The Monday Report – 14 September 2026

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This story features KIP MCGRATH EDUCATION CENTRES LIMITED, and other companies.
For more info SHARE ANALYSIS: KME

US markets ended up on Friday, ignoring a higher August CPI print. Oil prices fell and yields receded.

It's a big week ahead with the FOMC meeting on Wed/Thurs for the rates decision and 'quad witching' for futures and options expiry on Friday.

The Australian market fell almost -3% last week, its worst week since March this year.

ASX200 futures are pointing to a positive start, but Anthropic's CEO has signalled AI development needs to slow down, which is expected to weigh on AI-related stocks as an immediate response.

Good Morning,

The Australian market fell -0.89% or 78.2 points to 8,741 on Friday, its fourth straight session of declines.

Last week also marked the second worst week in 2026 since the first week of March, when the war broke out in the Middle East.

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

The Australian market wrap and more, Tony Sycamore IG, extract

The ASX200 finished 264 points (-2.94%) lower last week at 8741. The smash-up derby followed losses on Wall Street as bond yields and energy prices ratcheted higher, compounded by a double dose of hawkish RBA commentary and dismal consumer and business confidence data.

At the almost halfway point of September the ASX200 is down -3.69% for the month, as September lives up to its reputation as the worst month of the year, which over the past decade has delivered an average decline of -1.78%.

The worst-performing sectors last week were IT (-8.57%), Consumer Discretionary (-4.73%), Materials (-3.91%) and Health Care (-3.77%). In contrast, Energy (+2.39%), Utilities (+0.51%), Industrials (-1.28%) and Financials (-2.33%) outperformed the broader market.

While the local data calendar is light this week, we will hear from Assistant RBA Governor Sarah Hunter Monday at 12.30pm and from RBA Governor Michele Bullock on Friday at 9.30am during her testimony to the House of Representatives Standing Committee on Economics. 

The Australian interest rate market starts the week pricing in 20bp, or an circa 80% chance of a 25bp hike at the 29 September RBA Board meeting, with a cumulative 50bp of RBA rate hikes priced between now and February 2027. 

AI reset signalled over weekend

Over the weekend the big news was in the AI space. Anthropic’s Dario Amodei called for the industry to slow down so safety can catch up, warning that in six to 12 months a misaligned agent swarm could take over the internet.

In a rare display of unity Elon Musk said, “Dario is right,” while Sam Altman agreed OpenAI needs to pace the frontier and said a 2026 IPO is off the table.

IG’s OpenAI Pre IPO market-cap contract, which had rallied from about US$1.38 trillion to US$1.64 trillion after the release of Astra, has fallen back to US$1.57 trillion on the news — a pullback of about -US$70 billion from that high.

In terms of what a slow down means more broadly there are quite a few pieces to unwrap. AI investment is estimated to have accounted for roughly a third of US growth in the first half of 2026, so less capex would in theory weigh on GDP and equity prices and in turn consumer sentiment.

Offsetting this, yields could retreat if a slower buildout means less issuance and less inflationary pressures. Beyond markets, a slowdown would likely let China close the gap.

As we said, lots of moving parts, but the first reaction to a slower pace of AI development, and a chance for China to play catch-up is a negative for US equities and risk sentiment at the start of the new week. 

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

Inflation Puts The Fed Back In Play

Headline CPI landed in line. Core monthly prices did not, running a tick above forecast, and that one number did the damage.

Traders went from a coin flip a week ago to near certainty on a quarter point hike Wednesday.

It would be the Fed’s first increase in three years.

Oil Eases While Saudi Supply Gets Worse

Crude slipped back under US$100 after Iran agreed to meet Gulf states in Oman on Monday about the Strait of Hormuz.

Then Saudi Arabia shut its East-West crude pipeline after attacks in the Riyadh and Madinah regions injured several people.

Saudi output was already down to about 6 million barrels a day, its lowest in three decades and off from more than 10 million before the war.

Diesel crossed US$6 a gallon for the first time ever, and that cost lands on everything that moves by truck.

A Broad Rally And A Grumpy Consumer

Advancers beat decliners at the New York Stock Exchange 1,701 to 924, so this was not a megacap-only bounce.

Consumers see a different economy. Michigan’s early September sentiment reading came in at 47.8, down from 51.7, and gas prices are doing most of that damage.

Corporate profits still took the biggest share of national income since the government started tracking it in 1947.

Both things are true at once.

NAB Markets Today extract

• US Core CPI rose 0.3% m/m, above the 0.2% consensus; headline CPI increased 0.4%
• Oil prices ease on Friday notwithstanding threats to key Middle East export routes
• Canada is exploring an “Associate” EU membership focused on trade, defence and strategic supply chains
• Markets now assign an around 87% chance of a 25bp September hike
• 2y UST yields rose 4bp Friday, flattening the curve and up 26bp over the week; the 10-year ended little changed, near 4.97%.
• Bunds were steady Friday, gilts rallied and AU 3-year and 10-year futures cheapened 2.5bp after Sydney
• US and European shares rebounded Friday, but all fell over the week
• USD had a mixed Friday. JPY led gains on Friday and the week. SEK and NZD were the main weekly laggards. AUD edged higher on Friday, but fell on the week, opens at 0.7168
• Despite falling on Friday, oil gained some 9% over the week; iron ore and base metals weakened
• Credit Spreads tightened Friday, though weekly HY performance remained softer than IG

US Market Call: Still Targeting 8,400, But Raising Odds Of Bearish Outcome to 30%, Ed Yardeni & Toby Hearst, Yardeni QuickTakes, extract

I. Performance

The good news is that our recommendation to overweight the S&P500 Energy sector is working well. The bad news is that it is doing so because the war in the Middle East has re-escalated.

Saudi Arabia has shut down its East-West pipeline as a precaution after a drone attack that originated in Iraq. The pipeline had been moving 4 million to 5 million barrels of oil per day, amounting to 4% to 5% of global supply.

Oil prices shot up over the past week, and the retail price of diesel in the United States surged past a record-high US$6 a gallon.

Jacking the prices were two developments: The US and Iran both fired on oil tankers, and the Iran-aligned Houthis in Yemen advanced along the Red Sea, potentially extending disruption to another major oil route.

If the Houthis close the Bab el-Mandeb Strait, that would deal another economic blow, constraining another 7% of global petroleum supplies and about 12% of global trade.

The latest rebound in oil prices above US$100 a barrel boosted the 10-year US Treasury bond yield to nearly 5.00% and the comparable TIPS yield to 2.60%.

Yields are rising on fears that the war in the Middle East is far from over, resulting in higher-for-longer oil prices.

If so, then the latest oil shock could spread inflationary pressures in the economy. That would increase the odds of a prolonged Fed rate-hiking cycle.

Yet the S&P500 is down just 01.8% from its record high of 7798.99 on August 13. Over that same period, the equal-weight version of the index is down -3.5%.

II. Earnings

FEMO (Fabulous Earnings Momentum) continues to support stock prices despite the latest troubling developments. The S&P 500 forward earnings have risen to a record US$403.44 per share.

By definition, they are approaching the analysts’ consensus 2027 EPS estimate and will converge with that estimate by year-end. The consensus has risen to US$419.54, and we think it could rise further to US$425 by year-end.

By the way, the 2027 estimate is not distorted by mark-to-market (MTM) capital gains, as is the 2026 estimate.

S&P500 forward earnings have been rising at a faster pace in recent weeks. This suggests that the underlying trend in actual earnings (excluding the recent MTM gains) remains very strongly to the upside.

FEMO can be explained by the surprisingly strong pace of S&P500 revenue growth. It has accelerated this year, notwithstanding rising oil prices and bond yields.

FEMO has also gotten a big boost from a spike in the S&P500 profit margin. The S&P500 forward profit margin rose to a record-high 16.8% in early September, confirming that the trend is solidly to the upside even excluding the MTM distortion during the first two quarters of this year.

On a y/y basis, there is no sign of any slowdowns in the growth rates of either S&P500 forward revenues or S&P500 forward earnings.

Even more remarkable is that analysts’ consensus long-term earnings growth (LTEG) expectation continues to rise to record highs.

Last week, LTEG rose to 26.7%. Of course, such a rate of growth would be impossible given that nominal GDP growth is well below that. However, it reflects analysts’ collective exuberance about the earnings prospects of the companies they follow.

The dispersion of positive y/y percentage changes in S&P500 forward revenues and forward earnings remains very high.

The S&P500 Net Earnings Revisions Index also rose to a cyclical high in September.

The forward earnings of the S&P500, S&P400, and S&P600 all rose to record highs last week.

III. Valuation

Since the start of the year, the S&P500’s forward earnings have risen 28.1%, while its forward P/E has fallen -12.9% ytd.

Investors aren’t willing to pay as much for FEMO as they were in January. They may be concerned that analysts’ EPS projections reflect a fair amount of irrational exuberance, even though that exuberance has been fueled by actual EPS results!

In recent weeks, the forward P/Es of the major market indexes have declined as forward EPS estimates have outpaced stock price gains. FEMO has been partially offset by less FOMO!

Also weighing on forward P/Es has been the rise in bond yields. We are still projecting 8400 for the S&P500 by the end of the year.

That target might be hit with stronger forward earnings and a weaker forward P/E than we had expected. So we are raising our 2027 earnings estimate to US$425 per share from US$415 and lowering our forward P/E expectation to 19.7 from 20.2.

IV. Sentiment

Admittedly, recent developments in the oil and bond markets are unnerving. We are acknowledging that by lowering the odds of our Roaring 2020s scenario through the end of the decade from 80% to 70%. We are raising the odds of a more bearish outcome from 20% to 30%.

September has often been the toughest month of the year for stock investors. That could be the case this year too.

The bull-bear ratios we track could fall sharply over the rest of the month because of the concerns we discussed above. From a contrarian perspective, we would welcome that as a strong buying signal.

This Time is Different? Earnings and Price Break 90-year Trends, Lance Roberts, The Bull/Bear report extract

I will tell you one thing: you have to give the bulls their credit. This past week was the perfect setup for a sharp sell-off in the market. Corporate buybacks are sidelined, interest rates spiked, and oil surged, pushing inflation higher.

If there was ever a case for a pullback, it was this past week.

Nonetheless, the correction that we have discussed over the last two weeks stopped right where the first line of support sits.

The S& 500 closed the week at 7,666, down -0.68%. The part that matters happened on Thursday, with the index trading down to 7,595 and closing dead on its 50-day moving average near 7,600.

That was our initial downside target, and the market met it up to that point before Friday’s bounce lifted the price back above the line.

While the 50-DMA held on the first test, overall momentum remains another matter. RSI sits at 50.9, dead neutral, down from the high-50s a week ago. The MACD signal has crossed below its signal line, keeping downward pressure in place into the end of the quarter.

Furthermore, the histogram has turned negative, adding to our caution. While the market held support, it did so with weakening momentum, which is the definition of an undecided tape.

From our vantage point, the breadth story is the bigger worry. The equal-weight S&P fell almost three times as hard as the cap-weighted index this past week. Most notably, it was small caps that led the whole thing lower, with volume telling the same story.

Of course, the spike in crude oil didn’t help and forced the heaviest selling in the rate-sensitive names, rather than the index leaders. As noted, breadth is the key to a sustainable bull market rally. The current breadth is a warning, but not yet a sell signal.

This coming week keeps our focus on risk management. From that standpoint, we continue to recommend trimming the most extended winners back toward model weight into any push toward the old highs, rather than chasing them.

The 50-DMA near 7,600 is the support line that decides our next moves.

If we hold it, and the uptrend off the spring lows stays intact, we can keep exposures near normal levels.

However, if we lose that support on a closing basis, the next real floor sits much lower at the 200-DMA near 7,158. We suggest keeping some dry powder heading into the Fed rate decision and next Friday’s option expiration.

Heading into the end of the month and the quarter, there is one level that dictates portfolio strategy into October. A weekly close back above 7,796, the August record, says the buyers have reclaimed control.

A close below 7,600 signals that the 50-DMA has failed and that the market wants deeper support. Everything in between is noise.

And next week brings two catalysts big enough to force the break. Trade the level, not the narrative.

KEY CATALYSTS NEXT WEEK

As mentioned throughout the commentary so far, there are two key events next week, and both are large enough to set the tone for the quarter. More importantly, they land 48 hours apart.

The first is the Fed. The FOMC meets Tuesday and Wednesday. The decision, a fresh set of projections, and Warsh’s press conference all hit on Wednesday afternoon. The market still leans toward a rate hike.

However, as noted above, I think this week’s data made the call harder, not easier. A central bank does not like hiking into a 3.4% headline inflation print that was primarily a function of a temporary crude spike, so the real story on Wednesday may be who dissented, rather than the lack of a rate hike.

The second catalyst is purely mechanical. Next Friday brings the options and futures expiration, known as “quad-witching,” which occurs four times a year.

Notably, this one is set up to be a record in size, which is unsurprising given the surge in options trading in the markets over the last couple of years.

However, historically, expirations this large can pin prices to the big strikes. Then they release them hard once they clear. Layer that on a Fed decision 48 hours earlier, and the week has a real setup for an outsized move.

The asymmetric risk is a hawkish surprise from the Fed. Whether the market is priced for a hike remains to be seen.

However, if Warsh delivers a hike, the rate-sensitive trade may have already priced it in, along with the bond market.

In other words, a rate hike might turn out to be a relief for bond traders after all.

Corporate news in Australia:

• Crimson Education’s hostile takeover of Kip McGrath Education Centres ((KME)) is gaining shareholder support, with Crimson reportedly prepared to increase its offer to 74c per share if it reaches the 90% compulsory acquisition threshold
• Hilco Capital’s sale of Australian fashion retailer Cue Clothing and sister brand Veronika Maine has yet to secure a buyer, while Cue CEO Melanie Remai has resigned after less than 18 months in the role
• Macquarie Asset Management ((MQG)) is preparing to sell its 50% stake in the $3bn Port of Newcastle, with Dalrymple Bay Infrastructure ((DBI)) considering a bid
• Canada’s Element Fleet Management has withdrawn from the $860m auction for FleetPartners Group ((FPR)) after declining to submit a revised bid
• New Zealand fuel retailer Waitomo has hired Jarden to pursue ExxonMobil’s roughly NZ$1bn New Zealand fuel business as the formal auction gets underway
• Charter Hall Group ((CHC)) has increased its stake in Abacus Group ((ABG)) to 7.04%, fuelling takeover speculation as Abacus’ share price weakens
• National Reconstruction Fund Corporation is investing $55m of senior secured debt in Global Resource Recovery to expand its Darwin chemical waste recycling and logistics infrastructure
• AirTrunk is seeking around SG$2bn of bank debt to finance asset acquisitions and refinancing for its proposed Singapore REIT
• Future Secure AI is nearing completion of a pre-IPO convertible note raising backed by Macquarie Asset Management ((MQG)), Square Peg and other investors, with the notes set to convert at a maximum $1.8bn valuation upon a planned ASX float

On the calendar today:

-NZ July Migration

-AU RBA Assistant Governor Hunter fireside chat

-JP July Industrial prod’n (final)

-US Sep Empire Mfg

-CA Aug CPI

-HK 2Q Industrial production & PPI

-CREDIT CORP GROUP LIMITED ((CCP)) ex-div 45.50c (100%)

-CHORUS LIMITED ((CNU)) ex-div 25.57c

-GLENNON SMALL COMPANIES LIMITED ((GC1)) ex-div 2.00c (100%)

-KELSIAN GROUP LIMITED ((KLS)) ex-div 10.00c (100%)

-SAUNDERS INTERNATIONAL LIMITED ((SND)) ex-div 1.00c (100%)

-VIRGIN AUSTRALIA HOLDINGS LIMITED ((VGN)) ex-div 7.60c (100%)

-WCM GLOBAL GROWTH LIMITED ((WQG)) ex-div 2.35c (100%)

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.

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