The Overnight Report: Time For A Breather

This story features SKS TECHNOLOGIES GROUP LIMITED, and other companies.
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US markets eased overnight. The September Fed Minutes were released. Looks like another rate hike (at some stage) is on the cards.

Treasury yields slipped after touching a 24-year high.

Yesterday marked another quiet day on the Australian market, with the index trading down slightly.

Post a softer overseas lead, ASX200 futures are pointing to a weak start for Thursday morning.

World Overnight
SPI Overnight	8709.00	– 53.00	– 0.60%
S&P ASX 200	8727.70	– 8.00	– 0.09%
S&P500	7801.77	– 17.16	– 0.22%
Nasdaq Comp	27538.69	– 61.20	– 0.22%
DJIA	51179.87	– 341.41	– 0.66%
S&P500 VIX	15.08	+ 0.07	0.47%
US 10-year yield	5.28	+ 0.01	0.15%
USD Index	102.29	+ 0.44	0.44%
FTSE100	10458.50	– 83.19	– 0.79%
DAX30	25104.36	– 344.83	– 1.35%

Good Morning,

Wednesday proved another quiet day on the ASX, with the index closing down -8 points or -0.09%.

Healthcare and REITs were positive with Telecoms and Materials weighing on the index.

SKS Technologies ((SKS)) was notable, down -12.26% as the founders sold -$106m in shares.

AGM season is revving up with REA Group ((REA)) and SRG Global ((SRG)) slated for today.

Citi on The Lottery Corp ((TLC)):

“TLC’s run of low jackpots may be ending as Powerball approaches a $60 million draw this Thursday.

“” However, we continue to see downside earnings risks to VA consensus in FY27-FY28e as LFL trends remain soft.

“TLC is also trading at a larger premium to the index than its historical average. Therefore, we retain Sell and lower our target price to A$4.50 (was A$5.00), driven mainly by a lower assumed PE premium to the ASX200 Industrials.”

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

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

Yields Hit 2002 Highs, Then Buyers Showed Up

Treasury yields hit their highest levels since 2002 this morning.

Then the govt sold US$39 billion of 10-year notes, and demand came in strong.

Dealers, who have to bid, took an unusually small share, a sign investors want these bonds at current rates.

The 10-year ended about flat, and that’s the most reassuring thing we learned today.

Fed Minutes Keep One More Hike on the Table

Minutes from the Fed’s September meeting show most officials expect one more rate hike by year end.

They didn’t say when, and made no urgent case for the Oct. 28 meeting.

Traders still see December as the likelier month.

Investors took it in stride, and a boring Fed day is a good Fed day.

Gold and Bitcoin Both Lose Ground

Gold hit its lowest price since Aug. 3, as a stronger dollar made it pricier for overseas buyers.

Bitcoin slipped under US$83,000 as about US$696 million in leveraged bets got wiped out, almost all of them bullish.

Crypto data firm Glassnode says trading volume is unusually low.

So borrowed money is moving prices more than new buyers are.

ANZ Bank, Australian Morning Focus extract

Equity markets were weaker across geographies.

The S&P500 was down -0.22%, the EuroStoxx50 fell -1.5% and the FTSE100 dropped -0.8%.

The yield on the US 10y Treasury note rose 2bp to 5.28%.

Oil prices were mixed but off their intraday highs. WTI fell -1.2% to US$88.3/bbl. Gold fell -1% to US$4,117/oz.

Minutes from the Fed’s September meeting struck a mildly hawkish tone, noting that “most participants” expected another rate hike by year-end. Several participants also viewed the policy rate as either not restrictive or only mildly restrictive.

The minutes suggested financial conditions were supporting growth despite higher bond yields, although those comments now appear dated, with the US 10y yield around 5.3%, up from about 5% at the time of the meeting.

The NY Fed’s one-year inflation expectations measure rose to 3.9% in September, its highest level since May 2023. Medium- and longer-term expectations remained stable, with the three-year measure at 3.3% and the five-year measure at 3.0%, suggesting higher energy prices are lifting near-term inflation concerns without de-anchoring expectations.

Inflation uncertainty also increased.

US mortgage applications fell -4.2% in the week to 2 October, the fifth straight weekly decline. The Mortgage Bankers Association data showed the 30-year fixed mortgage rate rose to a three-year high of 7.49% last week.

Bonds: The fixed income sell-off continued overnight as investors remained reluctant buyers of sovereign debt. Concerns about elevated energy prices, large budget deficits and rising government spending continued to weigh on sentiment.

Higher bond yields are also complicating monetary policy, particularly in Europe. While calls for ECB intervention in bond markets have increased, the ECB’s Moulin said conditions do not currently warrant intervention.

Energy rose as attacks on vessels in the Middle East continued. Supply risks pushed copper higher. Gold fell as higher bond yields weighed on demand.

Diesel in Australia: Cry in Shame, Dr Jonathan Kearns, Challenger extract

Average retail diesel prices in Australia are close to $3 per litre and have increased significantly more than petrol prices. This matters because diesel plays a larger role in the Australian economy than petrol.

While the Middle East conflict has disrupted the oil market, its impact on refined fuel products has been even greater.

This year, diesel prices have increased by more than petrol prices, just as they did in 2022 when Russia invaded Ukraine. Diesel prices have proved more sensitive to disruptions in the oil market.

In 2022, the increase in diesel prices relative to petrol prices was very similar across Singapore wholesale prices, which are the benchmark for Australia, and Australian wholesale and retail prices.

By contrast, earlier this year, Australian diesel prices increased by more relative to petrol prices than Singapore prices did. However, in recent months, the ratio of diesel to petrol prices has increased by less in Australia than in Singapore.

The differing movements in diesel and petrol prices highlight the greater regional disruption to refined fuel markets this year than in 2022. Refineries are configured to produce a particular mix of refined fuels, notably petrol, diesel and aviation fuel, from crude oil and have little scope to alter this mix.

Further, crude oils from different locations vary in density, hydrocarbon composition and sulphur content, which determines how easily they can be transformed into specific refined products.

We can break down the Australian retail diesel price into:

• fuel excise;
• the spread between the retail price and the Australian terminal gate wholesale price; and
• the spread between Singapore and Australian wholesale prices.

This breakdown highlights how the excise reduction temporarily lowered retail diesel prices and how the large increase in the international margin between Singapore and Australian wholesale prices has driven the additional rise in Australian retail diesel prices.

The disruption in global oil markets can also be seen in an implied ‘3-2-1 crack spread’ for the Asian region. The margin between three barrels of Brent crude oil and two barrels of Singapore refined petrol plus one barrel of Singapore refined diesel has increased significantly.

It has risen much more than in 2022 and is now well above the US$10 to US$20 range that applies in more normal periods. This does not necessarily imply that refiners are making larger profits, as many of their costs, including shipping and insurance, have also increased significantly.

The disruption in global diesel markets is particularly important for Australia, where diesel consumption far exceeds that of petrol and aviation fuel. Notably, over the past two decades, petrol consumption has declined while diesel consumption has more than doubled.

Road transport accounts for more than half of Australia’s diesel consumption, a share that has been relatively stable for four decades. The share used in mining has increased significantly alongside the growth of mining in Australia and now accounts for one-quarter of total consumption.

Agriculture accounts for around 8% of diesel consumption.

The share used in other industries declined significantly from the 1970s to the early 2000s, reflecting the decline in Australian manufacturing and the more efficient use of diesel in construction.

Australia imports almost all of its diesel from Asian countries, with Korea, Malaysia, Singapore and Taiwan the largest suppliers. The proximity of these countries, together with their strong trade and other connections to Australia, supports Australia’s diesel supply security.

One saving grace for Australian diesel users is that Australia taxes diesel much less heavily than most other advanced economies.

Across OECD economies, pre-tax diesel prices are very similar, but taxes vary widely. Australia’s relatively low taxes therefore result in a comparatively low retail diesel price.

2028 Should Be A Good Year, Ed Yardeni & Elias Griepentrog, Yardeni QuickTakes extract

We are now seven years into our Roaring 2020s thesis, which remains our base case for the rest of the decade, and it has played out very well so far.

When we first introduced the idea in August 2020, the prospect of another Roaring ’20s sounded a bit delusional. We argued that, as in the 1920s, rapidly proliferating technologies would drive a productivity boom that would support stronger economic growth while containing inflation, boosting real wages, widening profit margins, and lifting corporate earnings.

Since the beginning of the current decade, the economy’s resilience has repeatedly defied the naysayers, as productivity growth has increased and corporate earnings have continued to climb.

With only three full years left in the decade, one of the clearest manifestations of our Roaring 2020s thesis has been what we call FEMO, or Fabulous Earnings Momentum.

FEMO is clearly visible in industry analysts’ earnings expectations. They currently expect S&P500 operating earnings per share to rise to about US$364 per share in 2026 and US$419 in 2027, implying growth of roughly 15% in both years.

Toward the end of Q3 each year, we add another year to our Earnings Squiggles framework. This year’s addition is 2028, with earnings projected to rise another 17% that year to about US$489 per share.

For now, the analysts are more bullish than we are about earnings prospects over the remainder of the decade. We are projecting US$450 per share in 2028, US$475 in 2029, and US$500 in 2030.

If they are right, our S&P500 target of 10,000 will be achieved well before the end of 2029!

Corporate news in Australia:

• Dicker Data ((DDR)) will acquire Sektor for -NZ$138m, funded by expanded debt facilities, accelerating its expansion across Southeast Asia
• WSP has completed its acquisition of e2m, expanding its environmental and ecological consulting capabilities in Australia
• Acure Asset Management is seeking buyers for two neighbourhood shopping centres in Queensland and Western Australia worth more than $110m
• Former Northern Star Resources ((NST)) boss Bill Beament says Gold Fields will need to add a cash component to revive its rejected $38.7bn takeover proposal
• BHP Group ((BHP)) has agreed to sell its Kambalda nickel assets to Gold Fields, bypassing expected buyer Wyloo Metals
• The ACCC has approved MUFG’s discounted takeover of HESTA-backed technology company Grow
• New Zealand billionaire Nick Mowbray is reportedly weighing a rival bid for Mattel and may appoint Australian investment bankers
• CDC Data Centres’ ((IFT)) valuation fell -$78m over the September quarter as higher financing costs outweighed growth in contracted capacity and its development pipeline
• AirTrunk has secured a US$1bn green loan to fund liquid-cooling infrastructure at its Tokyo data centre
• Torque Metals ((TOR)) has launched a $25m placement after dropping Evolution Capital from its broker line-up amid ASIC scrutiny
• At least 15 lenders are competing to underwrite more than $5.5bn of debt backing EQT’s $9.4bn takeover of Cleanaway Waste Management ((CWY))
• Firmus is reportedly considering cutting its IPO price to around $9 per share following weaker-than-expected investor demand
• Glencore is preparing for its ASX debut, with analysts highlighting a substantial valuation discount to its historical average and Australian mining peers
• Sharon AI has appointed Goldman Sachs as an adviser as the Australian neocloud prepares for a potential future dual listing
• Omni Bridgeway ((OBL)) has closed US$1bn across two litigation finance funds, lifting AUM to US$4.2bn

On the calendar today:

-JP Aug BoP

-US Aug Wholesale inventories (final)

-GE Aug Trade balance

-ARB CORPORATION LIMITED ((ARB)) ex-div 35.00c (100%)

-CLIME CAPITAL LIMITED ((CAM)) ex-div 1.35c (50%)

-NAOS EMERGING OPPORTUNITIES CO. LIMITED ((NCC)) ex-div 2.10c (100%)

-REA GROUP LIMITED ((REA)) AGM

-SRG GLOBAL LIMITED ((SRG)) AGM

-WAM CAPITAL LIMITED ((WAM)) ex-div 7.75c (60%)

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

Spot Metals,Minerals & Energy Futures
Gold (oz)	4107.87	– 60.03	– 1.44%
Silver (oz)	59.72	– 1.70	– 2.77%
Copper (lb)	6.59	– 0.02	– 0.30%
Aluminium (lb)	1.42	+ 0.01	0.89%
Nickel (lb)	7.05	+ 0.03	0.39%
Zinc (lb)	1.73	+ 0.01	0.77%
West Texas Crude	89.06	– 0.79	– 0.88%
Brent Crude	101.02	0.00	0.00%
Iron Ore (t)	91.13	– 0.05	– 0.05%

The Australian share market over the past thirty days…

Index	07 Oct 2026	Week To Date	Month To Date (Oct)	Quarter To Date (Oct-Dec)	Year To Date (2026)
S&P ASX 200 (ex-div)	8727.70	0.53%	-0.70%	-0.70%	0.15%

BROKER RECOMMENDATION CHANGES PAST THREE TRADING DAYS
A1M	AIC Mines	Upgrade to Buy from Accumulate	Ord Minnett
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
TCL	Transurban Group	Upgrade to Accumulate from Hold	Ord Minnett

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.)

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