The Overnight Report: Positive Ahead Of RBA Hike

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US markets slipped from intraday highs as selling continued across the tech sector, notably in chip and memory stocks, ahead of tomorrow's midterm elections.

The Australian market weakened yesterday on broad-based selling.

On Tuesday morning, ASX200 futures are pointing to a positive start, with an RBA rate hike on the cards later today. There's a horse race too.

World Overnight
SPI Overnight	8924.00	+ 58.00	0.65%
S&P ASX 200	8856.50	– 51.60	– 0.58%
S&P500	7541.40	– 38.67	– 0.51%
Nasdaq Comp	25164.32	– 272.68	– 1.07%
DJIA	51983.98	+ 213.67	0.41%
S&P500 VIX	21.32	+ 1.90	9.78%
US 10-year yield	4.89	– 0.04	– 0.71%
USD Index	101.76	– 0.20	– 0.20%
FTSE100	10761.33	+ 31.55	0.29%
DAX30	25981.09	+ 162.88	0.63%

Good Morning,

One day ahead of today’s RBA’s ‘meeting that won’t surprise a nation’ (pun intended on Melbourne Cup day), the ASX200 fell -52 points or -0.58% to 8856.50, albeit the index closed off its intraday low.

With the RBA widely expected to add 25bps of added burden to the nation’s mortgage holders, most sectors fell, led by Materials, down -1.35%, with Staples continuing to weaken, off -1.39%.

Telecommunications bucked the trend, up 0.20%, as some defensive portfolio positions might have switched out of Coles Group ((COL)) and Woolworths Group ((WOW)) in favour of Telstra Group ((TLS)) shares.

A recent survey by Morgan Stanley revealed Telstra is now the most preferred defensive among local active institutions, ahead of Coles and Woolworths. That was before the latter two supermarket operators released their quarterly updates.

CLSA on Westpac ((WBC)):

“WBC’s FY26 Cash NPAT ex-notables was broadly in line with our expectations and included a better-than-expected loan loss charge. Underlying pre-provision profit was slightly below our expectations with softer revenue (NIM and non-interest income) partially offset by slightly better expenses.

“We adjust our EPS forecasts by -1.8% in FY27 and -0.4% in FY28 mainly reflecting a softer underlying margin and lower non-interest income. This is partly offset by modestly lower expense expectations with WBC’s FY27 expense growth guidance similar to FY26 (+1%).

“WBC added provisioning overlays during 2H26 while reducing modelled provisions as its economic forecasts look more optimistic than peers. We anticipate a headwind for loan loss assumptions. WBC’s capital position is a strength, and we expect capital management when WBC is more comfortable with the macro outlook.

“We lower our TP from A$32.50 to A$32.10 and maintain our Hold recommendation.”

Preview: Macquarie Group’s 1H27 earnings report on Friday

RBC Capital: “Upside risks to Macquarie Group’s ((MQG)) earnings profile are starting to play out. We see stronger commodities growth near-term as MQG is benefiting from ongoing volatility in global commodities markets.

We lift our FY27E earnings, and our price target rises to a top-of-the-Street $303 from $300.

We see upside risks to consensus forecasts and MQG’s FY27 guidance in the CGM division as MQG delivers its 1H27 result on 6-Nov-26.

We are 7% ahead of consensus, with 48% earnings growth heading into the 1H27 result on 6-Nov-26.

Where are we different? (1) We see consistently strong commodities conditions; (2) MAM has completed several asset sales; (3) progress on capital optimisation. We see upside risks to consensus forecasts and MQG’s FY27 guidance in the CGM division.

Stronger commodities growth near-term: MQG is benefiting from ongoing volatility in global commodities markets. Our commodity strategists are calling out elevated oil shipping costs, low EU gas storage, geopolitical tension and the need to rebuild supplies if/when the conflict ends. All these are creating price dislocations in commodity and energy markets.

Upgrading FY27 earnings: We upgrade our FY27E EPS by around 3%, now looking for around 10% y/y growth, or some 6% ahead of VA cons.”

Dual-listed Block INC ((XYZ)) is due to release its quarterly update later today.

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

Tech Gave Back Its Morning Bounce

Chip and hardware stocks erased the morning’s gains and pulled the Nasdaq into the red.

Intel $INTC fell again after losing nearly half its value in October.

Deutsche Bank turned bullish, saying tech has trailed the market this badly five times in 2 1/2 years.

It bounced every time, but with Apple $AAPL reporting tonight, buyers seemed happy to wait a day.

Cheaper Oil Gave the Old Economy a Lift

Brent crude fell about -US$9 to near US$104 on signs the U.S. and Iran may try diplomacy first.

Axios reported Trump wants talks to play out, and Iran said its supreme leader cleared the government to negotiate.

Cheaper oil helped industrial and materials stocks, and Sherwin-Williams $SHW and Home Depot $HD led the Dow higher.

Goldman Sachs still expects pricey oil, and raised its December Brent forecast to US$105 from US$90.

Oracle Had to Pay Up to Borrow

Oracle $ORCL is raising US$20 billion for its AI buildout, half in new stock and half in bonds.

Bond buyers demanded 2.75 percentage points over Treasuries on its new five-year notes.

That’s more than the safest junk-rated companies pay on average, even though Oracle still holds an investment-grade rating.

Shares fell hard, though Oracle says it plans no more bond sales for new projects for a few years.

ANZ Bank, Australian Morning Focus, extract

Equities were mixed despite growing hopes of a diplomatic solution to the Middle East conflict following headlines that Iran’s supreme leader has granted permission for talks.

The S&P500 was down -0.51%, the Dow Jones up 0.42% and the Nasdaq down -1.07%.

The EuroStoxx50 rose 0.7%, and the FTSE100 was up 0.3%.

The yield on the US 10y note fell -3.7bp to 4.89%. Oil prices fell sharply, with WTI down -4.4% to USD105.1/bbl. Gold rose 1.1% to USD3,943.9/oz.

The US ISM manufacturing index rose 1pt to 55.5, pointing to a brisk start to Q4 for factory activity. The production index rose 2.3pts to 59.0, its highest level since November 2021, while new orders edged up 0.2pts to 55.5, marking the 10th consecutive month of expansion.

Other sub-indices eased but remained firmly in expansionary territory. The backlog of orders eased -1.8pts to 56.4, employment was -0.3pts lower at 52.4 and prices paid fell -2.7pts to 75.2.

Overall, the data suggest a solid expansion is underway, but with some risk of a moderation in coming months.

RBA to hike: We expect that the RBA’s Monetary Policy Board will increase the cash rate by 25bp at its meeting today. The post-meeting communication will likely focus on the hard choices the RBA faces in a world of supply shocks and constrained capacity.

Those hard choices are likely to be reflected in the RBA staff forecasts published in the Statement on Monetary Policy. The unemployment rate forecast is likely to be revised up by at least 0.25% point over most of the forecast horizon, which would point to an unemployment rate peak at or a little above 5%.

Despite that, and a higher cash rate assumption, we think the trimmed mean inflation forecast is likely to be revised up and show inflation above or around the top part of the RBA’s 2%–3% target band to the end of 2027.

We see it only getting toward the mid-point of the target band by mid-2028, on an assumption that the cash rate is around 4.85%.

If the policy rate doesn’t change from its current 4.60% then the return of inflation to the target would be delayed.

In a world where the RBA is starting to see some movement in inflation expectations, we think the Board will ultimately conclude that a 25bp rate hike is necessary to return inflation to target in a reasonable timeframe.

The Pulse of the Market, Lori Calvasina, RBC Capital extract

Small Caps were another hot topic in last week’s meetings. Stock market leadership has turned against mega cap Growth, AI, and Tech, the Russell2000 has started to outperform the S&P500 again.

This latest pivot came after the relative ratio between the two indices nearly got back down to the lows made last summer before Small Caps started to inflect positively. The main problem Small Caps have had recently has been interest rates.

Though their relative performance trends over the duration of hiking cycles has been inconsistent over time, since COVID Small Caps have tended to be driven by shifts in expectations around the Fed outlook, underperforming when Fed hikes are getting added to the forecast or cuts are getting taken out.

Small Caps started to underperform in July 2026 as financial market participants started to focus more on the possibility of a new hiking cycle. The good news for Small Caps is that as we have settled into this new, mini hiking cycle, even more hikes have not been getting added in recently.

This has given Small Caps some room to outperform as investors have rotated into more attractively valued parts of the market. Small Caps also look modestly, though not deeply, undervalued on our P/E analysis and have looked deeply under owned/out of favor on CFTC positioning data where shorts are starting to close.

Despite our shift in view, there are number of things we will need to monitor closely on this call as it could end up being a short-term one. In particular, Small Caps usually need to see cyclical excitement building to outperform, things like accelerating jobs growth, rising ISM manufacturing, and rising GDP forecasts.

If we start to see economic excitement reined in as a result of rate hikes or a worsening of conditions in the Middle East, it will be difficult for Small Caps to lead as valuations are only modestly attractive and never fell back down recently to the lows we tend to see in recessions or more severe pullbacks.

Broader market conditions may also interrupt this trade. Small Caps tend to underperform when high yield spreads are widening and the VIX is rising. A major pullback could see Small Caps suffer from a more intense risk off tone if it emerges.

With the S&P500 down just -3% from its recent peak, we continue to think a -5%-10% pullback in the S&P500 is overdue and may be underway, which would take the index into the 7000-7400 range.

We have not changed our 12-month S&P500 price target of 8,150, noting that the signals from our models have returned to where they were at the time of our last update in September.

We continue to see the Growth/Value trade in the US as a tug of war but think a new phase of Value leadership has begun, which tends to coincide with US underperformance relative to non-US.

While the US is starting to look a little undervalued vs. non-US again, broadly speaking we don’t see enough in our work to justify fighting the underperformance of the US that’s underway at the moment.

We have turned more constructive on Small Cap, which we now prefer to Large Cap, remain overweight Financials and Health Care within the S&P500, and remain on the sidelines with Tech (market weight) following our mid-October downgrade.

Wall Street set for a boost whoever wins the midterms, Nigel Green, deVere extract

The S&P500 is expected to receive a meaningful boost once the votes are counted following Tuesday’s US midterm elections, regardless of the outcome.

Political uncertainty has been one of the heaviest weights on US equities this autumn, and any election result would remove a significant part of that uncertainty.

The correction has already done most of its work, noting beneath a relatively calm index, many individual stocks have experienced a brutal few months.

Once the uncertainty clears, capital that has been parked on the sidelines is likely to return to equities, with the recovery expected to extend well beyond the handful of technology giants that drove markets earlier in the year.

The S&P500 closed last week at 7,580, less than -3% below its October record. History offers encouragement: the index has gained around 17% on average in the 12 months following a midterm vote.

Republicans currently hold both the House and the Senate. The polls point to Democrats taking the House, with the Senate too close to call.

A split Congress has traditionally suited markets well because it slows sweeping new legislation and provides companies with a more stable environment in which to plan.

Should Republicans retain control of both chambers, investors would price in continuity on taxation and deregulation, which would also be supportive for equities.

Either way, the direction of travel for equities is believed to likely be higher.

Near-term turbulence remains possible. Close races can take days to call, and markets may remain jittery in the meantime.

Midterm elections tend to generate volatility in the lead-up to voting, followed by more favourable market conditions once the results are known.

Some volatility in the days following the election would not be a surprise and this is viewed part of the process of removing uncertainty.

A firmer US equity market also typically improves confidence and risk appetite across Europe, Asia and emerging economies.

It also makes it easier for companies globally to raise capital, hire employees and invest. A broader US market recovery, extending beyond a handful of mega-cap technology companies, would be healthier for the global economy than the narrow rally experienced earlier this year.

The current cycle could provide one of the more rewarding periods for long-term investors in recent years.

Corporate news in Australia:

• AVID Property Group raises its non-binding takeover proposal for Ingenia Communities ((INA)) to $5.45 per stapled security, matching Warburg Pincus’s revised offer
• KMD Brands ((KMD)) grants Bluestar Alliance exclusivity to undertake due diligence on a potential 100% takeover, with no binding agreement reached
• RCQ puts its proposed $75m-plus Maloja Hotel on the Sunshine Coast up for sale, attracting interest from Singaporean funds, Ovolo and international hotel operators
• Metrics-backed ((PNI)) RealtyAssist explores potential mergers with competitors as monthly losses exceed -$1m and accumulated losses reach -$57.9m
• The Oatley family reacquires Rosemount from Treasury Wine Estates ((TWE)) as the winemaker simplifies its portfolio
• Samsung C&T acquires Perth-based Powertech for around $100m, expanding its engineering and construction capabilities in the energy transition sector
• Quadrant Private Equity continues pursuing a sale of Fitness and Lifestyle Group at a potential valuation of up to $2bn
• Frasers Group presses ahead with its hostile 65c-per-share takeover offer for Accent Group ((AX1)), having increased its stake to 24%
• Rest Super commits another $250m to Wollemi Capital’s MPower solar and battery storage platform, following Wollemi’s earlier $100m investment
• The Break seeks $56m in private equity funding from family offices and other investors for its proposed $136m Adelaide surf resort and wave park
• UBS faces scrutiny over its role arranging NextDC’s ((NXT)) $1.1bn convertible note issue and associated capped call options amid share price weakness, project delays and financing concerns
• Alex Waislitz and Antony Catalano provide emergency funding to View Media Group following a -$40.6m loss, largely associated with the suspension of its view.com.au property listings portal

On the calendar today:

-NZ Sep Building permits

-AU Oct ANZ-Roy Morgan consumer confidence

-AU RBA Statement on Monetary Policy

-JP Public Holiday

-US Sep Durable goods (final)

-US Sep Durable goods ex transportation (final)

-US Sep Factory orders

-US Sep Factory orders ex transportation

-US Sep JOLTS

-WAM GLOBAL LIMITED ((WGB)) ex-div 6.60c (100%)

-BLOCK INC ((XYZ)) Qtrly update

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

Spot Metals,Minerals & Energy Futures
Gold (oz)	3946.13	+ 70.29	1.81%
Silver (oz)	50.49	+ 1.59	3.25%
Copper (lb)	6.51	+ 0.05	0.77%
Aluminium (lb)	1.41	0.00	0.00%
Nickel (lb)	6.91	– 0.00	– 0.02%
Zinc (lb)	1.79	0.00	0.00%
West Texas Crude	95.71	– 8.41	– 8.08%
Brent Crude	103.88	– 9.55	– 8.42%
Iron Ore (t)	91.25	+ 0.54	0.60%

The Australian share market over the past thirty days…

Index	02 Nov 2026	Week To Date	Month To Date (Nov)	Quarter To Date (Oct-Dec)	Year To Date (2026)
S&P ASX 200 (ex-div)	8856.50	-0.58%	-0.58%	0.76%	1.63%

BROKER RECOMMENDATION CHANGES PAST THREE TRADING DAYS
AMI	Aurelia Metals	Upgrade to Outperform from Neutral	Macquarie
ANN	Ansell	Downgrade to Sell from Neutral	Citi
ARF	Arena REIT	Downgrade to Hold from Accumulate	Ord Minnett
ASB	Austal	Upgrade to Buy from Hold	Bell Potter
BHP	BHP Group	Upgrade to Hold from Trim	Morgans
BOE	Boss Energy	Upgrade to Buy from Neutral	Citi
CCP	Credit Corp	Downgrade to Neutral from Outperform	Macquarie
COL	Coles Group	Downgrade to Hold from Buy	Ord Minnett
FRW	Freightways Group	Upgrade to Buy from Accumulate	Ord Minnett
GDF	Garda Property	Downgrade to Accumulate from Buy	Morgans
INA	Ingenia Communities	Downgrade to Neutral from Buy	Citi
L1G	L1 Group	Upgrade to Buy from Hold	Bell Potter
LTR	Liontown	Upgrade to Buy from Hold	Ord Minnett
LYC	Lynas Rare Earths	Downgrade to Hold from Accumulate	Ord Minnett
ORG	Origin Energy	Downgrade to Hold from Accumulate	Ord Minnett
RIO	Rio Tinto	Upgrade to Accumulate from Hold	Morgans
RMD	ResMed	Downgrade to Accumulate from Buy	Ord Minnett
TTT	Titomic	Upgrade to Accumulate from Hold	Ord Minnett
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.)

(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)

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