The Overnight Report: CPI High, Tech Tanks

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US markets fell, led by the Nasdaq, as chip and memory stocks sold off on concerns over rising debt levels and the cost of funding the AI build-out, compounded by a higher-than-expected CPI print.

The yield on neocloud provider CoreWeave’s debt rose to around 15%, signalling heightened credit risk and rising funding pressures across the AI infrastructure sector.

Selling in the Big Four banks weighed on the Australian market yesterday, sending the ASX200 down -0.64%.

Following a weak lead from US markets, ASX200 futures are pointing to a soft start on Thursday morning.

World Overnight
SPI Overnight	8727.00	– 18.00	– 0.21%
S&P ASX 200	8727.90	– 56.00	– 0.64%
S&P500	7718.94	– 86.51	– 1.11%
Nasdaq Comp	26692.87	– 511.51	– 1.88%
DJIA	51621.48	– 48.62	– 0.09%
S&P500 VIX	16.87	+ 1.60	10.48%
US 10-year yield	5.19	– 0.03	– 0.52%
USD Index	102.54	+ 0.33	0.32%
FTSE100	10724.86	+ 74.53	0.70%
DAX30	25298.61	+ 38.71	0.15%

Good Morning,

Overnight, European equites were stronger with US markets under pressure post a higher than expected September CPI print.

The S&P500 lost -1.1% and the Nasdaq was -1.9% lower. The Philadelphia semiconductor index was off more than -4% with falls concentrated in chips.

Healthcare, consumer staples and energy sectors advanced.

Locally, the ASX200 fell -56 points or -0.64% to 8727.90.

Selling emerged in the banks with the Big Four wiping -38 points off the index.

Shares in Paladin Energy ((PDN)) reached a 52-week low yesterday falling over -9% on a quarterly update which (yet again) missed expectations.

Q1 production of 1.00mlbs missed RBC Capital’s forecast and consensus by -9% and -14%, respectively, driven by plant recovery of 85%, below the broker’s 90% assumption and the 4Q FY26 level.

Throughput of 1.17Mt was only -2% below 4Q FY26. Sales of 1.16mlbs were in line with consensus, while the realised price of US$79.4/lb exceeded both RBC’s forecast and consensus, leaving revenue of US$92.1m approximately 5% above consensus.

The cost of production of US$61.6/lb was well above the US$44–US$48/lb guidance range, reflecting weaker volumes, with total cash costs broadly flat on 4Q FY26. FY27 guidance was reaffirmed in full.

RBC Capital lowered its FY27 production forecast to 5.2mlbs, while the 200klb loan rollover lifts FY27 sales and reduces FY28 sales.

The broker raised its FY27 NPAT forecast by 2% and lowered FY28 by -11%, with NAV per share broadly unchanged at $13.43.

RBC Capital retained its Outperform rating and $13.50 target price.

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/

ANZ Bank, Australian Morning Focus extract

Market moves were mixed, with European equity indices mostly up, but US indices down as US CPI bolstered expectations for Fed rate hikes and drove up US short-end bond yields.

The yield on the US 10-year Treasury bond was down -2bp to 5.19%. The active WTI oil futures contract rose 1.0% to US$95.1/bbl, while spot gold was down -1.4% to US$4,103/oz.

US Headline CPI rose 0.6% m/m in September. The annual rate accelerated to 3.7% y/y. Gasoline prices rose 9.1% m/m, accounting for more than half of the overall rise in the CPI.

The core measure rose 0.3% m/m (2.6% y/y), above market consensus. On a three-month annualised basis, core inflation accelerated from 2.0% to 3.4%. Core goods rose 0.3% m/m, led by used vehicle prices.

Shelter rose 0.4% m/m, with strength concentrated in lodging away from home. Rent of shelter rose 0.2% m/m and owners’ equivalent rent rose 0.3% m/m, representing more modest increases. Core services ex-shelter (supercore) rose 0.4% m/m, following August’s 0.5% m/m rise.

US inflation and the Fed: Fixed income markets repriced sharply following September’s stronger-than-expected US inflation report. Market pricing for a Fed rate hike later this month spiked to around 60% immediately after the data, before pulling back to around 40%, up from around 20% yesterday.

In our assessment, the report provided further evidence that the US disinflation process has stalled, and the encouraging inflation prints of the early months of the northern summer now appear to have been misleading signals about progress towards the 2% inflation target.

Measures of inflation diffusion continue to suggest price pressures are concentrated in pockets within the basket, but there is no longer a sufficiently broad disinflationary impulse elsewhere to offset those areas of strength.

Nearly eight months into the energy shock, the Federal Open Market Committee’s (FOMC) ability to look through relative price shocks has diminished.

Markets appear hesitant to price in more than a 50% probability of a hike later this month after senior FOMC policymakers indicated in recent weeks a lack of urgency in delivering hikes.

But the direction for the fed funds rate is clearly up, in our view. The October decision is a matter of monetary policy strategy for the FOMC.

In the September data, we did not see evidence of disinflation that would warrant a more cautious approach to tightening and believe that an October rate hike would send a strong signal of the FOMC’s commitment to its inflation mandate.

The energy sector rose as attacks on oil tankers in the Middle East intensified. Precious metals slumped following stronger-than-expected inflation in the US.

How will central banks react to higher bond yields? Oxford Economics extract

• The recent surge in government bond yields, which is spilling over into higher financing costs for households and businesses is unlikely to deter central banks from raising policy rates further. We expect major central banks will continue to tighten in the coming months.
• The rise in bond yields partly reflects higher market expectations for policy rates, driven by inflation worries and signs that growth –-especially business investment-– has been more resilient than expected. These same factors will also continue to prompt central banks to hike rates.
• The rise in yields also reflects an increase in term or risk premia, due partly to worries over unsustainable long-term fiscal trends and higher public debt issuance. This rise in premia may dent growth, but contrary to the implications of Ben Bernanke’s classic framework for analysing the yield curve, it probably won’t make central banks more dovish.
• That’s because those fiscal worries are also likely to erode the credibility of central banks’ long-term commitment to low inflation. A dovish response by central banks would probably weaken that credibility further, lifting inflation expectations and making it harder to return inflation to target.
• High bond yields have prompted some modest direct responses from central banks. However, large-scale direct central bank intervention in bond markets is unlikely unless high bond yields cause financial stability problems. Even in that case, any intervention would probably be temporary and targeted, aiming to buy time for broader fiscal adjustment.

Fed likely to wait out the midterms before hiking before year-end, Nigel Green, deVere, extract

The Federal Reserve is likely to hold its nerve until Americans have voted in the midterms, but inflation running at a 7% annualised pace makes another rate rise before the end of the year increasingly probable.

US consumer prices climbed 3.7% in the 12 months to September, a notch above the 3.6% economists had pencilled in, after jumping 0.6% in a single month.

A 0.6% monthly increase in prices equates to more than 7% annualised if sustained, well above the Fed’s 2% inflation target.

The gap between these two figures is likely to shape every decision the Fed makes between now and Christmas.

While the annual inflation figure reflects what has already happened, September’s monthly increase offers a better indication of what may lie ahead, suggesting inflation is accelerating.

Underlying inflation is also firming. Core prices, which strip out food and energy, rose 2.6% over the year, above forecasts, just weeks after the Fed lifted its target range to 3.75% to 4.00%.

Energy is driving much of the surge, with petrol averaging US$4.34 a gallon against US$3.08 a year ago.

The inflationary pressures originating in energy are unlikely to remain confined to the sector.

Higher fuel costs feed into delivery charges, food prices and airfares, with businesses passing these increases on to consumers. Rising core inflation suggests price pressures are becoming more widespread.

Fed policymakers meet on October 27 and 28, less than a week before the November 3 midterm elections. Minutes from September’s meeting show most officials already consider one more increase appropriate before year-end, with the final meeting of 2026 scheduled for December 8 and 9.

The Fed is expected to leave rates unchanged in October, given a rate increase just days before the midterms could expose policymakers to accusations of influencing the election outcome.

Weak employment data, with only 29,000 jobs added in September, also provides justification for keeping rates on hold.

December presents a different scenario. With the election concluded and inflation continuing to climb, the case for another increase becomes increasingly difficult to resist.

Fed Chair Kevin Warsh faces a delicate balancing act, with officials’ own projections already pointing to rates finishing 2026 higher than current levels.

Markets have spent much of the year anticipating interest rate cuts, but September’s inflation data suggests those expectations may need to be reconsidered.

The debate is shifting towards how many additional rate increases may be required and how long rates will need to remain elevated.

Persistently high energy prices, broadening inflationary pressures and the Fed’s need to maintain its credibility are likely to reinforce the case for tighter monetary policy.

The consequences could extend well beyond the US, with higher American interest rates affecting global borrowing costs, currencies and asset prices, from mortgages to company valuations.

The Fed is likely to face an increasingly difficult inflation challenge once the midterm elections are over.

With prices rising at an annualised pace exceeding 7% and elevated energy costs adding to inflationary pressures, the likelihood of a December rate increase is growing.

A December rate rise may also not be the last.

Corporate news in Australia:

• Insurance Australia Group ((IAG)) offers public-benefit concessions in an attempt to overturn the ACCC’s rejection of its proposed -$1.4bn acquisition of RAC Insurance
• Domino’s Pizza Enterprises ((DMP)) risks losing international operating rights as its US parent considers reallocating underperforming markets to other operators
• Cosette Pharmaceuticals loses its appeal over the failed $600m acquisition of Mayne Pharma, with the court upholding the ruling and ordering Cosette to pay legal costs
• Austal ((ASB)) extends Hanwha’s due diligence period while assessing competing proposals from Hanwha and Wildcat Infrastructure for its US business
• Orora ((ORA)) faces shareholder scrutiny over the weak performance of Saverglass following its -US$2.2bn acquisition but avoids a second strike against executive remuneration
• Andrew Roberts sells a 30% stake in property funds manager Corval Partners to Scarcity Partners to support expansion
• OKX Australia launches pre-IPO perpetual futures for OpenAI and Anthropic, offering wholesale investors leveraged exposure to their implied valuations
• Forsyth Barr seeks international investment banking alliances as Barrenjoey’s ((MFG)) expansion into New Zealand increases competition
• M Battery Materials, backed by Matt Latimore, targets a $15m–$25m ASX IPO to develop Australian graphite anode and vanadium supply chains
• Glencore ((GLC)) closes its first day of ASX trading at a 1.6% premium to its primary London listing

On the calendar today:

-AU Sep Employment change

-AU Sep Full-time employment change

-AU Sep Part-time employment change

-AU Sep Participation rate

-AU Sep Unemployment

-JP Aug Core mach orders

-JP Aug Industrial production (final)

-EZ Aug Trade Bal

-EZ Sep CPI (final)

-UK Aug GDP

-UK Aug Industrial production

-UK Aug Trade balance

-US Continuing jobless claims

-US Fed Hammack moderated discussion

-US Initial jobless claims

-US Oct Phil Fed

-US Sep PPI

-US Sep PPI ex food and energy

-US Sep Retail sales

-US Sep Retail sales control group

-US Sep Retail sales ex auto

-US Sep Retail sales ex auto and gas

-ALCOA CORPORATION ((AAI)) FY26 earnings report

-ACORN CAPITAL INVESTMENT FUND LIMITED REGISTERED ((ACQ)) ex-div 3.50c (100%)

-AUSTRALIAN FOUNDATION INVESTMENT CO. LIMITED ((AFI)) ex-div 2.5c (100%)

-AUSTRALIAN FOUNDATION INVESTMENT CO. LIMITED ((AFI)) ex-div 6.75c (100%)

-AUCKLAND INTERNATIONAL AIRPORT LIMITED ((AIA)) Qtrly update

-AMP LIMITED ((AMP)) Qtrly update

-ARB CORPORATION LIMITED ((ARB)) AGM

-BANK OF QUEENSLAND LIMITED ((BOQ)) FY26 earnings report

-COBRAM ESTATE OLIVES LIMITED ((CBO)) ex-div 4.50c (100%)

-CHARTER HALL LONG WALE REIT ((CLW)) AGM

-ENERGY ONE LIMITED ((EOL)) EGM

-FIDUCIAN GROUP LIMITED ((FID)) AGM

-FAT PROPHETS GLOBAL CONTRARIAN FUND LIMITED ((FPC)) ex-div 3.00c

-HORIZON OIL LIMITED ((HZN)) ex-div 1.00c

-K & S CORPORATION LIMITED ((KSC)) ex-div 6.00c (100%)

-NETWEALTH GROUP LIMITED ((NWL)) Qtrly update

-RIVCO AUSTRALIA LIMITED ((RIV)) ex-div 1.80c (100%)

-SOUTH32 LIMITED ((S32)) AGM

-TREASURY WINE ESTATES LIMITED ((TWE)) AGM

-WAM RESEARCH LIMITED ((WAX)) ex-div 5.00c (50%)

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

Spot Metals,Minerals & Energy Futures
Gold (oz)	4101.54	– 63.01	– 1.51%
Silver (oz)	55.61	– 3.64	– 6.14%
Copper (lb)	6.55	– 0.13	– 1.95%
Aluminium (lb)	1.38	– 0.01	– 0.62%
Nickel (lb)	7.01	– 0.03	– 0.38%
Zinc (lb)	1.73	+ 0.00	0.27%
West Texas Crude	95.10	+ 0.40	0.42%
Brent Crude	105.99	– 0.19	– 0.18%
Iron Ore (t)	90.74	– 0.09	– 0.10%

The Australian share market over the past thirty days…

Index	14 Oct 2026	Week To Date	Month To Date (Oct)	Quarter To Date (Oct-Dec)	Year To Date (2026)
S&P ASX 200 (ex-div)	8727.90	0.13%	-0.70%	-0.70%	0.16%

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
EBR	EBR Systems	Downgrade to Speculative Buy from Buy	Morgans
FPR	FleetPartners Group	Downgrade to Equal-weight from Overweight	Morgan Stanley
GYG	Guzman y Gomez	Upgrade to Buy from Accumulate	Ord Minnett
		Downgrade to Accumulate from Buy	Morgans
KAR	Karoon Energy	Upgrade to Overweight from Equal-weight	Morgan Stanley
LIC	Lifestyle Communities	Upgrade to Hold from Lighten	Ord Minnett
LYC	Lynas Rare Earths	Upgrade to Overweight from Equal-weight	Morgan Stanley
MIN	Mineral Resources	Upgrade to Buy from Accumulate	Morgans
MPL	Medibank Private	Downgrade to Accumulate from Buy	Ord Minnett
PLS	PLS Group	Upgrade to Buy from Hold	Bell Potter
		Upgrade to Accumulate from Trim	Morgans
QBE	QBE Insurance	Downgrade to Accumulate from Buy	Ord Minnett
S32	South32	Downgrade to Equal-weight from Overweight	Morgan Stanley
SFR	Sandfire Resources	Downgrade to Underweight from Equal-weight	Morgan Stanley
VEA	Viva Energy	Downgrade to Neutral from Buy	UBS
WES	Wesfarmers	Upgrade to Buy 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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