The Overnight Report: Relief Rally Boosts Tech

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This story features RAMSAY HEALTH CARE LIMITED, and other companies.
For more info SHARE ANALYSIS: RHC
The company is included in ASX100, ASX200, ASX300 and ALL-ORDS

US markets rallied, post the Fed rate hike sell off, as oil and US Treasury yields fell, with technology and chip stocks leading the markets higher. 

The Nasdaq Composite rose 1.7% with the S&P500 up 1.1%.

The Australian market rallied for a second straight day and ASX200 futures are pointing to a positive start for the end of the week.

Good Morning,

On Thursday, the Australian market bucked the weak offshore trend lead post the Fed rate hike and rallied 35.9 points or 0.41% to 8732.49, supported by Healthcare and Property Trusts, up 0.98% and 0.65%, respectively.

SPI futures are pointing towards a continuation of the rally on the final day of the week.

Ramsay Health Care ((RHC)) Capital Markets Day, RBC Capital extract

“Ramsay Sante 2030 strategy. Ramsay Sante management outlined its new strategic roadmap for the next 4 years. The strategy centres on revenue growth and margin expansion through network optimisation, revenue initiatives, and cost efficiency.

“At the group level, management is focused on strengthening centres of excellence, further digitising healthcare delivery, actively managing its portfolio of assets through optimisation and rationalisation, and continued focus on cost initiatives.

“Ramsay Sante management has issued FY27 outlook for revenue growth of 2%-3% (vs previous RBCe CC growth of 1.7%, consensus reported growth of -1%) and a stable EBITDA margin outlook (vs previous RBCe +0bps, consensus -45bps).

“Ramsay Sante management has issued FY29 outlook for revenue growth of ~3% (vs previous RBCe CC growth of 2.0%, consensus reported growth of 2.9%) and a gradual EBITDA margin improvement (vs previous RBCe +0bps between FY26-FY29, Consensus +39bps). Gross capex is expected to average ~4% of revenue over FY27-FY29 (vs previous RBCe 3%).

“Forecast changes. We have increased our Ramsay Sante revenues and margins, and our Ramsay Sante capex assumptions. The net impact has been EPS estimate increases of +0.6% in FY27, +2.0% in FY28 and +3.8% in FY29.

“Valuation. We have updated our SOTP valuation which has become $66/share (vs prev $68). Rating: Outperform”

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

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

1. The Gap Between The Fed And The Market

Futures traders are priced for three more quarter-point hikes over the next twelve months, according to LSEG data.

The Fed’s own dot plot shows one more this year and a median of nothing in 2027.

Jefferies economist Mohit Kumar said the market simply overread Warsh’s tone on Wednesday and spent Thursday walking it back.

That gap is where the volatility lives between now and December.

2. Crude Cooled, Diesel Did Not

Saudi Arabia is moving extra cargoes to Asian refiners through ship-to-ship transfers near Oman’s Sohar port, which took the fear premium out of Brent and pulled it back under US$104.

Diesel went the other way and set a national record at US$6.39 a gallon. California is above US$8.34.

Cheaper crude takes weeks to reach the pump, and diesel is the fuel that prices freight, food, and construction.

3. Memory Is The New Bottleneck

Intel CEO Lip-Bu Tan said memory shortages get worse in 2027, and that prices have already climbed five to seven times over.

That lifted Micron $MU and the rest of the chip tape.

Barclays strategist Venu Krishna flagged the other side of it: Apple blamed its recent gross margin squeeze entirely on memory costs, and that same bill lands on every chip buyer next year.

Good news for the sellers, a 2027 earnings problem for the buyers.

CBA: Daily Economic Alert, extract

Oil prices declined on reports Saudi Arabia is seeking to partially restore flows along its East-West pipeline within days. The kingdom also sold Asian refiners more oil for collection outside of the Strait of Hormuz, a sign oil flows are continuing through the strait.

Global equities increased, while Treasury yields fell amid these developments. Meanwhile, the Bank of England held rates steady and the Aussie dollar gained slightly against the USD.

In Australia, population data was released. Australia’s population rose by 0.5% in the March quarter of 2026 to 27.9 million people. The annual growth rate edged down to 1.4%, the slowest pace since Q2 2022.

Net overseas migration continues to normalise but remains above pre-pandemic levels. Through the year to Q1 26, net overseas migration added 292.1k people, a -5.6% decline from Q1 25.

US sharemarkets bounced back on Thursday as easing oil prices, dropping US Treasury yields and solid labour data helped markets move beyond the Federal Reserve’s first interest rate hike in more than three years. The Dow Jones index finished up 0.6%, the S&P 500 index rose 1.1% and the Nasdaq index added 1.7%.

European sharemarkets rose on Thursday as lower oil prices and a pause in the global bond selloff lifted risk appetite after the US Federal Reserve delivered its widely expected interest-rate hike.

Investors also focused on the Bank of England, which held rates steady while warning that soaring energy costs would intensify inflation pressures. The continent-wide FTSEurofirst 300 index ended up 0.9% and the UK FTSE 100 advanced 1.2%.

US government bond yields fell on Thursday as oil prices eased, and investors digested Wednesday’s Federal Reserve interest rate increase and signals of further rate increases ahead. The US 10-year Treasury yield fell 7 points to 4.93%, while the US 2-year Treasury yield dipped 6 points to 4.67%.

Currencies were higher against the US dollar. The Euro inched up 0.1% to US$1.1477, the Japanese yen rose 0.2% to JPY155.95 and the Aussie dollar gained 0.3% to US71.10 cents.

Global oil prices dropped, touching a one-week low before paring losses after supply disruption fears were calmed by reports of Saudi oil moving through Oman. Brent crude futures settled -1% lower at US$104.82 a barrel.

Base metal prices were higher on Thursday. Copper futures rallied, up 2.4%, as Chinese buyers returned to the market after a recent selloff while demand prospects brightened and the dollar softened. Meanwhile, aluminium futures edged up 0.3%.

Gold futures rebounded from a near six-week low in the previous session, as easing oil prices and a lower US dollar lent support, while investors assessed the latest Federal Reserve rate hike. The futures settled 0.3% higher at US$4,400 an ounce.

Iron ore futures settled flat at US$97.42 a tonne.

Looking Ahead: In Australia, the RBA Governor will speak at the lower house’s Standing Committee on Economics.

In the US, the Conference Board Leading Index and industrial production figures are released. In Japan, the central bank will make its decision on interest rates.

Australian Investors and Traders, CMC client survey, extract

Australian investors and traders remain nervous about markets but are continuing to invest and trade through uncertainty, maintaining exposure despite rising caution and concerns over mounting macro headwinds, according to new research from global online multi asset provider CMC.

CMC surveyed more than 8,500 Australian investors and traders, finding that ongoing global uncertainty had led more than half (56.1%) of all respondents to become more cautious.

However, almost nine in ten (87.1%) said they planned to invest the same, or even more, over the next six months.

Among those who were more cautious, one third (31.8%) of the respondents said they plan to invest or trade more in the next six months, while only 12.8% plan to invest or trade less.

Nervousness was reflected in mindset not allocations, with investors and traders choosing to stay the course despite ongoing uncertainty and volatility.

This is a story of calibration, not capitulation. Investors and trades are acknowledging the risks and adopting a more considered mindset, but uncertainty has not driven them away from markets.

Rather than stepping back, they appear to be reassessing how and where they participate, a measured response that reflects neither complacency nor retreat.

That’s a meaningful shift from what could be expected, given that uncertainty has in the past led some retail investors and traders to flee to cash.

This time, some investors and traders are staying in the market and adjusting how they participate.

Impending interest rate rises for Australian households, David Robertson, Bendigo Bank, extract

Increasing oil and energy prices, higher household spending, interest rates rising overseas and booming global export levels all point to a Reserve Bank of Australia (RBA) interest rate hike by November, potentially as soon as late September.

Despite the RBA’s efforts to slow our economy down and unemployment numbers in July increasing, Australian household spending remains high, up 7% compared to this time last year.

Combined with international factors, the case for an imminent domestic rate hike has grown substantially. With the Middle East conflict in its sixth month and a resolution looks as distant as ever, crude oil prices are back above US$100 a barrel.

These rising costs will continue to feed into transport costs, logistics, and goods production.

Until we see a meaningful and sustainable fall in energy prices, I believe we will see one interest rate rise before Christmas and remain sceptical of any RBA rate cuts in 2027 to ease the pain.

Looking internationally, bond yields around the world have similarly moved higher reflecting this mood, with several central banks raising rates over the last few weeks.

The challenge for central banks and bond markets isn’t just being driven by the rebound in oil prices, but also as the global AI buildout phase drives demand for capital and labour, which partly explains why the global economy has been so resilient to higher energy prices.

The outlook for property prices remains subdued after recent tax changes and as interest rates nudge higher, this will flow through to lower Consumer and Business Sentiment.

However, Australia’s economy remains strong and despite rising unemployment figures in July, the jobs market remains resilient and strong business investment is helping to keep a soft landing in play.

in Australia, the Middle East conflict impacts have been offset by the boost from AI-related trade and investment, including in data centre fit outs and other drivers of machinery and equipment investment.

While the latest GDP data saw our growth rate decelerate from 2.5% to 2.1%, and the global economy is slowing from 3.5% to 3%, global goods exports continue to boom as the tech investment binge continues.

We still expect a mildly higher Australian Dollar over coming months, with our AAA credit rating in sharp contrast to other major economies with problematic high government debt levels.

Corporate news in Australia:

• Kelsian Group ((KLS)) has received FIRB approval for the $161m sale of its tourism portfolio to Journey Beyond
• MA Financial ((MAF)) has acquired a 50% stake in Melbourne’s The Glen Shopping Centre for $327.5m and launched a new large-format retail fund
• RES has launched a sale process for Queensland’s Moah Creek wind farm, appointing MA Moelis Australia ((MAF)) to seek prospective investors
• China’s Tuhu has reportedly secured exclusivity for Continental’s mycar, beating Allegro Funds
• ColCap is preparing a record $3bn mortgage-backed bond issue, exceeding its previous $2.7bn issuance
• Americold has launched a $2bn sale of its APAC and European cold storage operations, including assets in Australia and New Zealand
• Washington H. Soul Pattinson ((SOL)) has joined EQT and Carlyle in the $1bn auction for staffing and services group Programmed
• National Australia Bank ((NAB)) has emerged as a suspected bidder for HSBC’s Australian deposit book
• Firmus is reportedly targeting a 22 October IPO at a valuation of up to US$60bn, with plans to deploy around 2m GPUs by 2028 and nine major customer accounts including Meta
• Works Media Group is seeking $5m from private investors to fund expansion
• Abacus Storage King ((ASK)) has launched a $121m block trade in Storage King through Barrenjoey Capital Partners ((MFG))
• Aware Super and Birdwood Energy are backing Victoria’s $700m Baranduda battery project alongside the State Electricity Commission of Victoria

On the calendar today:

-NZ Aug Trade Bal

-AU RBA Governor Bullock testimony

-JP Aug CPI

-JP BoJ rate decision

-EZ July Current A/C

-UK Aug Retail sales

-US Aug Industrial prod’n

-ADRAD HOLDINGS LIMITED ((AHL)) ex-div 2.56c (100%)

-CENTREPOINT ALLIANCE LIMITED ((CAF)) ex-div 1.75c (100%)

-MACMAHON HOLDINGS LIMITED ((MAH)) ex-div 1.25c (100%)

-VITA LIFE SCIENCES LIMITED ((VLS)) ex-div 5.00c (60%)

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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