The Overnight Report: New ASX Record Beckons

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Investors swept away concerns over replacing Fed Chair Powell and inflation to take US indices to new record highs, the 10th new high for the Nasdaq in 2025.

After a strong performance for the ASX200 yesterday, futures are signaling another positive start before week end.

World Overnight
SPI Overnight	8650.00	+ 32.00	0.37%
S&P ASX 200	8639.00	+ 77.20	0.90%
S&P500	6297.36	+ 33.66	0.54%
Nasdaq Comp	20885.65	+ 155.16	0.75%
DJIA	44484.49	+ 229.71	0.52%
S&P500 VIX	16.52	– 0.64	– 3.73%
US 10-year yield	4.46	+ 0.01	0.18%
USD Index	98.36	+ 0.35	0.36%
FTSE100	8972.64	+ 46.09	0.52%
DAX30	24370.93	+ 361.55	1.51%

Good Morning,

Investors only need a whiff of good news and a strong earnings report from chip maker TSMC to boost both the S&P500 and Nasdaq indices to new record highs. 

The Australian market matched its own record high on Thursday as rising unemployment boosted rate cut hopes. The ASX200 lifted 77pts or 0.9% to close at 8,639, equalling its all-time high achieved on June 11, but not beating it.

All 11 sectors advanced. Industrials topped while banks well supported the index gains.

What happened overnight: Extract NAB Markets Today research

Markets have fully recovered, and then some, from the mid-week damage suffered on reports Trump was contemplating firing Fed chair Powell, with mostly upside surprises in US data supporting the USD. 

US data prints all came in mostly on the high side of expectations, though details take off some of the gloss. Headline Retail Sales rose 0.6% against a 0.1% consensus, boosted by autos, though the ex-autos rise of 0.5% was also above expectations at 0.3%.

Remember these are nominal not real numbers and given the evidence in CPI of the start of pass-through from tariffs to goods prices, real (volume) sales last month were likely much more subdued. Control group sales most relevant to the consumption component of GDP were 0.5% against 0.3% expected, though with the downward revision of -0.2%, the level of sales was as expected.

Weekly jobless claims were lower than expected at 221k, though our friends at Pantheon Economics note this likely reflected reduced claims in the auto sector due to changes in the timing, and extent, of re-tooling activity (the drop in claims was concentrated in states with significant auto production sectors). More significant, continuing claims remained very high at 1,956k from a downward revised 1,954km, a little below expected but still consistent with much smaller gains in non-farm payrolls that we have witnessed in recent months

Finally, the Philly Fed survey –a highly volatile series– recorded an eye-popping jump to 15.9 from -4 in June and against a consensus expectation for -0.1%, with new orders, shipments and employment all moving back into positive territory.

Together, with the earlier reported rise in the Empire (NY state) survey, regional surveys to date are suggesting a rise in the ISM Manufacturing index released in early August. The Prices Paid index meanwhile showed evidence of tariff effects, up to 58.4 from 41.4 and expected prices rising to their highest since January 22.

The other release we had keen interest in overnight was June import prices. While these rose by just 0.1% and below the 0.3% consensus, this is a pre-tariff number, meaning there is zero evidence, across the import spectrum, of exporters absorbing at least part of the prevailing tariffs. So, while we have recently highlighted reports of a sharp fall in Japanese car export prices into the United States, there is no evidence of this happening at the aggregate economy level.

President Trump’s Truth Social response to the data flow was; “too late”… Great numbers just out. LOWER THE RATE!!! DJT”. In another world, the response might have been “great number just out, economy in no need to lower rates with inflation still above target’.

But back to reality, Kevin Warsh, one of the front runners to succeed Powell as Fed chair, has been on CNBC burnishing his credentials –in Trump’s eyes at least– saying there’s a credibility crisis at the Fed’, that the Fed’s hesitancy to cut rates is a loss in credibility and that the President is right to be pushing the Fed publicly.

He said there is a need for a “Treasury-Fed Accord’ like in 1951 (forgive me at this hour of the morning, I’m going to have to look that one up). Warsh did qualify these remarks saying he strongly believe(s) in Fed independence.

This time yesterday, New York Fed President John Williams was the latest to nail his colours firmly to the ‘no rate change for now’ mast, saying “Maintaining this modestly restrictive stance of monetary policy is entirely appropriate to achieve our maximum employment and price stability goals.”

And in the last couple of hours, we have heard from Fed Governor Ann Kuegler (whose expiring term early next year creates the vacancy for, in all likelihood, the next Fed chair). She says she favours holding interest rates steady for ‘some time’ amid tariff related pressure on prices, adding “there are many reasons to think that large tariff effects are still coming”.

And the Atlanta Fed’s Raphael Bostic has been out giving various interviews where the gist is the same, telling Fox News “We are seeing things underlying in the economy that suggest that inflation pressures are up and that’s really a source of concern”, adding “Right now, I would wait”. He says it could be 2026 before we see the full effect of tariffs.

Outside of the US, the UK unemployment rate rose to 4.7% for the three months through May, a four-year high, consistent with a cooling labour market. There were also signs of moderating wage inflation, with the key private sector figure excluding bonuses up 4.9% YoY, the lowest rate since early 2022. The data provided support to the widely held view that the BoE would cut its policy rate by -25bps at its next meeting in August (currently 90% priced).

As for RBA pricing, this moved to 100% for an August cut after yesterday’s unexpected rise in the unemployment rate to 4.3% from 4.1%, from about 90% pre-release. The sample rotation effects we had warned about upside risk to an otherwise steady unemployment rate were very much in evidence in the figures (the new sample having an above average unemployment rate versus the well-below average outgoing sample).

Yet this does not detract from the view that the labour market is showing some signs of cooling and that on a trend basis, the unemployment rate is edging up.

In stocks, Netflix has reported its Q2 earnings which exceeded expectations on all metrics, including full year revenue guidance which is now US$44.8bn to US$45.2bn up from US$43.5-US$44.5bn previously.

Price increases have boosted domestic revenue, while it cites the weaker dollar as a significant factor behind increased overseas revenue (expect to hear more of this as the earnings season rolls in for the big multinationals). The S&P finished in NY 0.5% higher (new high) after the intra day dip suffered Wednesday on the Powell possible firings headlines, and the Nasdaq up 0.74%. 

In FX the USD is stronger across the board with the DXY index up 0.25, recovering after fears about an imminent loss of Fed credibility/independence were Powell to be fired.

Currency losses are led by AUD down -0.6% and JPY off -0.5%, the unemployment data responsible for AUD underperformance against most currencies, JPY weakening in further in front of Sunday’s Upper House elections and a potential defeat for the LDP-Komeito coalition. 

Corporate news in Australia

-CC Capital is nearing a binding bid for Insignia Financial ((IFL)).

-PointsBet Holdings ((PBH)) has rejected Betr Entertainment’s ((BBT)) share offer.

-NSW is funding 549 new EV chargers with start-up EVX Australia to supply just over half.

-Medi reports suggest National Australia Bank ((NAB)) board members are meeting to discuss new CEO Andrew Irvine regarding investor concerns at public events  recently.

-Crown is in discussions to acquire a 50% stake in Star Entertainment’s ((SGR)) Queens Wharf project from Chow Tai Fook Enterprises and Far East Consortium.

On the calendar today:

-EZ ECB Meeting

-EZ May C/A Bal

-BHP GROUP LIMITED ((BHP)) Operational Update

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

Spot Metals,Minerals & Energy Futures
Gold (oz)	3345.30	– 9.72	– 0.29%
Silver (oz)	38.43	+ 0.32	0.83%
Copper (lb)	5.50	– 0.01	– 0.16%
Aluminium (lb)	1.17	+ 0.00	0.40%
Nickel (lb)	6.72	0.00	0.00%
Zinc (lb)	1.24	+ 0.02	1.30%
West Texas Crude	67.62	+ 1.02	1.53%
Brent Crude	69.62	+ 0.94	1.37%
Iron Ore (t)	97.18	+ 0.12	0.12%

The Australian share market over the past thirty days

Index	17 Jul 2025	Week To Date	Month To Date (Jul)	Quarter To Date (Jul-Sep)	Year To Date (2025)
S&P ASX 200 (ex-div)	8639.00	0.69%	1.13%	1.13%	5.88%

BROKER RECOMMENDATION CHANGES PAST THREE TRADING DAYS
ASK	Abacus Storage King	Downgrade to Hold, Medium Risk from Buy	Shaw and Partners
BRG	Breville Group	Upgrade to Buy from Neutral	UBS
EVN	Evolution Mining	Downgrade to Trim from Hold	Morgans
IKE	ikeGPS Group	Upgrade to Buy from Speculative Buy	Bell Potter
JLG	Johns Lyng	Downgrade to Equal-weight from Overweight	Morgan Stanley
MCE	Matrix Composites & Engineering	Downgrade to Speculative Hold from Speculative Buy	Bell Potter
PPM	Pepper Money	Downgrade to Neutral from Outperform	Macquarie
QAN	Qantas Airways	Upgrade to Buy from Neutral	Citi
TLS	Telstra Group	Upgrade to Hold from Sell	Morgans
TNE	TechnologyOne	Downgrade to Sell from Hold	Bell Potter

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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