The Overnight Report: Fresh Record Highs

This story features INFRATIL LIMITED, and other companies.
For more info SHARE ANALYSIS: IFT
The company is included in ASX200, ASX300 and ALL-ORDS

Against general 'wisdom' of market weakness in the run up to the midterms, the S&P500 and Nasdaq reached new all-time highs.

The Australian market rallied again yesterday, led by the index heavyweights.

ASX200 futures are pointing to a muted-to-weaker start for Wednesday morning.

World Overnight
SPI Overnight	8764.00	– 1.00	– 0.01%
S&P ASX 200	8735.70	+ 49.30	0.57%
S&P500	7818.93	+ 44.98	0.58%
Nasdaq Comp	27599.79	+ 122.48	0.45%
DJIA	51521.28	+ 253.38	0.49%
S&P500 VIX	15.01	– 0.51	– 3.29%
US 10-year yield	5.27	– 0.04	– 0.79%
USD Index	101.85	– 0.30	– 0.29%
FTSE100	10541.69	+ 43.75	0.42%
DAX30	25449.19	+ 194.98	0.77%

Good Morning,

The Australian market advanced 49.3points or 0.57% to 8735.7 led by Materials, Utilities and REITs, supported by Financials. InfoTech lagged, down -2.9%.

After falling -2% on the first day of trading in October, the local market has rallied for the last three days, albeit on light volumes (school holidays).

Overnight, shares in miners and enrichers of uranium rallied after Alphabet agreed to buy nuclear power from Constellation Energy in a deal that will spur the addition of 890MW of new reactor capacity. 

Shares in Cameco gained 6.1% while NexGen Energy ((NXG)) lifted 3.5%.

RBC Capital on Rio Tinto ((RIO)), BHP Group ((BHP)) and Glencore:

“We upgrade Rio Tinto to Sector Perform as we see less downside risk in the iron ore prices as the cost curve steepens on rising freight rates.

“M&A risks look more balanced with expected cash release of [US]$5bn (infrastructure/borates) to be announced in Q4, offsetting the smaller chance of expensive copper acquisitions.

“Rio Tinto has been the laggard of the diversified (ex Vale) at +19% YTD vs BHP & GLEN at +44%. From a valuation perspective, Rio PLC does not look as stretched as BHP, but Glencore could weigh on both, depending on the success of their Oz listing.”

Expensive or complicated copper M&A still a risk

“Given the balance of Rio Tinto’s NAV to iron ore (46%) vs copper (25%), we believe it remains an ongoing risk that the company will look to acquire more; either through complicated and cheap (Glencore), a passenger on projects (Taca Taca, Loz Azules) or pure-play & expensive (First Quantum).”

Small rotation risks for BHP and Rio Tinto

“Glencore’s listing in Australia could be the precursor of a Rio Tinto bid but also if it does have success in convincing institutions that it is a good alternative to BHP and RIO and have sufficient CDIs registered, then we could see rotation, tightening the current valuation gap. Spot 2027 EV/EBITDA for GLEN, RIO, BHP at 3.9x, 5.6x & 7.8x.”

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

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

S&P500 Hits a Record on a Narrow Rally 

The S&P500 hit its first record high since August 13, with tech doing most of the lifting.

Since that peak, only tech and energy have gained ground among the 11 sectors.

Small caps lagged today. That’s a lot of weight on a handful of very big names.

Power Stocks Rally on Google’s Nuclear Deal 

Google signed a 20-year deal to buy 890 megawatts of nuclear power from Constellation Energy $CEG.

Constellation will spend more than US$4.3 billion upgrading 11 of its reactors.

It’s the biggest deal yet to get more power out of plants that already exist.

Talen Energy $TLN led the rest of the power group higher.

Marvell Guides Far Above Wall Street Marvell Technology 

$MRVL expects about US$20 billion in revenue in fiscal 2028, ahead of the US$18.17 billion analysts wanted.

The bigger news was fiscal 2031: US$70 billion to US$90 billion, versus Wall Street’s US$47 billion.

Companies don’t put out numbers like that unless they like what customers are telling them.

The stock has more than tripled this year.

ANZ Bank, Australian Morning Focus extract

Equity markets rallied, with the S&P500 reaching a record high, as global bond yields declined and oil fell.

The S&P500 was up 0.6%. The EuroStoxx50 rose 0.5%, and the FTSE100 rose 0.4%. 

The yield on the US 10y Treasury note fell -4bp to 5.28%. 

The active WTI future was down -0.1% to US$89.8/bbl. Gold rose 1.2% to US$4,168.8/oz.

ANZ-Indeed Australian Job Ads rose 2.2% m/m in September, leaving the series12.9% higher over the year. The Job Ads series is 24.4% above its 2010s average and has been resilient through the RBA’s rate hiking cycle.

However, labour market conditions typically respond to softer economic activity with a lag. As the impact of higher interest rates continues to flow through to the economy, we expect economic momentum and labour demand to slow.

As a result, we anticipate Job Ads will gradually trend lower over the coming months.

The US trade deficit widened to US$105.6bn in August, from US$92.8bn in July. Imports rose 4.3% m/m, led by crude oil, non-monetary gold and capital goods. Exports rose 1.4% m/m.

The monthly trade deficit is the widest since the pre-tariff frontloading of import demand ahead of the April 2025 Liberation Day tariff announcements.

The monthly trade deficits with Mexico and Vietnam grew to the widest level on record, while the trade deficit with Canada also widened sharply ahead of tariffs coming into effect.

Europe: A sense of calm returned to European bond markets today, with French, Italian and Greek bonds outperforming amid a broad rally. Marine Le Pen, leader of France’s main opposition party and the current front-runner in the 2027 presidential election, laid out a proposal to aggressively reduce the deficit. 

Under this proposal, the deficit would narrow to 3.7% of GDP in 2027 and below 3.0% from 2028, meeting the requirements under the excessive deficit procedure.

After accounting for rising debt servicing costs, the proposal would require consolidation of around 3% of GDP over two years, which has raised questions about its credibility and broader implications for the economy.

Nonetheless, the focus on consolidation suggests Le Pen’s party, National Rally, may lend its support to the current government in passing the 2027 budget.

The energy sector gained as supply side risks remained elevated. Industrial metals were mixed, while gold gained amid signs of stronger central bank demand.

Global Fiscal adjustment- why, where, and how, Oxford Economics extract

Soaring long-term global bond yields have pushed fiscal adjustment back onto the policy agenda.

The case for fiscal tightening reflects the deterioration in underlying budgetary and debt positions, and some signs of declining policy credibility. But not all forms of adjustment are positive for bond investors.

With the recent surge in bond yields part of a longer upward trend, debt service costs look set to rise significantly, especially with gross debt in the G7 now above 100% of nominal GDP.

Rising interest costs also expose underlying weakness in fiscal positions. The aggregate advanced economy structural primary deficit is now around 3% of GDP versus just 1% in 2018, mostly because of higher spending.

For much of the period from 2011-2023, real bond yields were negative, which flattered fiscal accounts. That has now changed, and in some economies real interest costs exceed real GDP growth, which will tend to push up debt ratios.

Allowing structural deficits to rise also means budget deficits could blow out to very high levels in the event of a recession – perhaps even above 10% of GDP in the US.

Looking across a range of fiscal indicators, we think the need for fiscal adjustment is greatest in France and the UK, which is partly reflected in recent moves in bond yields. The US arguably has more room to adjust but will need significant fiscal reforms in the next decade.

Historically, large fiscal adjustments have been managed in different ways – including running sustained primary surpluses, rapid economic growth, and extended periods of inflation exceeding interest rates.

Uncertainty over what adjustment paths different economies will take could be adding to upward pressure on yields. Fiscal adjustments also have a high failure rate: cross-country evidence suggests they are most likely to succeed when they rely mainly on reductions in spending.

A new world debt order emerges as France stumbles and Argentina rises, Nigel Green, deVere, extract

France’s borrowing costs smashing through 5% is the starkest sign yet the world’s debt order has flipped, with rich nations now paying the kind of price once reserved for serial defaulters like Argentina.

France’s 10-year yield has topped 5% for the first time since 2002, its premium over Germany records the sharpest weekly jump in 17 years, and the US 30-year Treasury yield pushes above 5.7%.

A founding member of the euro is now borrowing at levels last seen when the single currency was still in its infancy.

Meanwhile Argentina, the byword for default, has spent this year collecting credit upgrades.

The bond market has stopped caring about history. It’s judging governments on what they’re doing right now, and the rich world is failing the test.

The pressure on France is intensifying fast. Its government last week unveiled a 2027 budget with EUR43 billion of new savings and revenue measures to tackle a deficit running at 5.4% of GDP.

Debt interest is already the country’s largest single budget expense, and its fiscal watchdog calls the plan’s assumptions “optimistic.”

A major rating agency reviews France later this month.

France is caught in the trap every indebted government fears. Higher yields swell the interest bill, a bigger interest bill widens the deficit, and a wider deficit pushes yields higher still.

Every week of political paralysis makes the escape more expensive.

Argentina has travelled the other way. The country, which has defaulted on its sovereign debt nine times, secured three major credit upgrades in under three months this year, driving its risk premium over US Treasuries to around 420 basis points in July, the lowest in eight years.

Its economy minister was in Paris last week telling investors the bigger risk was missing out.

Argentine spreads have since widened again as US yields surged, a reminder the recovery remains fragile.

Argentina’s turnaround isn’t finished, and its bonds feel every tremor in US yields.

But it slashed spending, turned deficits into surpluses, and crushed triple-digit inflation. Markets rewarded the pain. France has avoided the pain, and markets are punishing it.

Britain and the US are feeling the same pressure. Britain’s 30-year gilt yield has hit 6%, a 28-year high.

In the US, the Federal Reserve raised rates on 16 September for the first time since 2023, lifting its target range to between 3.75% and 4% as inflation refused to fade.

The US lost its last top-tier credit rating last year, and deficits still run into the trillions.

America has assumed the world will always fund it at a discount, whatever it spends. Investors are now charging full price, and the Fed’s hike shows inflation is far from beaten.

Emerging market debt, by contrast, has clearly outperformed developed market government bonds since late August, helped by average inflation in developing economies of around 3.8%.

Plenty of emerging economies took their medicine after the last inflation shock. They raised rates early, tightened budgets and absorbed the political backlash.

Much of the developed world borrowed its way through, and the bill is landing now.

Corporate news in Australia:

• Firmus has ended its alliance with CDC ((IFT)) over Project Southgate amid frustrations over costs and delays
• Australia Post is downsizing its contract with Orro as private equity owner LVP seeks to sell the debt-laden IT business
• PSP Investments is in advanced talks to acquire AAA Egg Company’s Golden Eggs and Days Eggs businesses for more than $200m
• Infratil ((IFT)) is weighing a potential -NZ$1bn sale of One NZ’s fibre network
• Macquarie Capital ((MQG)) has invested in Zerra to expand its more than 2GW Asia-Pacific data centre pipeline
• Firmus has opened its IPO bookbuild with 42.4% of shares escrowed, pitching 75% EBITDA margins at a $43.9bn valuation
• H2X Global is seeking $6.1m to fund a leaner turnaround after cutting staff and costs
• SKS Technologies ((SKS)) founders are selling -$106m of shares following a 166% share-price rally driven by data centre demand
• AustralianSuper plans to more than double its private equity exposure in Asia, targeting buyouts in Japan, South Korea and India
• Invest Unlisted has launched a $250m raise offering Australian investors exposure to US data centre developer Fleet
• Nuveen has raised $1bn from CPP Investments and Temasek for Australian property credit

On the calendar today:

-JP Aug Earnings

-CH Public Holiday

-US Aug Consumer credit

-US Sep FOMC minutes

-GE Aug Industrial production

-ASPEN GROUP LIMITED ((APZ)) investor briefing

-MFF CAPITAL INVESTMENTS LIMITED ((MFF)) ex-div 11.00c (100%)

-NICKEL INDUSTRIES LIMITED ((NIC)) investor briefing

-REDOX LIMITED ((RDX)) AGM

-RYDER CAPITAL LIMITED ((RYD)) ex-div 3c (100%)

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

Spot Metals,Minerals & Energy Futures
Gold (oz)	4167.90	+ 28.97	0.70%
Silver (oz)	61.42	+ 0.35	0.57%
Copper (lb)	6.61	+ 0.02	0.30%
Aluminium (lb)	1.41	– 0.00	– 0.08%
Nickel (lb)	7.02	+ 0.02	0.22%
Zinc (lb)	1.71	– 0.01	– 0.63%
West Texas Crude	89.85	+ 0.52	0.58%
Brent Crude	101.02	+ 0.64	0.64%
Iron Ore (t)	91.18	– 0.27	– 0.30%

The Australian share market over the past thirty days…

Index	06 Oct 2026	Week To Date	Month To Date (Oct)	Quarter To Date (Oct-Dec)	Year To Date (2026)
S&P ASX 200 (ex-div)	8735.70	0.62%	-0.61%	-0.61%	0.25%

BROKER RECOMMENDATION CHANGES PAST THREE TRADING DAYS
A1M	AIC Mines	Upgrade to Buy from Accumulate	Ord Minnett
AMI	Aurelia Metals	Downgrade to Neutral from Outperform	Macquarie
DPM	DPM Metals	Downgrade to Neutral from Outperform	Macquarie
GGP	Greatland Resources	Upgrade to Outperform from Neutral	Macquarie
GL1	Global Lithium Resources	Downgrade to Neutral from Outperform	Macquarie
LIN	Lindian Resources	Downgrade to Underperform from Neutral	Macquarie
LYC	Lynas Rare Earths	Upgrade to Accumulate from Lighten	Ord Minnett
MEI	Meteoric Resources	Downgrade to Hold from Speculative Buy	Ord Minnett
NST	Northern Star Resources	Upgrade to Accumulate from Hold	Ord Minnett
QBE	QBE Insurance	Upgrade to Outperform from Neutral	Macquarie
RIO	Rio Tinto	Upgrade to Outperform from Neutral	Macquarie
TCL	Transurban Group	Upgrade to Outperform from Neutral	Macquarie
		Upgrade to Accumulate from Hold	Ord Minnett
WAF	West African Resources	Upgrade to Outperform from Neutral	Macquarie

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