The Monday Report – 20 October 2025

This story features AUSTRALIAN STRATEGIC MATERIALS LIMITED, and other companies.
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US markets re-discovered their footing on Friday, ending the week on a positive note.

The ASX200 fell -0.8% or 73pts on Friday and futures suggest a slightly flat to negative start to the week.

World Overnight
SPI Overnight	9003.00	– 7.00	– 0.08%
S&P ASX 200	8995.30	– 73.10	– 0.81%
S&P500	6664.01	+ 34.94	0.53%
Nasdaq Comp	22679.98	+ 117.44	0.52%
DJIA	46190.61	+ 238.37	0.52%
S&P500 VIX	20.78	– 4.53	– 17.90%
US 10-year yield	4.01	+ 0.03	0.78%
USD Index	98.19	+ 0.07	0.07%
FTSE100	9354.57	– 81.52	– 0.86%
DAX30	23830.99	– 441.20	– 1.82%

Good Morning,

On Friday, the ASX200 lost 0.81% (-73.1 pts) to 8,995.3; the All Ords fell -0.88% to 9,293.2.

Weakness followed renewed US regional-bank worries and a slump in oil prices.

Energy (-2.8%), Info Tech (-1.9%), and Financials (-1.2%) led declines; Staples (+0.3%) eked out gains.

Over the week, the ASX200 rose 37pts or 0.41% to 8995 with weaker than anticipated September jobs data boosting market expectations of a rate cut at the RBA’s November 4 meeting.

What happened overnight, Chris Weston, Pepperstone extract

Market sentiment was briefly shaken by concerns on the U.S. funding and credit markets, with renewed focus on US regional banks. After a spell of heightened cross-asset volatility with the VIX index pushing up to 29%, those fears have since been repriced and sentiment has recovered. Buyers of risk have regained their composure, and the broader tone in markets has since improved.

While the futures re-open should be uneventful, we’ll look to see if the buyers of risk play their hand and state their dominance, or whether we see broad disagreement in the flows, resulting in increased choppy price action. 

Traders remain highly attuned to risk and aware of the potential for elevated volatility around U.S. earnings reports. However, as we enter the new week, there’s a prevailing belief that U.S.–China trade headlines will remain skewed toward a positive outcome.

Following last week’s dovish speech from Jay Powell, and with the Federal Reserve now in its blackout period, expectations are high that the Fed will cut rates at both the October and December FOMC meetings.

The week ahead is rich in scheduled event risk, but as always, positioning, flow, and sentiment will dictate the market price action. Cross-asset volatility remains under close watch where a sustained upside break of 6,766 in S&P500 futures or 25,179 in NAS100 futures would bring new all-time highs into play.

Gold saw increased volatility last week, with long positions now looking to hold the line above US$4,199 to contain further downside. Globally, with strong demand for physical gold amid chaotic scenes to transact in vendors, from both buyers and sellers, the precious metals market looks set for another potentially volatile week.

In FX, the U.S. Dollar Index (DXY) pulled back from 99.50, finding support at the 50-day moving average (98.00). USD bears will be looking for a decisive close below that 98.00 level. With key inflation data due from the U.S., U.K., Japan, Canada, and New Zealand, moves across USD pairs could screen prominently on traders’ radars this week.

–US-China trade relations: Developments here remain the major known unknown. Catalysed by Trump’s remark that high tariffs on China are “not sustainable,” markets appear priced for a positive or at least less-bad outcome.

This week’s meeting between Scott Bessent and Chinese Vice Premier He Lifeng could set the tone for constructive dialogue between Trump and Premier Xi Jinping in South Korea on 31 October.

The market’s base case now seems to be that China will offer concessions on its rare-earth export controls, paving the way for the U.S. to extend the current 30% “tariff truce” by another 90 days beyond its 10 November deadline.

However, one does question whether markets misprice the risk that China may not back down, maintaining its rare-earth export restrictions beyond 1 November, which would see Trump’s 100% additional tariffs on Chinese imports take effect and prompting China to retaliate with 100% tariffs of its own. 

–US Government Shutdown: As the shutdown enters its 20th day, the impact on markets so far has been negligible. The absence of key economic data has, if anything, reduced cross-asset volatility. A vote on the Affordable Care Act (ACA) could take place this week; if an agreement is reached, it could reopen the government and have major implications for Trump’s push to deliver US$1 trillion in healthcare-related cuts under the “One Big Beautiful Bill Act.”

–US Q3 Earnings Season: Roughly 15% of the S&P 500’s market capitalization reports earnings this week. Key names include Netflix (Tuesday after-market), Tesla (Wednesday after-market), IBM (Wednesday after-market), Intel (Thursday after-market), and Newmont Corp (Thursday after-market). Guidance will be crucial, and those stocks that have rallied strongly may face harsh treatment if they fail to meet lofty expectations. 

-European and UK Corporate Earnings (STOXX 600 and FTSE 100): Earnings momentum ramps up this week across Europe and the UK, with Barclays, Lloyds, NatWest, UniCredit, and SAP (22 October) among the key names to watch. Notably, SAP carries a 13.8% weighting in the German DAX (GER40). With SAP options pricing implying a ±6.3% move on results day, if that materializes, it would translate, all else equal, into an approximate ±0.9% swing in the DAX.

–US CPI (Fri): Despite the ongoing government shutdown, the CPI report will still be released this week and stands as the marquee scheduled data event. Consensus expects core CPI to rise 0.3% MoM, keeping the annual rate steady at 3.1%.

With US interest-rate swaps fully pricing a -25bp cut at both the October and December FOMC meetings, and the Fed now in a blackout period, only a materially hotter CPI print would challenge market pricing given the already-elevated expectations for rate cuts.

-Global Inflation Data: Beyond the U.S., we’ll also see CPI figures from the UK, New Zealand, Canada, and Japan this week. Each has potential to influence local interest-rate expectations and, by extension, their respective FX markets.

-US Preliminary S&P Global PMIs : In the absence of Tier-1 official data, and with U.S. GDP tracking near 3%, the S&P PMIs may prove more market-moving than usual. Eurozone PMIs could shift the EUR and modestly influence sentiment toward European equities.

-China’s Fourth Plenum (20–23 Oct): Top Chinese policymakers convene to discuss the Five-Year Plan. The focus will be on boosting domestic demand and advancing structural reforms, though expectations for major market-moving headlines remain low.

-China Monthly Economic Activity Data: In the session ahead, China releases new and used home prices, Q3 GDP (consensus 4.7% YoY), retail sales, and industrial production.

The PBoC will also announce its 1-year and 5-year Loan Prime Rates, with consensus expecting both to remain unchanged at 3.0% and 3.5%, respectively.

Did Santa come early to Wall Street, Yardeni Research extract

We’ve been monitoring the relationship between the S&P500’s ytd performance versus its comparable average of the past 10 years. This year, the index has been much more volatile than the average and has outperformed the average by about five percentage points since early August.

Does this mean that the traditional Santa Claus rally started early this year and is over already?

Over the past 10 years, the Santa rally has added about four percentage points to the average annual percentage gain of the S&P500 during November and December.

Much will depend on investors’ assessments of the credit markets. They were spooked last week (just ahead of Halloween) by news that Zions Bancorp incurred a -US$50 million charge-off in Q3 due to legal actions against two borrowers. Stock prices dropped sharply on Thursday, led by the KBW Regional Banking ETF.

Investors have also been spooked by fears of trouble in the private credit market since First Brands filed for Chapter 11 bankruptcy protection on September 29, 2025, disclosing liabilities of between US$10 billion and US$50 billion and assets in the range of US$1 billion to US$10 billion. ETFs tracking the private credit market tumbled during September and are lower than the “Annihilation Days” which followed the April 2 “Liberation Day.”

On the other hand, ETFs that track the high-yield and investment-grade corporate bond markets have held up well so far this year and so has an ETF tracking senior loans.

We don’t expect credit problems that will add up to serious systemic risk of an economy-wide credit crunch, which has often caused recessions in the past. We are encouraged to see that the Fed’s data on commercial banks’ loan-loss reserves remains relatively stable so far this year.

We also continue to be encouraged by the strength of S&P500 companies’ collective earnings per share. They beat expectations significantly during Q1 and Q2. We expect they did do so again during Q3. Industry analysts are currently expecting a 6.7% y/y increase. We expect a 10.0% gain.

S&P500 forward earnings per share rose to yet another record high last week, of US$297.27; it has rapidly been converging toward analysts’ 2026 consensus expectation, currently at US$304.55, which it will match at year-end. The current forward P/E —i.e., the multiple using forward earnings as the “E”— is 22.4 times.

The recovery in the forward earnings of the S&P400 MidCaps and S&P600 SmallCaps remains disappointing compared to that of the S&P500.

Corporate news in Australia

-Litchfield Minerals (LMS)) is seeking to raise $6m from a private placement.

-Australian Strategic Minerals ((ASM)) is looking to raised $50m via an institutional placement at $1.20 per share.

-White Oak Global Advisers is moving to gain control of Sanjeev Gupta’s manganese smelter in Tasmania with an $80m plan to restart operations.

On the calendar today:

-NZ Sept Qtr CPI

-CH 3Q GDP

-CH Sept Industrial Prod’n

-CH Sept Retail Sales

-EZ Aug Current Acc

-AERIS RESOURCES LIMITED ((AIS)) Sept Quarterly

-CLOVER CORPORATION LIMITED ((CLV)) ex-div 1.0c (100%)

-MFF CAPITAL INVESTMENTS LIMITED ((MFF)) AGM

-PANTORO GOLD LIMITED ((PNR)) Sept Quarterly

-TABCORP HOLDINGS LIMITED ((TAH)) AGM

-WAM CAPITAL LIMITED ((WAM)) ex-div 7.75c (60%)

-XRF SCIENTIFIC LIMITED ((XRF)) AGM

-YANCOAL AUSTRALIA LIMITED ((YAL)) Sept Quarterly/Investor Call

-ZIP CO LIMITED ((ZIP)) 1Q26 Report

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

Spot Metals,Minerals & Energy Futures
Gold (oz)	4213.30	– 116.46	– 2.69%
Silver (oz)	50.10	– 3.18	– 5.97%
Copper (lb)	4.97	– 0.02	– 0.31%
Aluminium (lb)	1.26	– 0.01	– 0.88%
Nickel (lb)	6.77	– 0.05	– 0.76%
Zinc (lb)	1.33	– 0.01	– 1.09%
West Texas Crude	57.15	– 0.36	– 0.63%
Brent Crude	61.29	+ 0.21	0.34%
Iron Ore (t)	105.35	– 0.21	– 0.20%

The Australian share market over the past thirty days…

Index	17 Oct 2025	Week To Date	Month To Date (Oct)	Quarter To Date (Oct-Dec)	Year To Date (2025)
S&P ASX 200 (ex-div)	8995.30	0.41%	1.66%	1.66%	10.25%

BROKER RECOMMENDATION CHANGES PAST THREE TRADING DAYS
ABB	Aussie Broadband	Upgrade to Buy from Accumulate	Ord Minnett
ABY	Adore Beauty	Upgrade to Buy from Hold	Bell Potter
AMP	AMP	Downgrade to Neutral from Buy	Citi
ARX	Aroa Biosurgery	Downgrade to Accumulate from Speculative Buy	Morgans
BBN	Baby Bunting	Downgrade to Hold from Buy	Ord Minnett
BOQ	Bank of Queensland	Upgrade to Hold from Trim	Morgans
CPU	Computershare	Upgrade to Neutral from Sell	UBS
GNC	GrainCorp	Downgrade to Hold from Buy	Bell Potter
IMD	Imdex	Upgrade to Buy from Neutral	Citi
		Downgrade to Hold from Buy	Bell Potter
JIN	Jumbo Interactive	Upgrade to Buy from Accumulate	Morgans
NST	Northern Star Resources	Upgrade to Buy from Neutral	UBS
PDN	Paladin Energy	Downgrade to Sell from Hold	Ord Minnett
RIO	Rio Tinto	Downgrade to Trim from Hold	Morgans
RRL	Regis Resources	Upgrade to Buy from Sell	UBS
SRG	SRG Global	Downgrade to Accumulate from Buy	Morgans
STO	Santos	Upgrade to Accumulate from Trim	Morgans
VAU	Vault Minerals	Upgrade to Buy from Neutral	UBS

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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