) ex-div 70.00c

-CHANNEL INFRASTRUCTURE NZ LIMITED ((CHI)) ex-div 5.10c

-DUSK GROUP LIMITED ((DSK)) ex-div 1.60c (100%)

-MINERAL RESOURCES LIMITED ((MIN)) ex-div 83.00c (100%)

-MOTORCYCLE HOLDINGS LIMITED ((MTO)) ex-div 7.00c (100%)

-NEWS CORPORATION ((NWS)) ex-div 9.93c

-NEWS CORPORATION ((NWSLV)) ex-div 9.93c

-PERPETUAL EQUITY INVESTMENT CO. LIMITED ((PIC)) ex-div 4.00c (100%)

-PEET LIMITED ((PPC)) ex-div 6.50c (100%)

-PEPPER MONEY LIMITED ((PPM)) ex-div 7.20c (100%)

-REGIS HEALTHCARE LIMITED ((REG)) ex-div 9.40c (100%)

-SMARTGROUP CORPORATION LIMITED ((SIQ)) ex-div 21.50c (100%)

-SAFEROADS HOLDINGS LIMITED ((SRH)) ex-div 0.50c (100%)

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

The Australian share market over the past thirty days…

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