The Overnight Report: Waiting & Watching

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Between a Federal Reserve on hold, ongoing uncertainty over whether the US will enter the Israel/Iran conflict and a US public holday on Thursday (Friday Sydney time), US markets lacked direction, finishing broadly unchanged.

The ASX200 continues to trade slightly weaker to flat with Thursday’s opening signalling caution dominates.

World Overnight
SPI Overnight	8513.00	– 20.00	– 0.23%
S&P ASX 200	8531.20	– 10.10	– 0.12%
S&P500	5980.87	– 1.85	– 0.03%
Nasdaq Comp	19546.27	+ 25.18	0.13%
DJIA	42171.66	– 44.14	– 0.10%
S&P500 VIX	20.14	– 1.46	– 6.76%
US 10-year yield	4.40	+ 0.00	0.09%
USD Index	98.46	+ 0.05	0.05%
FTSE100	8843.47	+ 9.44	0.11%
DAX30	23317.81	– 116.84	– 0.50%

Good Morning,

The Australian market could lack direction over the last two trading days of the week, unless the conflict in the Middle East ratchets up with the US entering the fray. Oil markets remain fragile and investors are sitting on the sidelines.

What happened overnight: Chris Weston, Pepperstone

Crude oil prices edged higher, briefly touching a year-to-date high amid speculation the US will become involved in the Israel-Iran conflict. Trump said Iran had squandered the chance to make a deal over its nuclear enrichment but declined to say whether the US plans to join Israel’s offensive aimed at destroying the program.

This comes after Trump demanded Iran surrender and warned of a possible strike against its leader earlier this week. The oil market remains concerned any further escalation in the war will bring risks to supply disruptions. Almost a fifth of the world’s oil supply transits the Strait of Hormuz, which Iran has threatened to block in the past.

The oil derivatives market highlights the nervousness of investors. Bullish options are fetching their biggest premium in more than a decade and volatility has surged to a three year high. For now, there are no disruptions to supply.

Iranian crude oil exports have jumped since the nation came under attack from Israel. It’s shipped 2.33mb/d since 13 June, an increase of 44% compared with the year to 12 June, according to TankerTrackers.com. Demand also looks robust. US crude oil inventories fell by 11.6mbbl last week, the biggest decline in almost a year.

The Energy Information Administration report also showed production continues to stall as the rig count declines. Global gas prices gave back recent gains as traders contemplated the risk of disruptions to supply from the Middle East conflict.

Earlier this week, Qatar asked LNG vessels to wait outside the Strait of Hormuz until they were ready to load, amid rising tensions in the region. So far, LNG shipments through the waterway have been unaffected, according to Bloomberg ship tracking data.

Vessels that had been waiting have now crossed the Strait. Meanwhile, Israel announced some of its own gas exports may resume as early as Thursday after it stopped flows to Egypt and Jordan last week. The initial supplies are expected to be small.

Traders in the North Asia LNG market remained nervous. Japanese shipper Nippon Yusen KK instructed its ships to maintain a safe distance from the shore while navigating the Iranian waters. Some support emerged after Chinese state-owned CNOOC purchased several cargoes to help replenish falling inventories in the south of the country as summer heat adds to the nation’s power demand.

Copper edged lower as traders weighed on rising Middle East tensions against signs of tightness in the spot market. Readily available inventories of the metal have dropped by -80% this year, driven in part by a surge in US imports amid concerns of impending tariffs.

Spot copper contracts have this week risen to trade at their biggest premium to three-month futures since February, with the widening spread indicating near term tightness. However, any sustained spike in energy prices is likely to ultimately weigh on the copper market due to the higher cost to producers.

Gold fell after the USD rose after Fed Chair Powell indicated inflation risks remained high and flagged uncertainty stemming from tariffs. More inflation going forward raises the risk the central bank may have to keep rates high, or even raise them, to contain the price pressures. Earlier in the session, gold found some support from haven buying amid the rising tensions in the Middle East.

The precious metal is up more than 25% this year, driven by a cocktail of trade, economic and geopolitical risks that have prompted investors to scoop up the metal.

Latest from the US FOMC meeting: Extract NAB Markets Today Research

As for the details from the FOMC, the Fed kept rates on hold as universally expected. The median dot for 2025 remained at two cuts (3.9%), though with a hawkish distribution with seven seeing no cuts in 2025 (up from four in March). The dot plot further out was also lifted higher with a median of 3.6% for 2026 (from 3.4%) and 3.4% for 2027 (from 3.1%). The longer-run ‘neutral rate’ dot though remained at 3.0%.

Near term forecasts were revised, incorporating the impact of higher tariff levels compared to when the forecasts were last compiled in March. Core CPE inflation was revised higher to 3.1% in 2025 (from 2.8%), 2.4% in 2026 (from 2.2%) and, interestingly, even in 2027 is still above target slightly at 2.1% (from 2.0%).

Unemployment rate forecasts were revised up marginally to 4.5% in 2025 (from 4.4%) and holding at 4.5% in 2026 (from 4.3%). GDP forecasts, unsurprisingly, were lower to 1.4% in 2025 (from 2.7%) and to 1.6% in 2026 (from 1.8%).

In the press conference, Chair Powell highlighted the high degree of uncertainty:

“With uncertainty as elevated as it is, no one holds these rate paths with a lot of conviction” and that the Fed is clearly willing to wait a few months to see the price impact from tariffs “We feel like we will learn a great deal more over the summer on tariffs“. The economy remained decent and as the “The labor market’s not crying out for a rate cut“ and “because the economy is still solid, we can take the time“

Corporate news in Australia

-Platinum Asset Management ((PTM)) and L1 Capital finalise due diligence for merger.

-Kelsian Group ((KLS)) wins a $91m US transport contract with Worley ((WOR)) for Louisiana LNG project.

-Woodside Energy ((WDS)) achieves a 15-year LNG contract with Petronas for one million tonnes of LNG from 2028.

-Macquarie Group ((MQG)) has acquired three UK airports from the Ontario Teachers’ Pension Plan.

-Mayne Pharma ((MYX)) shareholders approve Cosette deal ($672m).

On the calendar today:

-NZ 1Q GDP

-AU May Unemployment

-UK BoE rate

-US Public Holiday

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

Spot Metals,Minerals & Energy Futures
Gold (oz)	3393.45	– 13.75	– 0.40%
Silver (oz)	36.79	– 0.39	– 1.04%
Copper (lb)	4.86	+ 0.07	1.48%
Aluminium (lb)	1.15	– 0.00	– 0.10%
Nickel (lb)	6.71	– 0.02	– 0.23%
Zinc (lb)	1.20	+ 0.00	0.06%
West Texas Crude	73.24	– 0.40	– 0.54%
Brent Crude	76.08	– 0.73	– 0.95%
Iron Ore (t)	94.71	– 0.15	– 0.16%

The Australian share market over the past thirty days

Index	18 Jun 2025	Week To Date	Month To Date (Jun)	Quarter To Date (Apr-Jun)	Year To Date (2025)
S&P ASX 200 (ex-div)	8531.20	-0.19%	1.14%	8.77%	4.56%

BROKER RECOMMENDATION CHANGES PAST THREE TRADING DAYS
ADT	Adriatic Metals	Upgrade to Hold from Trim	Morgans
ASX	ASX	Upgrade to Hold from Trim	Morgans
AX1	Accent Group	Downgrade to Hold from Buy	Morgans
COH	Cochlear	Upgrade to Buy from Neutral	UBS
EVN	Evolution Mining	Downgrade to Sell from Neutral	UBS
HDN	HomeCo Daily Needs REIT	Upgrade to Accumulate from Hold	Ord Minnett
NST	Northern Star Resources	Downgrade to Neutral from Buy	UBS
OML	oOh!media	Upgrade to Buy from Neutral	UBS
RRL	Regis Resources	Downgrade to Sell from Neutral	UBS
STO	Santos	Downgrade to Trim from Hold	Morgans
		Downgrade to Accumulate from Buy	Ord Minnett
VNT	Ventia Services	Upgrade to Hold from Trim	Morgans

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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