The Overnight Report: New Highs In Sight

This story features PEXA GROUP LIMITED, and other companies. For more info SHARE ANALYSIS: PXA

SPI futures are signalling another sunny opening for the Australian share market on Thursday morning.

Both Pexa Group ((PXA)) and REA Group ((REA)) need to find a new CEO shortly as the local results season starts ramping up, albeit slowly.

World Overnight
SPI Overnight	8443.00	+ 66.00	0.79%
S&P ASX 200	8416.90	+ 42.90	0.51%
S&P500	6061.48	+ 23.60	0.39%
Nasdaq Comp	19692.33	+ 38.31	0.19%
DJIA	44873.28	+ 317.24	0.71%
S&P500 VIX	15.77	– 1.44	– 8.37%
US 10-year yield	4.42	– 0.09	– 2.02%
USD Index	107.47	– 0.31	– 0.29%
FTSE100	8623.29	+ 52.52	0.61%
DAX30	21585.93	+ 80.23	0.37%

By Chris Weston, Head of Research, Pepperstone

Good morning.

While the collective in the market remains highly cognisant that headline risk is still very much present, we see further evidence of tariff fatigue, with market players re-positioning and adding risk to portfolio exposures and aligning to the changes afoot in the cross-asset price action.

The central vibe running through trade has been the solid bid in US Treasuries, with the USD finding increased selling flows across the G10 FX complex -notably vs the JPY- with net buying in EU and US equity indices, and a renewed focus on short crude.

Gold continues to see upbeat client volumes, and with spot pushing intraday to US$2882 (now US$2862), we’ve certainly seen better two-way trading flows emerging.

Despite so much focus on the data that portrays just how tight the physical market has become, many now feel chasing the tape higher here as wholly uncompelling.

Along with the gold flows, the USD gets the central focus from clients, which is typically the way in times of increased movement and evolving trending conditions.

The 9bp bleed lower in the US 10-year Treasury yield (to 4.42%) can partly explain the solid break of 108 on the DXY, with the below consensus US ISM Services print (at 52.8) offering additional tailwinds to the USD selling.

Turning to Asia our opening call for the ASX200 looks constructive. The leads from US equity markets -with the S&P500 closing on session highs– will feed through into gains across the board, with the ASX200 looking towards a test of 8500.

While the tariff thematic still hangs over Asia equity sentiment, it feels as though we’re pushing back towards the goldilocks backdrop for the ASX200, with reduced right tail risk leading to an easing cycle amid earnings upgrades and reasonable growth.

New highs seem possible in the near-term.

On the calendar today:

-New Zealand Public Holiday

-Australia Dec Trade Balance

-Eurozone Dec retail sales

-UK BoE rate decision

-Beach Energy ((BPT)) earnings report

-Garda Property Group ((GDF)) earnings report

-News Corp ((NWS)) earnings report

-REA Group ((REA)) earnings report

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

Corporate news in Australia:

-Bloomberg reports Macquarie Group ((MQG)) is ditching US debt capital markets, cutting jobs and offloading loans, as it bets big on the booming private credit sector

-According to Bloomberg, Allianz and Insurance Australia Group ((IAG)) are considering bidding for the insurance arm of The Royal Automobile Club of Western Australia

-Microsoft signals it is open to striking deals with Australian publishers under Labor’s new tech levy

-Future Fund hit $238bn after a 12.2% return in 2024

-Westpac ((WBC)) invests $10m in Lawpath to provide legal and compliance services to businesses

-REA Group ((REA)) CEO Owen Wilson is set to retire in the second half of 2025 after 10 years with the business

Spot Metals,Minerals & Energy Futures
Gold (oz)	2882.00	+ 7.60	0.26%
Silver (oz)	32.80	– 0.10	– 0.29%
Copper (lb)	4.44	+ 0.07	1.71%
Aluminium (lb)	1.18	– 0.00	– 0.24%
Nickel (lb)	6.77	+ 0.07	1.06%
Zinc (lb)	1.26	– 0.01	– 0.78%
West Texas Crude	71.22	– 1.38	– 1.90%
Brent Crude	74.76	– 1.31	– 1.72%
Iron Ore (t)	104.81	– 0.59	– 0.56%

By Samer Hasn, Senior Market Analyst at XS.com

Gold has hit record highs for the fifth consecutive day, surpassing US$2,877 per ounce in spot trading.

Gold’s consecutive gains come amid escalating trade wars between the US and China, which are likely to deepen concerns about the economies of both countries.

These consecutive peaks for gold also coincide with declining Treasury yields and lackluster US stock market performance, reinforcing the safe haven demand hypothesis, which was also after a larger-than-expected decline in job openings in December.

These factors add to the uncertainties surrounding the global economy and geopolitical realities, which together contributed to driving investment demand for gold to grow by 25% in 2024 compared to 2023 and by 32% in the fourth quarter compared to the same period in the previous year, according to the World Gold Council report.

The trade war now appears to be the most significant factor fueling uncertainty, which in turn drives demand for safe havens.

Concerns are growing today as the trade war is expected to escalate further, although it began less severely than expected with the inauguration of Donald Trump.

With tariffs on Chinese imports entering the United States taking place, more signs of the coming escalation have emerged today.

Chinese authorities are preparing to open an investigation into Apple over its App Store policies, according to Bloomberg News.

This comes after the announcement that Google will be targeted with antitrust investigations, in addition to restricting exports of some rare metals and imposing tariffs on some imports from the United States.

Although China’s retaliatory steps appear limited and do not target strategic goods and targeting only an estimated US$14bn in American imports, they may represent the beginning of a broader escalation of the trade war, as they may encourage Trump to make more aggressive decisions, according to what The New York Times reported from experts.

China’s retaliatory measures signal the possibility of harming American companies, but at the same time, they open the door to negotiation.

In addition, according to The Times, the escalation of tensions between China and the United States may affect the prospects of stopping the war in Ukraine.

China is the largest supporter of the Russian economy, and yet escalation will make cooperation difficult to end the war.

While the absence of a near horizon for settling the war in Ukraine will keep uncertainty high in the European Union countries, whose economies are not only suffering from this war, but also from the economic threat of the upcoming trade war.

Escalation with China will also lead to a redrawing of the map of alliances around the world, according to The Times in a separate report.

Trump’s hostility towards its allies and enemies, in addition to cutting off aid from the United States, will attract the affected countries and China to ally with each other.

This in turn will not be unlikely to force the United States to escalate further to avoid losing its global hegemony.

The Australian share market over the past thirty days

Index	05 Feb 2025	Week To Date	Month To Date (Feb)	Quarter To Date (Jan-Mar)	Year To Date (2025)
S&P ASX 200 (ex-div)	8416.90	-1.35%	-1.35%	3.16%	3.16%

BROKER RECOMMENDATION CHANGES PAST THREE TRADING DAYS
AFG	Australian Finance Group	Upgrade to Buy from Neutral	Citi
APX	Appen	Upgrade to Buy from Accumulate	Ord Minnett
AUB	AUB Group	Downgrade to Neutral from Buy	UBS
BSL	BlueScope Steel	Upgrade to Buy from Neutral	Citi
DSE	Dropsuite	Downgrade to Hold from Buy	Shaw and Partners
EMR	Emerald Resources	Downgrade to Sell from Hold	Ord Minnett
MFG	Magellan Financial	Downgrade to Sell from Neutral	UBS
MND	Monadelphous Group	Downgrade to Neutral from Buy	Citi
NEC	Nine Entertainment	Downgrade to Neutral from Buy	UBS
NWS	News Corp	Upgrade to Buy from Neutral	UBS
OML	oOh!media	Downgrade to Neutral from Buy	UBS
ORG	Origin Energy	Downgrade to Neutral from Outperform	Macquarie
PPM	Pepper Money	Upgrade to Buy from Neutral	Citi
RMD	ResMed	Upgrade to Buy from Neutral	UBS
STX	Strike Energy	Downgrade to Hold from Buy	Bell Potter
SUN	Suncorp Group	Downgrade to Neutral from Buy	UBS
TCL	Transurban Group	Downgrade to Neutral from Buy	Citi

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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