Daily Market Reports | 8:45 AM
This story features KMD BRANDS LIMITED, and other companies.
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Markets fell on a combination of concerns around energy and the Middle East, as well as question marks over OpenAI's financial reporting.
After a hefty sell-off in Materials and Financial stocks in Australia yesterday, which pulled the ASX200 down, futures are pointing to a positive start for Friday.
The choppiness continues.
| World Overnight | |||
| SPI Overnight | 8715.00 | + 19.00 | 0.22% |
| S&P ASX 200 | 8660.90 | – 66.80 | – 0.77% |
| S&P500 | 7765.36 | – 36.41 | – 0.47% |
| Nasdaq Comp | 27193.34 | – 345.35 | – 1.25% |
| DJIA | 51231.64 | + 51.77 | 0.10% |
| S&P500 VIX | 15.41 | + 0.33 | 2.19% |
| US 10-year yield | 5.23 | – 0.05 | – 0.87% |
| USD Index | 102.08 | – 0.21 | – 0.20% |
| FTSE100 | 10441.60 | – 16.90 | – 0.16% |
| DAX30 | 24806.97 | – 297.39 | – 1.18% |
Good Morning,
The Australian market fell -66.8 points or -0.8% to 8660.90, led by a decline in Materials of -2% and Financials off -0.99%. Energy rose 1.36% on higher oil prices.
The market is trading some -7% below its August 6 high.
RBC Capital on Endeavour Group ((EDV)):
“Reducing FY27e and FY28e EBIT by -3.5%/-4.2%. Changes reflect softer revenue and higher CODB estimates for Hotels in FY27 and FY28 on higher wage inflation and investment in the opex base, partially offset by stronger gross margins in FY28.
“We are wary of downside to sales, particularly for Hotels on the back of weak top-down EGM revenues in VIC and QLD, and capital-intensive renewals pipeline.
“FY27 is shaping up to be a tough year with elevated capex (RBCe ~$600m), and leverage likely running above target while investors await improved returns outcomes from capital-intensive hotel renewals.
“In the meantime, we prefer to remain on the sidelines. Sector perform, $3.00/share PT vs $3.10/share previously.”
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
A Smaller OpenAI Number Hits AI Stocks
OpenAI’s annualized revenue hit about US$50 billion at the end of September, per the Financial Times.
The US$68 billion figure reported last month included partners’ gross revenue, so the two numbers measure different things.
AI stocks sold off anyway, with CoreWeave $CRWV among the hardest hit.
I think that says more about how high the bar is for AI than about OpenAI.
Oil Climbs After a Tanker Is Hit Near Qatar
Brent closed around US$104, its highest finish since Sept. 28. A tanker was struck off the coast of Qatar, well away from the usual trouble spot in the Strait of Hormuz.
Oil came off its highs after President Trump posted that the US won’t attack Iran before the Nov. 3 midterms.
With strikes off the table until then, tanker attacks are the risk I’d watch.
Starbucks Looked at Buying Chipotle
The Financial Times reported Starbucks $SBUX explored a deal for Chipotle $CMG, and Chipotle rose on the news.
At about US$39 billion, it would be the biggest restaurant takeover ever.
Starbucks CEO Brian Niccol ran Chipotle before this job.
Starbucks said only that it’s focused on its own turnaround, which isn’t a denial.
ANZ Bank, Australian Morning Focus extract
The S&P500 was down -0.47%. The EuroStoxx50 ended its session down -0.9%, while the FTSE100 lost -0.2%.
AI-related stocks declined after the Financial Times reported that OpenAI’s annualised revenue is less than previously signalled.
The yield on the US 10y note fell around -7.8bp to 5.23%.
Escalating tensions in the Middle East drove oil prices higher, but prices are off their overnight highs following comments from President Trump that he would not attack Iran before the 3 November midterms.
WTI lifted 1.4% to US$91.2/bbl. Gold was weaker at US$4,130.3/oz.
US Initial jobless claims fell -2k to 197k in the week ended 3 October. The four-week moving average declined to 198k, near historic lows, suggesting that the labour market remains in a ‘low hire, low fire’ equilibrium.
The FOMC’s attention can remain focused on risks to the inflation side of its dual mandate.
FOMC member Governor Waller signalled that further interest rate hikes will likely be needed, although there is flexibility as to the timing. He assessed the balance of risks to the economy as roughly the same as they were at the September FOMC meeting.
That is, economic activity is strengthening, the labour market is broadly stable and inflation risks are skewed to the upside.
Waller said that he is not greatly concerned that tighter monetary policy threatens a damaging slowdown, though he is concerned about a re-acceleration in inflation.
He stressed the need for flexibility in forward guidance, emphasising that monetary policy is not on a predetermined path and that rate “hikes do not need to come at consecutive meetings, but they should be in place in an acceptable period of time.”
Waller’s guidance aligns with that of other senior FOMC members who have recently indicated that there is no urgency to tighten policy, but we think that, at 20%, the market is assigning too low a probability of a rate hike at the next meeting in October.
We do not think Waller’s guidance should be interpreted as an endorsement of an October pause but rather as providing flexibility to respond to incoming data.
The September CPI report next week will be important for the Fed’s October decision. If it shows firmer underlying inflation or evidence that energy and AI-related price pressures have broadened, we think an October rate hike will remain firmly on the table.
Energy rose on fears of renewed disruptions to supply from the Middle East. The subsequent hit to risk appetite pushed industrial metals lower.
Anthropic’s $2 trillion IPO puts AI’s circular money machine on trial, Nigel Green, deVere Group, extract
The AI boom is being financed in a loop, and Anthropic’s blockbuster listing is about to hand that loop to ordinary investors.
Anthropic heads towards a Nasdaq debut that could value it at up to US$2 trillion, while one independent research house puts its worth at just US$150 billion and brands it the “most ridiculous IPO” of 2026.
The gulf between ambition and accounts is vast. A leaked copy of the prospectus shows Anthropic generated US$4.6 billion of revenue in 2025 while posting a net loss of -US$42 billion.
To justify a US$2 trillion price, the research house, New Constructs, estimates the company would need to earn around double the trailing annual profit of Nvidia, the world’s most valuable tech company, which topped US$190 billion.
A US$2 trillion valuation on US$4.6 billion of revenue asks investors to pay today for a future where almost everything goes right.
And a large share of the demand propping up that future is circulating between the same handful of players.
For example, Nvidia invests in AI developers. Developers spend the money on Nvidia chips and computing power. Nvidia books it as revenue. Every turn of the wheel looks like growth.
Anthropic sits right at the centre. It has signed up to spend US$518 billion on AI infrastructure, including up to US$84.5 billion of computing capacity from SpaceX through 2029.
SpaceX builds its AI data centres exclusively with hardware from Nvidia, which holds a stake of nearly US$21 billion in the company, and it reportedly now seeks US$40 billion, mostly through bonds, to buy more of those chips.
Follow the cash around the circle. Nvidia money goes into SpaceX. SpaceX borrows to buy Nvidia chips. Anthropic rents the computing power, and SpaceX books the rent as AI revenue.
Then Anthropic arrives on public markets carrying a valuation partly built on the growth those same arrangements generate.
Some of this demand is genuine and powerful. The question nobody can yet answer with confidence is how much of it is the same dollars doing laps.
Borrowing is increasingly filling the gap. For the first time, the capital spending of the five largest hyperscalers is set to exceed their combined operating cash flow, and debt has climbed from 9% of their capex in fiscal 2024 to 32% by mid-2026.
The Bank of England now warns that rising indebtedness, opacity and “circular arrangements” in AI financing could amplify losses if expectations disappoint.
These were some of the most cash-generative companies in history.
Now they’re borrowing to keep building while financing their own customers to keep the orders coming.
You’ve got leverage stacked on leverage, with the same names on both sides of the table.
A listing of this size flows into global trackers, pension schemes and funds held by millions of people who never chose to back a loss-making AI lab.
If the loop slows, the pain won’t land on the backers who’ve already cashed out. It’ll land on everyone who came in at the top.
At the turn of the century, telecoms suppliers lent heavily to customers so they could keep buying equipment. Sales soared, valuations soared, and then the buyers ran out of road.
The technology changed the world. Investors still lost fortunes, because the money holding the boom up kept going round in circles until it stopped.
Brilliant technology and a sound valuation are two very different things, and the price paid decides which one investors end up owning.
At US$2 trillion, the circle has to spin faster forever. Circles rarely manage it.
China: Housing won’t find a floor this decade, Oxford Economics extract
- It’s been around five years since the policy-engineered property bust, and the supply side of the Chinese housing market hasn’t shown signs of stabilising – we’re more pessimistic than the consensus about when a floor will form. Housing inventories are near record highs, developer financing has been squeezed further, and the exposure of banks to more insidious forms of real estate lending has risen markedly. We expect housing to subtract around -1.6ppt from GDP growth this year and circa -1.1ppt next year.
- Against that, the authorities continue to offer incremental demand-side housing support. With recent price recoveries in tier-1 cities proving limited, we also see growing evidence that the property market’s problems are feeding into weaker economic activity – and the reverse is becoming more evident, too, creating an ugly feedback loop.
- But there’ll be no single trough, as resale transactions should recover before prices, and construction will likely bottom out before the housing stock has fully repriced. Less a conventional property cycle and more a structural repair of various balance sheets, the housing adjustment is increasingly likely to take the form of repeated temporary stabilisations rather than a clean cyclical turn.
- Recent mortgage subsidies are too narrowly targeted, and, by our calculations, cheaper financing still can’t fully offset expected capital losses. Some frontloaded buying may materialise given the one-year subsidy application window, but more debt isn’t likely given consumers’ currently low appetite for risk.
- Nor can China simply build through the downturn. We estimate total structural demand for housing will be roughly half of 2019’s levels by 2035 and fall by another -50% by 2060.
Corporate news in Australia:
- BGH Capital has hired bankers to sell healthcare operator ForHealth for around $1bn, having acquired the business for approximately $500m in 2020
- Pacific Equity Partners (PEP) is acquiring a 30% stake in Energy Bay, backed by Skip Capital and Grok Ventures, predominantly through a primary equity raising
- Authentic Brands has joined three other potential bidders pursuing a takeover of KMD Brands ((KMD)), owner of Kathmandu and Rip Curl
- AustralianSuper has acquired an additional 9.14% stake in Perth Airport for over $600m, increasing its ownership to 29.4%
- Nvidia-backed Firmus is reportedly considering postponing its IPO and pursuing a private capital raising following disagreements over valuation, putting pressure on Maas Group ((MGH)) and its $410m investment, with potential dilution risks for existing shareholders
- ASIC has issued interim stop orders against three Australian Secure Capital Fund (ASCF) private credit funds, preventing new investor activity due to concerns over product disclosure statements
- HPS Investment Partners has reportedly marked down its private credit exposure to KKR-owned Laser Clinics Australia to around 67 cents in the dollar amid ongoing financial difficulties for the business
On the calendar today:
-US Oct Uni Mich sentiment (prelim)
-EQT HOLDINGS LIMITED ((EQT)) ex-div 20.00c (100%)
FNArena’s four-weekly calendar: https://fnarena.com/index.php/financial-news/calendar/
| Spot Metals,Minerals & Energy Futures | |||
| Gold (oz) | 4135.47 | + 27.60 | 0.67% |
| Silver (oz) | 59.22 | – 0.50 | – 0.84% |
| Copper (lb) | 6.51 | – 0.08 | – 1.21% |
| Aluminium (lb) | 1.41 | – 0.01 | – 1.02% |
| Nickel (lb) | 7.10 | + 0.05 | 0.72% |
| Zinc (lb) | 1.72 | – 0.00 | – 0.10% |
| West Texas Crude | 90.79 | + 1.73 | 1.94% |
| Brent Crude | 103.37 | + 2.35 | 2.33% |
| Iron Ore (t) | 90.98 | – 0.15 | – 0.16% |
The Australian share market over the past thirty days…
| Index | 08 Oct 2026 | Week To Date | Month To Date (Oct) | Quarter To Date (Oct-Dec) | Year To Date (2026) |
|---|---|---|---|---|---|
| S&P ASX 200 (ex-div) | 8660.90 | -0.24% | -1.46% | -1.46% | -0.61% |
| BROKER RECOMMENDATION CHANGES PAST THREE TRADING DAYS | |||
| ALD | Ampol | Upgrade to Buy from Accumulate | Ord Minnett |
| AMP | AMP | Downgrade to Neutral from Buy | UBS |
| BOQ | Bank of Queensland | Downgrade to Hold from Accumulate | Morgans |
| BPT | Beach Energy | Upgrade to Buy from Hold | Ord Minnett |
| FMG | Fortescue | Downgrade to Trim from Hold | Morgans |
| HUB | Hub24 | Upgrade to Buy from Neutral | UBS |
| NST | Northern Star Resources | Upgrade to Accumulate from Hold | Ord Minnett |
| NWL | Netwealth Group | Upgrade to Buy from Neutral | UBS |
| ORG | Origin Energy | Upgrade to Accumulate from Hold | Ord Minnett |
| ORI | Orica | Downgrade to Accumulate from Buy | Morgans |
| QBE | QBE Insurance | Upgrade to Buy from Neutral | Citi |
| WDS | Woodside Energy | Upgrade to Hold from Sell | Ord Minnett |
For more detail go to FNArena’s Australian Broker Call Report, which is updated each morning, Mon-Fri.
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CHARTS
For more info SHARE ANALYSIS: EDV - ENDEAVOUR GROUP LIMITED
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For more info SHARE ANALYSIS: KMD - KMD BRANDS LIMITED
For more info SHARE ANALYSIS: MGH - MAAS GROUP HOLDINGS LIMITED