The Overnight Report: Waiting For CPI

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The S&P500 closed at a record high for the second straight day ahead of Wednesday's FOMC meeting and US Big Tech earnings.

The ASX200 fell yesterday, with large caps CSL and WiseTech Global under heavy selling pressure.

SPI futures are suggesting a mildly positive start ahead of the September quarter CPI print at 11.30am AEST.

Good Morning,

The Australian market fell -43pts or -0.5% to 9013 with CSL dragging down healthcare and WiseTech Global ((WTC)) doing its bit too, alongside lithium and gold miners.

Banks and consumer stocks rose.

What happened overnight, NAB Markets Today Research 

Gains in Big Tech US companies propelled US equities to new all-time highs with Apple briefly surpassing the US$4trn mark and Microsoft finalising a landmark stake in OpenAI. 

US equities extended their gains for a fourth consecutive day with big tech leading the gains. The S&P500 rose 0.43%, Nasdaq up 0.89%, and DJIA up 0.65%. Sector performance was mixed: Information Technology rose 1.72%, Consumer Discretionary lifted 0.36% and Materials rose 0.20%, while Real Estate fell -2.09%, Utilities slipped -1.62%, and Energy -0.91% lagged.

In company news, Microsoft has secured a 27% ownership stake in OpenAI Group, valued at about US$135 billion, as part of a major restructuring. Under the deal, Microsoft will have access to OpenAI’s technology, including any future artificial general intelligence (AGI) models—until 2032, and will continue to receive 20% of OpenAI’s revenue until an expert panel verifies AGI has been achieved. 

In other news, Nvidia’s expansion into South Korea further fuelled AI enthusiasm, the company is expected to unveil new contracts to supply AI chips to major South Korean companies, including Samsung and Hyundai.

In Europe, the Eurostoxx600 slipped -0.22%, DAX -0.12%, while the FTSE100 outperformed at up 0.44%. Asian markets were mixed, with the Nikkei -0.58%, and CSI300 -0.51.

Moving to the rates markets, ahead of the FOMC meeting early tomorrow morning, UST yields were little changed.

Currency markets saw the AUD up 0.47% and JPY up 0.45%, outperform. The AUD was buoyed by improved risk sentiment and a stronger CNY fix, as the PBOC set the yuan at its firmest level since mid-October 2024. After a brief move down to 0.6544 after the Sydney close, the AUD regained its upward momentum trading to an overnight high of 0.6591, before easing to 0.6585 where it currently trades.

US-China negotiations remain in focus, with reports that President Trump and President Xi are set to discuss a framework that would see the US roll back some tariffs in exchange for Beijing’s commitment to crack down precursor chemicals used to make fentanyl.

China’s rare earth export controls are also a key bargaining chip, with potential for the US to ease high-tech restrictions and remove some Chinese firms from the entity list.

US data releases were mixed. Consumer confidence fell for a third consecutive month in October, with the Conference Board’s index dropping to 94.6, the lowest since April. The expectations component slipped further, reflecting persistent concerns over the labour market and income prospects. 

The Richmond Fed’s manufacturing survey painted a mixed picture: while the composite index improved, new orders and employment remained subdued. Aggregating the regional Fed surveys suggests the ISM Manufacturing PMI, due next week, will likely hover near the breakeven 50 mark (the last print was 52.2 in September).

In other news, the fragile Israel-Hamas truce has been thrown into doubt after Prime Minister Netanyahu ordered renewed strikes in response to attacks on Israeli soldiers, raising the risk of further escalation.

In US politics, House Speaker Mike Johnson dismissed the prospect of a third Trump term, citing constitutional limits and reinforcing the two-term precedent.

We expect Australia’s Q3 trimmed mean inflation of 0.9% qoq (2.8% yoy), which is materially higher than the RBA’s August SoMP forecast of 0.64% qoq. Consensus for 0.8% but reasonably finely balanced between 0.8% and 0.9%

Headline inflation could be around 1.1% qoq (3.0% yoy), driven by the anticipated unwind of electricity subsidies.

Based on information in the Monthly CPI indicator and our forecasts, the main driver of trimmed mean inflation is the expected broad reacceleration in market services and rents inflation.

ANZ Bank Australian Morning Focus, Commodities Update

Copper steadied near its record high, as investors waited to see whether the US and China would finalise a much-anticipated trade deal. Negotiators have reached tentative agreements on issues such as tariffs, shipping fees and export controls. However, details remain vague.

Copper has been supported by renewed supply side issues in recent months. There were fresh setbacks yesterday, with Anglo American warning copper production at its Collahuasi mine in Chile will likely be lower than expected next year. Its 2026 output plans have been reduced from 470kt to between 380-410kt. This adds to an already tight market.

The outlook for demand also brightened in Europe. Car sales in the region rose for a third consecutive month in September. New vehicle registrations increased 11% y/y to 1.24m units. Sales of electric vehicles jumped by a third amid robust demand for more affordable models.

Optimism surrounding easing US-China trade tensions and the signing of a new ASEAN-China free trade agreement boosted sentiment in the steel and iron ore markets.

The prospect of China weathering the trade war with US better than was expected appears to have boosted the confidence of steel mills to start restocking in recent months. October imports are forecast to reach 113mt, based on ship tracking data from Kpler. If achieved, that would be second only to the all-time high of 116.33mt in September.

Progress in US-China trade talks continues to sap demand for haven assets such as gold, which extended a pullback as tension eased. Gold-backed exchange traded funds saw -448,7006oz cut from their holdings on Monday, the biggest daily decline in six months.

However, the mood at this week’s London Bullion Market Association annual gathering has been bullish. A survey of over 10 attendees projected that gold will be trading near US$5,000/oz in a year. The recent declines may provide an opportunity for central banks to ramp up purchases.

Crude oil prices fell as signs of oversupply quelled a rally triggered by US sanctions on Russian oil companies. The amount of oil being shipped across the world’s oceans hit a record high.

About 1.4mbbl are now aboard oil tankers, according to data from Vortexa. That is the highest level in figures going back to 2016. This comes as the OPEC-Plus alliance looks to meet this weekend to discuss its production plans.

Another modest increase in output of 137kb/d is the base case, according to two delegates in a Bloomberg report. There could also be a political consideration in the decision. Saudi Arabian Crown Prince, Mohammed bin Salman, is scheduled to visit the White House on 18 November.

European gas futures steadied amid risks to domestic production. Ukraine’s Naftogaz said its gas facilities were hit again overnight. This is the seventh strike on gas infrastructure in October. This could force Ukraine to increase its gas imports and tighten the European market.

The region’s supply balance remains fragile this winter and is heavily reliant on weather and volatile LNG flows. North Asian LNG prices were steady, although buyers remain on sidelines waiting for further falls before buying.

Corporate news in Australia

-WiseTech Global ((WTC)) disclosed ASIC and federal police executed a search warrant at its Sydney office over share trading by Richard White and three others. 

-Domino’s Pizza Enterprises ((DMP)) denies Bain Capital takeover talks.

-Epiminder launches $125m IPO with backing from Cochlear ((COH)).

-AGL Energy ((AGL)) vehicle-to-grid trial allowing electric vehicle owners to sell surplus charge in their car battery to the grid.

-National Australia Bank ((NAB)) is removing broker loans for private bankers.

-Stonepeak debt note has raised $100m within launch aiming for $300m.

-Glencore turns down $35m grant for WA nickel mine renewable hub.

-La Trobe redemptions near -$900m after ASIC stop orders.

-AirTrunk announced a $4.5bn Saudi data centre deal.

On the calendar today:

-AU 3Q CPI

-AU Sep Inflation Indicator

-US Fed FOMC Decision

-US Sept Pending Home Sales

-AUSTCO HEALTHCARE LIMITED ((AHC)) AGM

-ALKANE RESOURCES LIMITED ((ALK)) Sept Full Quarterly

-ANSELL LIMITED ((ANN)) AGM

-BOSS ENERGY LIMITED ((BOE)) Sept Quarterly/Investor Call

-BANK OF QUEENSLAND LIMITED ((BOQ)) ex-div 20c (100%)

-BHAGWAN MARINE LIMITED ((BWN)) AGM

-DATA#3 LIMITED. ((DTL)) AGM

-DEXUS ((DXS)) AGM

-EBOS GROUP LIMITED ((EBO)) AGM

-ELSIGHT LIMITED ((ELS)) 3Q25 Update

-ELEVRA LITHIUM LIMITED ((ELV)) Sept Quarterly/Investor Call

-FALCON METALS LIMITED ((FAL)) AGM

-MEDIBANK PRIVATE LIMITED ((MPL)) Investor Day

-NICK SCALI LIMITED ((NCK)) AGM

-SITEMINDER LIMITED ((SDR)) AGM

-STRIKE ENERGY LIMITED ((STX)) 1Q26 Update/Investor Call

-WATERCO LIMITED ((WAT)) ex-div 8c (100%)

-WOOLWORTHS GROUP LIMITED ((WOW)) 1Q26 Update

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

The Australian share market over the past thirty days…

For more detail go to FNArena’s Australian Broker Call Report, which is updated each morning, Mon-Fri.

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