The Overnight Report: Rate Hike(s) Coming

This story features INGENIA COMMUNITIES GROUP, and other companies.
For more info SHARE ANALYSIS: INA
The company is included in ASX200, ASX300 and ALL-ORDS

US markets edged higher with the Federal Reserve remaining on hold. 

Post market close, earnings results from Microsoft, Google, ServiceNow and Fortinet have after hours share prices flying in each direction. Volatility is the one consistent.

On Wednesday, the Australian market erased early morning gains after the quarterly CPI release, with the market now pricing in a Melbourne Cup rate hike.

ASX200 futures are pointing to a positive start on Thursday morning.

World Overnight
SPI Overnight	8900.00	+ 40.00	0.45%
S&P ASX 200	8847.30	– 2.80	– 0.03%
S&P500	7743.98	+ 21.38	0.28%
Nasdaq Comp	26549.85	+ 72.04	0.27%
DJIA	52475.10	+ 97.53	0.19%
S&P500 VIX	16.91	– 0.61	– 3.48%
US 10-year yield	5.05	+ 0.05	1.04%
USD Index	102.13	– 0.17	– 0.17%
FTSE100	10694.50	+ 7.96	0.07%
DAX30	25704.02	+ 113.25	0.44%

Good Morning,

The ASX200 lost early gains after the September quarter CPI print came in stronger than expected and the RBA Governor reiterated inflation was too high at a Senate Hearing Committee.

The index closed slightly weaker, down -2.8 points or -0.03%. Technology, Materials and Financials finished in the positive with Consumer Discretionary, Energy and Utilities dragging on the index.

Markets are now pricing around an 82% probability of a 25bp RBA rate hike on November 3, taking the cash rate to 4.85%.

Macquarie on Aurelia Metals ((AMI)):

“Au production of 16.2koz was an 11% beat vs Visible Alpha (VA). At the end of 1QFY27 Au production is 29% vs guidance midpoint.

“FY27 guidance reiterated and comfortably on-track; balance sheet in a comfortable position with A$161m cash & no debt. EV of A$510m.

“AMI is down 20% over the last 1M on the back of declining gold price (-6%) and has underperformed GDX over same period (-10%).

“Value has now emerged, with guidance comfortably on-track and AMI trading on FY27 EV/Ebitda of 4.4x (3.9x at spot).”

FY27 EPS up 11%; Upgrade to Outperform; TP increased 4% to A$0.55/sh.

Citi on NextDC ((NXT)):

“While there is still delivery risk which could result in slippage in contracted EBITDA, NXT’s update on its financial covenant position as of 30th June 2026 should help reduce investor concerns especially given i) NXT’s calcs excludes part of the M3 customer contract that has power and is billing (CitiE: ~40 MWs should be billing this year), though we acknowledge that service level credits could be higher; and ii) NXT has flexibility on the $7 billion capex required to complete the backlog given 134 MWs of the S4 contract only starts billing from CY29e onwards.

“Our calcs point to ample headroom as of 30th June 2027, with the headroom reducing in Jun’28 but also note that NXT does have a land bank of ~$750 million.

“Buy. Target price A$21.15”

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/

Market Overview, J.L. Bernstein extract

The Fed Held, but Two Officials Wanted Another Hike

Rates stayed put in a 10-2 vote, six weeks after the Fed’s first hike since 2023.

Cleveland Fed President Beth Hammack and Fed Governor Lisa Cook both wanted another quarter-point hike.

Governors rarely break ranks, and Cook hadn’t once since joining in 2022.

Warsh wouldn’t say what comes next, and traders still see better than 4-in-5 odds of a December hike.

Oracle Told Investors When Its Spending Peaks

Oracle sees revenue reaching US$225 billion in fiscal 2030, growing more than a third a year.

Its data center spending peaks this fiscal year and next, and it expects to stop burning cash by mid-2028.

It also capped new fundraising at US$20 billion through 2030, which eases worries about its debt.

The stock rose about an eighth after losing a third of its value this year.

Wendy’s Got a Buyout Offer and Chili’s Raised Its Outlook

Nelson Peltz’s fund Trian offered about US$1.4 billion for Wendy’s, per the Wall Street Journal.

Wendy’s was worth about US$1.2 billion Tuesday, and nearly a third of its tradable shares were sold short.

Chili’s owner Brinker raised its full-year forecast, and Wingstop beat on profit despite weaker sales.

All three stocks rose by double digits.

ANZ Bank, Australian Morning Focus, extract

Stock markets were generally slightly firmer overnight. The S&P500 was up 0.28%.

The EuroStoxx50 ended its session up 0.1%, while the FTSE100 gained 0.1%.

The yield on the US 10y note rose around 1.9bp to 5.04%. WTI lifted 1.4% to US$102.8/bbl. Gold was stronger at US$4,060.2/oz.

The US Federal Reserve left policy settings unchanged, in line with market expectations. The decision wasn’t unanimous, with Cook and Hammack dissenting in favour of a 25bp hike.

The FOMC’s statement characterised the economic expansion as “strong”, a slight upgrade from “solid” in September. The Committee is now in data-watch mode.

While it stopped short of signalling that a December hike is likely, that is certainly a live possibility and is expected by markets, with the statement noting that “the accumulation of more information will help the Committee determine the policy stance appropriate to ensure a timely return of inflation to the Committee’s 2 percent goal”.

The Bank of Canada joined other major central banks in raising its policy rate by 25bp to 2.50% in response to the energy shock. It considered holding rates steady but ultimately decided to hike to reduce the risk of higher energy prices passing through to broader inflation.

To date, core inflation has been contained at around the 2% target, so today’s move is best described as an ‘insurance’ hike. The BoC agreed to proceed carefully while signalling the possibility of further rate hikes.

UK Budget: The government delivered an unremarkable Autumn Budget, implementing modest cost-of-living support and revenue-raising measures, while adhering to its self-imposed fiscal rules. The Budget achieved its aim of signalling a commitment to fiscal discipline, with a limited reaction in the gilt market.

There had been some market speculation that Labour might judge the timing to be opportune to capitalise on recent momentum in the polls and call an early election, potentially as soon as December.

The next general election is not due until 2029. Prime Minister Burnham has affirmed that he will not call a snap election in the next 12 months.

High inflation makes an interest rate hike a certainty, Dr Jonathan Kearns, Challenger Financial

Inflation was strong again in the September quarter, highlighting that the RBA has more to do to reduce excess demand in the economy.

The RBA faces a delicate balance: restrain demand enough to slow inflation, but not too much. The RBA will have to hike on Melbourne Cup Day, delivering a rate rise that will stop the nation, but hopefully not the economy.

Inflation was 4.4% over the year to September, having increased by 0.6% or more in each of the past three months. However, CPI inflation is not the best measure of demand pressures in the economy, given the significant impact of oil prices and energy subsidies over the past year.

The clincher for a November rate hike is that trimmed mean inflation, which gives the best read on demand-driven inflation, was 1.0% in the quarter. Quarterly trimmed mean inflation of 0.9% or above sets off alarms at RBA HQ.

In 1995, 2001 and 2007, the RBA anticipated building inflation pressures and hiked before the trimmed mean inflation alarm sounded.

In 2021, the RBA was late to hike, partly because it needed to be sure the economy had escaped its Covid-19 slump and partly because it did not appreciate how strong inflation would be.

The RBA has again been surprised by the strength of demand pressures, through the second half of 2025 and into this year.

With the benefit of hindsight, the resilience of inflation pressures means the 2025 cuts were too early, and the hikes this year have been catching up to where rates need to be.

A November hike will take the cash rate to 4.85%, which should give the RBA the opportunity to pause at its December meeting.

By the time the RBA Board returns from its summer break, the economy will be slowing under the cumulative effect of 125 basis points of hikes starting 12 months earlier, and high inflation, making further rate hikes in 2027 unlikely.

Fed Rate Hikes May Be Modest, but Long-Term Treasury Yields Could Climb Further, Tim Murray, T. Rowe Price extract

The Federal Reserve changed direction on September 16, raising its target range by a quarter point in its first rate hike since 2023.

But the bigger story is not the 25 basis points. It is that the easing cycle is over. The question now is how far the Fed may ultimately need to go.

For now, investors are expecting a relatively modest move higher in rates. As of September 23, futures markets were pricing in almost two additional quarter-point hikes by year-end, and just over four hikes in total through the end of 2027.

In other words, markets appear to expect something closer to a mid-cycle adjustment than a full-fledged hiking cycle.

That could certainly prove correct. But history suggests investors may want to take that assumption with a grain of salt.

The modern era of Federal Reserve policymaking began in February 1994, when the Fed started announcing rate changes on the day they were made. Since then, there have been six hiking cycles. Only one turned out to be a true mid-cycle adjustment.

In the other five cases, the federal funds rate ultimately rose at least 175 basis points from where the hiking cycle began. The exception was 1997, when the Fed raised rates only once before reversing course.

But even that episode proved temporary. After three subsequent cuts, the Fed began hiking again in 1999—a cycle that ended about a year later when the technology bubble burst.

While the current futures curve may prove accurate, history suggests that once the Fed has started hiking, the endpoint has often been considerably higher than markets initially expected.

More importantly, Fed policy has become a less important driver of longer-term Treasury yields. Over the two years ended September 23, 2026, the 10-year US Treasury yield increased from roughly 3.73% to 5.10%—an increase of about 137 basis points.

Only about 72 basis points of that move can be attributed to higher expectations for future Fed policy. The remainder reflects an increase in the term premium—the additional compensation investors demand for holding longer-term bonds.

That premium has risen for a variety of reasons, including greater geopolitical uncertainty, persistent inflation concerns, heavy Treasury issuance and expectations for rising capital expenditure globally.

Those pressures are unlikely to disappear simply because the Fed ultimately delivers a relatively modest hiking cycle.

As a result, even if markets are correct about the path of Fed policy, longer-term yields could continue to grind higher.

2026 Midterms: Seven Questions That Matter For Markets, Monica Guerra, Morgan Stanley Wealth Management, extract

With the midterms fast approaching, I’ve been travelling the country talking with clients about the election and their investments.

While this election will likely reshape Washington, it won’t necessarily reshape the investment outlook. Under a divided government, executive actions and regulatory changes could move stocks in some industries.

However, inflation, growth and corporate earnings will likely remain the biggest drivers of broader market performance.

1. Morgan Stanley continues to expect Democrats to regain the House of Representatives, where they need to gain just three seats to reach a 218-seat majority. However, our Senate outlook has shifted in recent weeks from a GOP hold to a toss-up with the Democrats having a slight edge.

The Senate race has become more competitive as cost-of-living pressures and a less optimistic consumer outlook weigh on the party in power. Still, Democrats need to gain four seats overall in the 100-seat Senate to take control, and Republican campaign resources and conditions in individual races could still limit Democratic gains.

If Democrats take the House, as we expect, the result would be a divided government regardless of which party controls the Senate. It’s difficult to make sweeping legislative changes under those circumstances.

2. A divided government can often help markets because political gridlock makes sweeping legislative changes to taxes, regulation and government spending less likely.

Historically, under a Republican president, the S&P500 Index has gained about 16% on average in the calendar year following midterms when Democrats control both chambers of Congress and 23% when control of Congress is split between the parties.

However, past performance does not guarantee future results. And equities have already performed better in 2026 than in the typical second year of a presidential term, potentially leaving less room for gains after the midterms.

That may be particularly true in technology and energy, where stocks are up substantially this year. Headlines about regulatory scrutiny or potential cuts in government support could prompt pullbacks in those sectors, even when companies’ longer-term earnings prospects remain unchanged.

Such declines may create selective opportunities for investors when market reactions to policy headlines exceed the likely impact on businesses.

3. Policy changes through executive authority and federal agencies can still affect markets. Congressional hearings, investigations and proposals can also move stocks, even when legislation is unlikely to pass.

For investors, the key is determining whether a policy development could change a company’s costs or earnings prospects, rather than simply cause short-term volatility.

But congressional gridlock would materially limit the scope for major legislation affecting government funding or corporate costs—and therefore the potential for lasting changes to company results from such legislation.

4. Growing opposition to data centres could delay some projects and cause short-term price swings in stocks tied to AI infrastructure, but it will not necessarily weaken their longer-term prospects.

State or local pauses on development, for example, may delay projects, but they may also lead to agreements on power-grid improvements and other infrastructure investments that address community concerns about electricity costs.

5. An end to the Iran war before November 3 appears increasingly unlikely. Even if the conflict ends by then, consumer relief from high energy costs and broader price pressures would likely arrive too late to lift voter sentiment enough to affect the election outcome.

Morgan Stanley Research estimates that, after the Strait of Hormuz reopens, it could take roughly four months to restore 75% of lost Middle East production, with full recovery extending well into 2027.

Logistical and technical bottlenecks would likely keep oil and fuel supplies tight in the interim, limiting how quickly energy costs could ease for households and businesses.

6. The election alone is unlikely to substantially change the longer-term outlook for interest rates or the US deficit—the gap between government spending and revenue.

Heavy government borrowing and Treasury issuance tend to put upward pressure on bond yields, often weighing on asset prices.

Spending cuts could modestly reduce government borrowing, but substantially shrinking that gap would require broader tax and spending changes, which will likely be difficult under divided government.

The takeaway: A change in Congress won’t necessarily bring substantially lower rates or a lasting boost for bonds.

Corporate news in Australia:

• Warburg Pincus raises its takeover offer for Ingenia Communities ((INA)) to $5.45 per security, trumping AVID Property Group’s competing $5.35 proposal
• Frasers Group declares its 65c per share hostile takeover offer for Accent Group ((AX1)) best and final, with the offer scheduled to close on January 29, 2027
• Pemba Capital-backed Sequana acquires UK infrastructure advisory firm INFRACO, expanding its international operations to 300 staff and more than $80m in annual revenue
• Gold Fields lobbies Northern Star Resources ((NST)) shareholders to support its proposed $36bn merger
• Japan’s Daiichi Life is expected to increase its takeover proposal for Challenger ((CGF)) towards $13 per share, potentially valuing the group at approximately $8.8bn
• Hilco Capital provides David Jones with $10m in emergency financing to fund inventory purchases ahead of Christmas trading
• Stonepeak secures $55m in cornerstone commitments for a proposed $100m ASX-listed debt investment trust, targeting a December listing
• ·Storage Investments Australia prepares a $125m capital raising and launches a $200m fund to expand its Roomia self-storage network
• Charter Hall ((CHC)) prepares to launch a new ASX-listed REIT before Christmas, targeting a capital raising exceeding $100m and a 7% dividend yield

On the calendar today:

-NZ Oct ANZ business confidence

-AU 3Q Export price index

-EZ ECB President Lagarde press conference

-EZ ECB rate

-US 3Q GDP (advance)

-US Sep Core PCE

-US Sep PCE

-US Sep Personal spending

-US Weekly continuing jobless claims

-US Weekly initial jobless claims

-AUTOSPORTS GROUP LIMITED ((ASG)) ex-div 3.00c (100%)

-BENJAMIN HORNIGOLD LIMITED ((BHD)) ex-div 6.20c (100%)

-BWP GROUP ((BWP)) AGM

-CHALLENGER LIMITED ((CGF)) AGM

-CHAMPION IRON LIMITED ((CIA )) Qtrly update

-CAPRICORN METALS LIMITED ((CMM)) AGM

-CAPSTONE COPPER CORP. ((CSC)) Qtrly update

-INTEGRAL DIAGNOSTICS LIMITED ((IDX)) AGM

-ILUKA RESOURCES LIMITED ((ILU)) Qtrly update

-JB HI-FI LIMITED ((JBH)) AGM

-PERPETUAL LIMITED ((PPT)) AGM

-RESMED INC ((RMD)) Qtrly report

-SUPER RETAIL GROUP LIMITED ((SUL)) AGM

-SUNCORP GROUP LIMITED ((SUN)) investor briefing

-WATERCO LIMITED ((WAT)) ex-div 13.00c (100%)

-WESFARMERS LIMITED ((WES)) AGM

-WOOLWORTHS GROUP LIMITED ((WOW)) AGM

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

Spot Metals,Minerals & Energy Futures
Gold (oz)	4067.26	+ 5.04	0.12%
Silver (oz)	54.16	– 0.30	– 0.55%
Copper (lb)	6.67	+ 0.04	0.60%
Aluminium (lb)	1.40	+ 0.01	1.01%
Nickel (lb)	7.00	– 0.05	– 0.64%
Zinc (lb)	1.78	+ 0.01	0.70%
West Texas Crude	101.73	+ 1.72	1.72%
Brent Crude	113.95	– 0.36	– 0.31%
Iron Ore (t)	90.70	– 0.08	– 0.09%

The Australian share market over the past thirty days…

Index	28 Oct 2026	Week To Date	Month To Date (Oct)	Quarter To Date (Oct-Dec)	Year To Date (2026)
S&P ASX 200 (ex-div)	8847.30	0.59%	0.66%	0.66%	1.53%

BROKER RECOMMENDATION CHANGES PAST THREE TRADING DAYS
BSL	BlueScope Steel	Downgrade to Accumulate from Buy	Ord Minnett
ELD	Elders	Downgrade to Accumulate from Buy	Morgans
FMG	Fortescue	Downgrade to Sell from Hold	Bell Potter
IKE	ikeGPS Group	Upgraded to Buy from Hold	Bell Potter
LOT	Lotus Resources	Upgrade to Speculative Buy from Hold	Ord Minnett
MFG	Magellan Financial	Upgrade to Buy from Accumulate	Morgans
MMS	McMillan Shakespeare	Upgrade to Outperform from Neutral	Macquarie
NEM	Newmont Corp	Upgrades to Accumulate from Hold	Ord Minnett
		Downgrade to Accumulate from Buy	Morgans
OBM	Ora Banda Mining	Upgrade to Outperform from Neutral	Macquarie
OCC	Orthocell	Downgrade to Speculative Hold from Speculative Buy	Bell Potter
PRU	Perseus Mining	Upgrade to Outperform from Neutral	Macquarie
		Upgrade to Buy from Hold	Ord Minnett
REH	Reece	Downgrade to Sell from Neutral	Citi
RMS	Ramelius Resources	Upgrade to Outperform from Neutral	Macquarie
RRL	Regis Resources	Upgrade to Hold from Sell	Ord Minnett
SFR	Sandfire Resources	Upgrade to Buy from Hold	Morgans
		Upgrade to Buy from Neutral	UBS

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