The Overnight Report: Memory Under Pressure

This story features COMMONWEALTH BANK OF AUSTRALIA, and other companies.
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The company is included in ASX20, ASX50, ASX100, ASX200, ASX300 and ALL-ORDS

The S&P500 closed almost flat with selling in memory chip stocks a major theme and investors digesting bank earnings as the Q3 reporting season moves into full swing.

The Australian market closed flat yesterday which belied heavy risk off selling in growth, defence, tech and high-beta stocks. 

Traders attributed the sell off to weakness in Korea memory stocks and AirTrunk's decision to delay its Singaporean IPO until 2027. 

ASX200 futures are pointing to a weak start.

World Overnight
SPI Overnight	8788.00	– 30.00	– 0.34%
S&P ASX 200	8783.90	+ 0.70	0.01%
S&P500	7805.45	– 1.79	– 0.02%
Nasdaq Comp	27204.38	– 41.52	– 0.15%
DJIA	51670.10	– 180.45	– 0.35%
S&P500 VIX	15.27	+ 0.06	0.39%
US 10-year yield	5.22	– 0.02	– 0.44%
USD Index	102.21	– 0.39	– 0.38%
FTSE100	10650.33	– 5.95	– 0.06%
DAX30	25259.90	– 17.78	– 0.07%

Good Morning,

The ASX200 finished flat on Tuesday at 8783.9, a 0.7 point (0.01%) move.

The big banks did the heavy lifting with CommBank ((CBA)) shares adding 19.35 points to the ASX200. BHP Group ((BHP)) was the major index drag, down -19.30 points.

Other noticeable ASX200 stocks weighing on the index were Codan ((CDA)), down -1.71 points and NextDC ((NXT)), down -1.93 points.

Heavy selling hit major pockets of the ASX200 with selling orders concentrated in growth stocks, defence, tech and high beta stocks, particularly in small caps, which was not reflected in the index.

Media reports noted Blackstone-backed AirTrunk has postponed its proposed US$1.5bn Singapore IPO amid rising borrowing costs, weaker investor appetite and growing concerns over AI infrastructure valuations.

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/

According to JPMorgan, as cited on X:

– 42 AI stocks account for 60%-80% of S&P500 earnings growth

– 60% of S&P500 stocks are down -20% from their highs

– Only 30% of stocks outperforming the S&P500, lowest percentage since 1991

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

Banks Grew Profits and Still Got Sold

All four big banks that reported today grew profits, and most of their stocks fell anyway.

Citigroup had its best third-quarter revenue in a decade and still dropped the most of the four.

Jamie Dimon said JPMorgan is tightening up on credit because some loan terms have gotten loose.

Memory Chips Take a Hit From China

Chinese memory maker CXMT plans to roll out a new, more powerful chip by year-end.

That’s a threat to Samsung and SK hynix, and South Korea’s Kospi closed at its lowest since July 31.

Here at home, Micron $MU took the biggest hit among memory stocks.

The Nasdaq barely moved, so the selling stayed mostly inside memory.

Gas Prices Are Showing Up in Earnings

US same-store sales at Domino’s barely grew last quarter, and the CEO pointed at the gas pump.

Joe Jordan said customers really start pulling back once gas tops US$4.

Some franchisees have already paused plans for new stores.

Brent crude is still above US$105 a barrel, so I expect more companies to tell this story.

ANZ Bank, Australian Morning Focus extract

Equity markets declined, led by a sell-off among chipmakers. The Nasdaq was down -0.1%, and the Dow Jones fell -0.2%. The EuroStoxx50 dropped -0.6%, and the FTSE100 fell -0.1%.

The yield on the 10-year US Treasury note rose 2.1bp to 5.22%.

The active WTI futures contract rose 1.9% to US$94.5/bbl. Gold was -0.7% lower at US$4,164.3/oz.

US existing home sales rose 1.5% m/m to 3.99m saar in September, partly unwinding August’s large fall. Nonetheless, sales volumes remain historically weak, and further weakness is likely to emerge in the months ahead.

The average 30-year fixed-rate mortgage rose to 7.4% last week, its highest level in nearly three years.

IMF shuffles the cards in its latest forecasts: The IMF left its 2026 global growth forecast unchanged at 3.1% in its October World Economic Outlook and revised its 2027 forecast up 0.2ppt to 3.4%.

But the stable headline masks a sharp reallocation of growth across economies. Just 32 economies now account for 95% of global growth, down from 54 in April, while around 47% of economies were downgraded.

The dividing lines are exposure to the energy shock and participation in the AI investment cycle, which is highly concentrated. Taiwan and Korea account for 62% of net trade in AI computing hardware, while the US and China account for more than 75% of net imports.

The IMF describes energy importers outside the technology value chain as facing the most difficult configuration. Higher global bond yields compound the divergence. Large and persistent fiscal deficits and AI-related investment are lifting demand for capital.

At the same time, elevated geopolitical risk and a shifting investor base for government debt, as central banks normalise their balance sheets, are adding to term premia.

For economies with limited exposure to the AI boom, higher yields are tightening financial conditions without an offset from firmer growth. Fiscal consolidation needs are also rising: the IMF notes that in most major economies, stabilising debt would require more consolidation than currently planned.

AI may eventually deliver productivity gains that broaden to economies adopting the technology, but the scale and timing are uncertain. The IMF’s baseline assumes no additional boost from AI over the forecast horizon.

In our view, for economies where fiscal constraints are biting and participation in the AI boom is limited, rising yields and slower growth will make consolidation both more necessary and harder to deliver.

Macro Talking Points, Benoit Anne, MFS Investment Management extract

We have been expecting you, Mr Bond. Fixed income is back, its licence to yield having been recently renewed.

Take US IG, for instance. The current yield sits at the 98th percentile, meaning that the US IG yield has been higher than the current level only 2% of the time during the past ten years.

It is funny how the market narrative changes. Six months ago, clients were basically saying: why would I bother with fixed income when I can buy equities? Now, even equity clients are enquiring about fixed income yields.

We are of the view that fixed income valuations are back to being compelling, especially on a risk-adjusted basis. While there are no worrying signs of fragility in the equity market, at least for now, there are a number of issues to keep in mind.

First, we are always at the mercy of the possibility that the AI trade may crack at some point. In addition, some equity investors, mainly on the retail side, seem to think of the equity market as their Casino Royale.

With that in mind, we believe there is a strong case for using more fixed income in multi-asset portfolios as a risk management asset class.

To be clear, it is not all smooth sailing. At a macro-fundamental level, many sovereigns face fiscal credibility issues, while rate volatility has been made worse by higher monetary policy uncertainty in some places, including the US.

We tend to favour exposure to credit over sovereigns for that reason. But more importantly, an investor who takes the long view should have no difficulty seeing the appeal of current yields.

Narrow equity market: warning sign or opportunity?

The S&P500 is up roughly 15% this year, but participation has narrowed sharply. In mid-August, nearly 74% of index members traded above their 100-day moving average. Today, only around 38% do, even as the index trades near record highs.

But breadth tells only half the story. Leadership has rotated like a relay. Investors began the year shifting from software into semiconductors and more economically sensitive businesses.

Energy took the lead when the conflict with Iran triggered a correction. Semiconductors and memory stocks followed. More recently, momentum has swung back to software and large-cap technology.

This is not a classic flight to safety. Investors are selling rate-sensitive stocks and favouring companies whose AI-driven growth appears less exposed to higher rates.

A market carried by the same few stocks all year would signal fragility. A market where leadership keeps rotating sends a different message.

Beneath the index, profit pools and competitive positions are shifting across industries, creating clear winners and losers.

Low stock correlations reinforce the point: company-specific outcomes matter more than usual.

Narrow markets are often treated as a warning sign. For active investors, they may actually be an opportunity.

The key is not to chase each rotation, but to apply research and valuation discipline to identify the companies that can sustain returns as profit pools shift, and to own them at the right price.

(Contribution from Ross Cartwright, Lead Strategist – Strategy and Insights Group)

CBA Economics, RBA September Minutes – mixed messages, Belinda Allen, extract

• The RBA Board Minutes were decisively hawkish, with a clear focus on upside risks to inflation and little attention given to downside risks to growth.
• A shift in the RBA’s tolerance for slower growth and employment in an environment of persistent adverse supply shocks was an explicit inclusion in the Minutes, as was the rising neutral rate.
• The Minutes were in clear contrast to the messaging by the Governor in her unscripted answers at the press conference. A hawkish statement shifted to a dovish press conference, where the focus on the lags of monetary policy and the hope that the four rate hikes to date would be enough shifted the message.
• These recent communications highlight the uncertainty around the path for monetary policy and what would lead to further tightening.
• Deputy Governor Hauser will have a chance next week to fine-tune the messaging ahead of the November Board meeting, with only September labour force data and Q3 CPI still to be released ahead of the next meeting.
• We still see the cash rate on hold from here but acknowledge the clear risk of another rate hike, with November very much live.

Property Paralysis: Australians pause property plans amid market uncertainty, Westpac extract

• Two in five (41%) Australians think now is a bad time to buy a first home.
• Almost half (47%) of Australians think now is a bad time to sell a property.
• Three-quarters (75%) of first home buyers are holding off on buying a property until prices fall further.
• 73% of first home buyers are delaying buying a property until interest rates stabilise.
• Four in five (79%) first home buyers feel more motivated to buy a property now compared to 12 months ago.
• More than half (55%) of Australians intend to make a housing change in the next year, including plans to renovate their home (19%), buy a first or new home to live in (15%), buy an investment property (8%) or sell a home (6%).
• The biggest factors influencing Australian property decisions are housing affordability (40%), interest rate uncertainty (32%) and falling property prices (30%).
• Almost one-third (31%) of Australians say there either aren’t enough properties available or those that are on the market don’t meet their needs.
• Four in five (81%) Australians agree owning a property remains the best way to build long-term wealth.
• Buyers are adjusting their strategies by making lower offers (19%), revising their deposit targets (17%) or considering suburbs previously outside their budget (16%)

Corporate news in Australia:

• Arena REIT ((ARF)) agrees to sell additional Edge Early Learning childcare properties following the operator’s rental default and administration
• Pacific Equity Partners, Orix and Sumitomo Corp prepare final bids for vehicle-leasing group FleetPartners ((FPR))
• Telstra Group ((TLS)) closely monitors SpaceX’s mobile expansion following its spectrum acquisition, which strengthens Starlink’s competitive position
• Gold Fields seeks to revive its near $40bn takeover of Northern Star Resources ((NST)) with a higher cash component, an ASX listing and potential asset sales
• Fidante defends marking up the Lennox fund’s Firmus investment to the anticipated $11 IPO price ahead of the subsequently withdrawn ASX listing
• Ellerston remains positive on Firmus’ growth prospects and a potential Nasdaq IPO in 2027 following the withdrawal of its planned ASX listing
• Glencore begins its ASX listing with an expected local market capitalisation below $500m, making index inclusion a longer-term objective
• Thoma Bravo prepares Nearmap for a potential ASX relisting at a valuation above $5.75bn, appointing Goldman Sachs and Barrenjoey Capital Partners ((MFG)) to advise on the IPO
• Senator Dave Sharma calls for ASIC to investigate the collapse of Firmus’ IPO amid concerns over disclosure, investor demand and book building
• Wiluna secures $180m in IPO commitments, paving the way for the gold miner’s return to the ASX

On the calendar today:

-NZ Aug Migration

-CH Sep CPI

-CH Sep PPI

-CH Sep Trade balance

-US Fed Beige Book

-US MBA mortgage applications

-US Sep Average hourly earnings

-US Sep CPI

-COMMONWEALTH BANK OF AUSTRALIA ((CBA)) AGM

-EVOLUTION MINING LIMITED ((EVN)) Qtrly update

-ORORA LIMITED ((ORA)) AGM

-ORIGIN ENERGY LIMITED ((ORG)) AGM

-LOTTERY CORPORATION LIMITED ((TLC)) AGM

-UNITED OVERSEAS AUSTRALIA LIMITED ((UOS)) ex-div 0.50c

-UNITED OVERSEAS AUSTRALIA LIMITED ((UOS)) ex-div 1.50c

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

Spot Metals,Minerals & Energy Futures
Gold (oz)	4164.55	– 5.11	– 0.12%
Silver (oz)	59.25	– 1.00	– 1.66%
Copper (lb)	6.68	– 0.03	– 0.45%
Aluminium (lb)	1.39	– 0.00	– 0.01%
Nickel (lb)	7.04	– 0.01	– 0.19%
Zinc (lb)	1.73	– 0.01	– 0.76%
West Texas Crude	94.70	+ 1.51	1.62%
Brent Crude	106.18	+ 0.14	0.13%
Iron Ore (t)	90.83	+ 0.15	0.17%

The Australian share market over the past thirty days…

Index	13 Oct 2026	Week To Date	Month To Date (Oct)	Quarter To Date (Oct-Dec)	Year To Date (2026)
S&P ASX 200 (ex-div)	8783.90	0.77%	-0.06%	-0.06%	0.80%

BROKER RECOMMENDATION CHANGES PAST THREE TRADING DAYS
ALD	Ampol	Upgrade to Buy from Neutral	UBS
AMP	AMP	Upgrade to Buy from Accumulate	Ord Minnett
ARF	Arena REIT	Downgrade to Accumulate from Buy	Ord Minnett
BOE	Boss Energy	Downgrade to Equal-weight from Overweight	Morgan Stanley
CPU	Computershare	Upgrade to Accumulate from Hold	Ord Minnett
DMP	Domino’s Pizza Enterprises	Downgrade to Neutral from Buy	UBS
DRR	Deterra Royalties	Upgrade to Equal-weight from Underweight	Morgan Stanley
ELV	Elevra Lithium	Upgrade to Buy from Neutral	UBS
GYG	Guzman y Gomez	Upgrade to Buy from Accumulate	Ord Minnett
		Downgrade to Accumulate from Buy	Morgans
IGO	IGO Ltd	Upgrade to Buy from Neutral	UBS
LTR	Liontown	Upgrade to Buy from Neutral	UBS
LYC	Lynas Rare Earths	Upgrade to Overweight from Equal-weight	Morgan Stanley
MPL	Medibank Private	Downgrade to Accumulate from Buy	Ord Minnett
PDN	Paladin Energy	Upgrade to Buy from Neutral	UBS
PLS	PLS Group	Upgrade to Buy from Neutral	UBS
QBE	QBE Insurance	Downgrade to Accumulate from Buy	Ord Minnett
RRL	Regis Resources	Upgrade to Buy from Neutral	UBS
S32	South32	Downgrade to Equal-weight from Overweight	Morgan Stanley
SFR	Sandfire Resources	Upgrade to Neutral from Sell	UBS
		Downgrade to Underweight from Equal-weight	Morgan Stanley
VEA	Viva Energy	Downgrade to Neutral from Buy	UBS

For more detail go to FNArena’s Australian Broker Call Report, which is updated each morning, Mon-Fri.

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