The Overnight Report: US Tech Results Disappoint

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Disappointed investors erased -US$500bn in market cap off Google on weaker than expected results, weighing on AI stocks and Nasdaq.

Non-AI-related stocks fared much better, with shares in GLP-1 heavyweight Eli Lilly reaching a new 52-week high on another robust quarterly performance.

ResMed's quarterly also beat forecasts on lower costs and margin expansion while consensus was positioned for margin contraction.

The Australian market rose yesterday and ASX200 futures are pointing to a positive start on Friday morning.

World Overnight
SPI Overnight	8937.00	+ 32.00	0.36%
S&P ASX 200	8891.80	+ 44.50	0.50%
S&P500	7720.39	– 23.59	– 0.30%
Nasdaq Comp	26184.73	– 365.13	– 1.38%
DJIA	52342.56	– 132.54	– 0.25%
S&P500 VIX	17.20	+ 0.29	1.71%
US 10-year yield	4.99	– 0.06	– 1.11%
USD Index	102.13	– 0.17	– 0.17%
FTSE100	10722.07	+ 27.57	0.26%
DAX30	26039.68	+ 335.66	1.31%

Good Morning,

The ASX200 rose 0.5% or 44.5% to 8891.80, led by Real Estate and Financials.

Consumer Discretionary weakened by almost -2% as several major retailers flagged softening demand in October and released weaker than expected 1Q27 trading updates.

Shares in Wesfarmers ((WES)) fell -4%, JB Hi-Fi ((JBH)) down -2.9% and Super Retail ((SUL)) down -2.8%.

Big Tech earnings have fallen foul of expectations with Google shares down -13% today, its worst day ever and taking -US$500bn off its market cap.

Selling in the US aftermarket has continued to Amazon shares post quarterly earnings, down -6% after a -4% decline today, while Intel shares are down -18% in the after market after a -3.6% fall overnight.

Ahead of the US midterms, investors are ‘taking no prisoners’ on the AI trade.

ResMed ((RMD)) announced its September quarter earnings after the close in the US.

Citi:

“RMD saw modest beats to VA consensus across the board, as demand has remained strong.

“Outperformance was mainly ex US, with the Americas falling in line. The beat at core EBIT level was larger (7%), driven by lower-than-expected SG&A costs.

“Gross margin expanded when the expectation had been for some decline, per the company mainly as a result of productivity initiatives.

“We think this result will be taken positively, and expect some questions around gross margin sequencing through the year due to the outperformance in 1Q and unchanged EPS guidance.”

RBC Capital:

“ResMed has delivered a strong result that has beat expectations and consensus across all key line items. The company has delivered strong revenue performance across all categories.

“Non-GAAP gross margin expanded by 20bps sequentially, which beat management’s guidance for gross margins to compress.

“FY27 guidance has been retained. The one area of weakness was FCF which declined -10% YoY.

“However, we expect the market to like the good revenue growth and gross margin expansion.”

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

Wall Street Stayed Calmer Than Alphabet’s Stock

Alphabet fell about -13 percent, on track for its worst day since going public in 2004. Analysts didn’t panic with it.

UBS cut its target to US$332 from US$380, still well above today’s price near US$283, and Barclays called it a “code yellow” but said the shares are still attractive at about 14 times expected 2028 profit.

A cloud business that more than doubled to nearly US$31 billion couldn’t stop the slide.

The Other 493 Stocks Are Beating The Magnificent Seven

A fund of the 493 big US companies outside the Magnificent Seven is up more than 15 percent this year.

A fund of just the seven is up less than 6 percent, and the S&P500 sits in between at 13 percent.

Today fits the pattern, with software stocks down about 4 percent, ServiceNow down about a quarter, and smaller companies up for a third straight day.

Shoppers Got More Careful Heading Into October

Sprouts Farmers Market fell about a fifth after cutting prices to win back shoppers, and it now sees fourth quarter profit at less than half what analysts expected.

Hershey said convenience store candy and gum sales fell nearly -5 percent across the industry in September, and the caution is carrying into October.

Today’s GDP report showed consumer spending at its fastest pace since late 2024, but it only covered July through September.

CBA Economics, Daily Alert, Trent Saunders, extract

Tech weakness drags US stocks lower

US sharemarkets fell, led by weakness in technology and software shares as investors reassessed the cost and near-term returns from heavy AI investment.

The Dow fell -0.3%, the S&P500 declined -0.4% and the Nasdaq dropped -1.4%. Broader sector performance was more resilient, with gains across several defensive and financial sectors limiting the decline in the major indices.

European sharemarkets rose as investors digested earnings and the ECB’s decision to leave policy rates unchanged. The FTSEurofirst 300 rose 0.8% and the FTSE 100 gained 0.3%.

In US economic data, the PCE price index rose 0.5% in September, broadly in line with expectations.

The inflation reading helped pull Treasury yields lower despite stronger-than-expected Q3 GDP growth, leaving markets balancing still-firm activity against evidence that inflation had not surprised materially to the upside.

US government bond yields declined as the PCE inflation data offset the stronger GDP result. The 10-year yield fell -8bp to 4.94%, while the 2-year yield fell -9bp to 4.65%.

Currencies were mixed against the US dollar. The euro rose 0.1% to US$1.1169, while USD/JPY fell 0.1% to 157.75, implying a modestly firmer yen. The Australian dollar fell 0.3% to US$0.7030, or US70.30 cents.

Global oil prices were volatile. Brent crude futures were 0.3% higher at US$115.7 a barrel, reversing earlier weakness that had been linked to hopes for progress in peace talks. WTI crude was at US$102.00 a barrel, down 0.8%.

Base metal prices were mixed, with copper futures down 1.0% to 658.1 USc/lb and aluminium futures up 1.4% to US$3,332.25/t.

Gold futures fell -0.5% to US$4,033.3 an ounce as firmer US activity kept expectations of further Fed tightening alive. Iron ore futures were little changed at US$90.7/t.

Looking Ahead: In Australia, producer prices and private sector credit are due today.

Offshore, we have the US employment cost index and the Bank of Japan meeting today.

Assessing What Matters for the U.S. Midterms – PGIM Economists, extract

• With U.S. voters heading to the polls next week, our base case for the Congressional midterm elections is that Democrats sweep the House and the Senate, but with materially less confidence around the latter outcome. While a Democratic Congress could block legislation, funding, and nominations, it would lack the votes to override presidential vetoes and, therefore, to implement its own agenda. The principal risk to our base case is in voter turnout and correlated errors within political polling.
• Divided government could push the administration toward greater reliance on executive authority, particularly as it pertains to tariffs and foreign policy. As a result, we could see the effective tariff rate to rise from roughly 10% toward the mid-teen percentages. The timing of the midterms has also been linked to potential conditions in the Middle East, which could deteriorate in the near future, possibly pushing Brent crude above US$120/ barrel before it settles into a range of US$90-US$120 / barrel, which is consistent with our base case for a prolonged quagmire in the region.
• If Republicans do not raise the debt ceiling during its next session, the unresolved issue raises the risk for a particularly contentious debt ceiling confrontation next summer
• Given that the political winds regarding AI may reach a crescendo around the midterms, our working view is for a slower, but longer, AI capex cycle. Therefore, the AI investment boost to real GDP growth could moderate from roughly 100–150 bps this year to an approximate range of 75–100 bps in 2027. A more gradual capex pace could aid the absorption of hyperscaler debt, while weaker AI-driven growth could eventually place downward pressure on long-term rates.

The AI and non-AI economies – two different growth stories, Oxford Economics extract

• Without the AI boom, global growth would be sluggish. We estimate that in H1 2026, annualised GDP growth excluding AI was a moderate 1.4% in the US and lower still in other major advanced economies. Should the AI boom slow or go into reverse, recession risk in the advanced economies would be substantial.
• In Q2 2026, we estimate that AI investment net of higher imports added 0.4ppt to US growth, and stock market wealth effects a similar amount. This means much of the headline annualised growth rate of 2.2% can be attributed to AI-related factors. The US economy is relying far more on this tech boom for growth than in the previous boom of the late 1990s.
• Outside the US, the AI sector is having a smaller impact. Across a set of major advanced economies, we estimate AI effects contributed on average 0.2ppt of the 1.1% annual growth recorded in 2025-2026H1. The biggest boosts from AI were in Canada, Japan, the UK, and Sweden.
• The slow underlying growth of the advanced economies is partly due to a drag from residential investment, a result of the rise in interest rates since 2022. But if it were not for a decline in the proportion of GDP accounted for by interest-sensitive sectors and their reduced sensitivity to rate rises – especially in the US – the picture would be weaker still.
• The AI boom is overall a positive factor for world growth, but it’s also creating some negative spillovers. Higher US electricity prices, higher prices for some electronics used by consumers and non-AI businesses, and potentially higher borrowing costs are all factors tending to curb growth. A plausible estimate suggests these effects could reduce annual growth by 0.2ppts-0.3ppts in some advanced economies

Corporate news in Australia:

• Ingenia Communities ((INA)) denies knowledge of a third bidder as it considers competing takeover proposals from Warburg Pincus and AVID, with no certainty a transaction will proceed
• CECEP Wind Power and Goldwind seek buyers for their White Rock Wind Farm in NSW, with a potential sale valued at more than $450m
• Adamantem Capital appoints bankers to explore the sale of cardiology provider Advara HeartCare amid increasing healthcare M&A activity
• Capital Partners explores a potential sale of David Jones, with retail billionaire Brett Blundy among possible buyers
• Sam Arnaout moves to secure control of Cairns Reef Hotel Casino through a near-$200m takeover of the remaining interest in Reef Casino Trust ((RCT))
• Pacific National’s proposed $6bn sale stalls as shareholders insist on a whole-of-business transaction, potentially excluding bidders interested in individual divisions
• Former Cue executive Justin Levis and billionaire Larry Kestelman emerge as potential buyers for Cue Clothing and Veronika Maine as receivers assess offers
• ASIC continues targeted inquiries into JPMorgan, Morgan Stanley, Bank of America and Morgans Financial over their roles as joint lead managers of Firmus’ cancelled IPO
• Funds raised through iPartners for business lender Marketlend reportedly flowed to related company Electricity Wizard, now in liquidation, raising questions over valuations and related-party transactions
• Star Entertainment ((SGR)) confirms its WhiteHawk Capital Partners credit facility remains available after accepting a $260m Federal Court penalty for anti-money laundering breaches
• Tribeca-backed Cyprium Metals ((CYM)) seeks $25m in equity and US$40m in debt to fund redevelopment of its Nifty copper mine in Western Australia
• Firmus founders reportedly pledge their entire shareholdings to support up to $10bn in financing as the AI infrastructure company seeks private capital following cancellation of its proposed $44bn ASX IPO
• Metrics’ ((PNI)) $8.25bn wholesale senior loan fund faces $904m in redemption requests, declining cash reserves and rising loan provisions amid concerns over Australian private credit and property exposure

• On the calendar today:

-NZ Oct ANZ consumer confidence

-AU 3Q PPI

-AU Sep Private sector credit

-JP BoJ rate

-JP Oct Tokyo CPI

-JP Sep Industrial production (prelim)

-JP Sep Retail sales

-JP Sep Unemployment

-EZ 3Q GDP (advance)

-EZ Oct ECB Kocher speech

-EZ Sep Unemployment

-US Oct Chicago PMI

-US Oct Fed Daly introductory remarks

-US Oct Fed Musalem keynote address

-CAR GROUP LIMITED ((CAR)) AGM

-COBRAM ESTATE OLIVES LIMITED ((CBO)) AGM

-COLES GROUP LIMITED ((COL)) Qtrly update

-ENDEAVOUR GROUP LIMITED ((EDV)) AGM

-LIONTOWN LIMITED ((LTR)) Qtrly update

-MINERALS 260 LIMITED ((MI6)) AGM

-NEXGEN ENERGY LIMITED ((NXG)) Qtrly update

-ORIGIN ENERGY LIMITED ((ORG)) Qtrly update

-PINNACLE INVESTMENT MANAGEMENT GROUP LIMITED ((PNI)) AGM

-REECE LIMITED ((REH)) AGM

-STEADFAST GROUP LIMITED ((SDF)) AGM

-SANDFIRE RESOURCES LIMITED ((SFR)) AGM

-TABCORP HOLDINGS LIMITED ((TAH)) 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	29 Oct 2026	Week To Date	Month To Date (Oct)	Quarter To Date (Oct-Dec)	Year To Date (2026)
S&P ASX 200 (ex-div)	8891.80	1.10%	1.17%	1.17%	2.04%

BROKER RECOMMENDATION CHANGES PAST THREE TRADING DAYS
AMI	Aurelia Metals	Upgrade to Outperform from Neutral	Macquarie
ANN	Ansell	Downgrade to Sell from Neutral	Citi
ASB	Austal	Upgrade to Buy from Hold	Bell Potter
BOE	Boss Energy	Upgrade to Buy from Neutral	Citi
BSL	BlueScope Steel	Downgrade to Accumulate from Buy	Ord Minnett
CCP	Credit Corp	Downgrade to Neutral from Outperform	Macquarie
GDF	Garda Property	Downgrade to Accumulate from Buy	Morgans
IKE	ikeGPS Group	Upgraded to Buy from Hold	Bell Potter
INA	Ingenia Communities	Downgrade to Neutral from Buy	Citi
LOT	Lotus Resources	Upgrade to Speculative Buy from Hold	Ord Minnett
MMS	McMillan Shakespeare	Upgrade to Outperform from Neutral	Macquarie
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
WOW	Woolworths Group	Downgrade to Hold from Accumulate	Morgans
		Downgrade to Lighten 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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