The AI trade lifted both Nasdaq and the S&P500 for a positive start to the week.
ASX200 futures are flat to slightly negative ahead of the RBA decision and Statement of Monetary Policy at 2.30pm AEST.
| World Overnight |
| SPI Overnight | 8894.00 | - 9.00 | - 0.10% |
| S&P ASX 200 | 8894.80 | + 12.90 | 0.15% |
| S&P500 | 6851.97 | + 11.77 | 0.17% |
| Nasdaq Comp | 23834.72 | + 109.77 | 0.46% |
| DJIA | 47336.68 | - 226.19 | - 0.48% |
| S&P500 VIX | 17.34 | - 0.10 | - 0.57% |
| US 10-year yield | 4.11 | + 0.01 | 0.12% |
| USD Index | 99.72 | + 0.09 | 0.09% |
| FTSE100 | 9701.37 | - 15.88 | - 0.16% |
| DAX30 | 24132.41 | + 174.11 | 0.73% |
Good Morning
After a negative start, the Australian market recovered off its intraday low on Monday to end the day with a small gain.
The ASX200 added 13 points or 0.15% to 8,894. Westpac's ((WBC)) financial update was well-received.
Technology stocks led the gains with financials up 1.3%. Healthcare and materials slipped.
What happened overnight, NAB Markets Today Research
Yesterday, Australia’s latest data releases painted a mixed picture for the consumer and housing sectors.
Household spending rose by a modest 0.2% month-on-month in September, falling short of both NAB’s own forecast (up 0.7%) and consensus expectations (up 0.4%). The increase was driven by goods spending, particularly on food and household equipment, while services spending was flat and discretionary spending was unchanged.
On the housing front, dwelling prices accelerated by 1.1% in October —the strongest monthly gain since June 2023— driven by robust performances in Perth and Brisbane. Meanwhile, dwelling approvals rebounded 12% in September, largely due to a surge in apartment approvals in New South Wales and Victoria, while house approvals retraced earlier losses.
Advertised rents also continued to climb, rising 0.5% in October and 4.6% over the year, with vacancy rates tightening across all capital cities. An interesting backdrop for today’s RBA meeting, see more below.
We expect the RBA to be on hold at 3.6% and expect little guidance (on either timing or direction) of the next move, instead emphasising elevated uncertainty as it seeks to gain more understanding of labour market and inflation dynamics.
Markets are priced for no change. Forecasts will be conditioned on a higher path for the cash rate than in August, with the most material revisions being a much higher near-term underlying inflation profile.
The RBA has also said they will provide more information on their approach to the monthly CPI in the November SoMP. The first release of the new series is 26 November.
In the US, the new week began with a familiar theme: tech stocks powering Wall Street higher, even as broader market sentiment remained cautious. The US ISM disappointed, contracting for eight consecutive months, meanwhile Amazon announced a blockbuster US$38bn deal with OpenAI while Microsoft’s committed to more AI infrastructure.
The October ISM manufacturing index slipped to 48.7 (consensus 49.5), marking an eighth consecutive month of contraction. The details were hardly encouraging, new orders barely budged (49.4), production fell back below 50, and the employment index, while up slightly, remains consistent with ongoing job losses in the sector.
Respondents continued to cite tariffs and global uncertainty as major headwinds, with one chemical products firm noting, “Business continues to remain difficult, as customers are cancelling and reducing orders due to uncertainty in the global economic environment and regarding the ever-changing tariff landscape.”
Price pressures eased, with the prices paid index dropping to a nine-month low, but the overall tone remains one of stagnation and caution, highlighting how US economic activity is a story of two contrasting dynamics. An AI boom led by big tech and a struggling manufacturing sector marred in tariff uncertainty and higher costs.
Fed officials offered a mixed bag of commentary overnight. Chicago’s Goolsbee struck a cautious note, emphasising the need for more data and expressing greater concern about inflation than the labour market.
San Francisco’s Daly echoed the need for flexibility, urging the Fed to “keep an open mind” about further cuts.
In contrast, Governor Miran stood out, arguing policy is “too restrictive” and calling for more aggressive easing, while Governor Cook highlighted risks to the labour market but stopped short of endorsing another cut.
The divergence of opinions reinforces Fed Powell’s assessment that another fed funds rate in December is not a forgone conclusion with the lack of data adding to the need to wait before making a decision (When driving in a fog, best to slow down).
US equities saw another session of tech-led gains, with Amazon surging 5% on its OpenAI partnership and Microsoft inking a US$9.7bn AI infrastructure deal with Australia’s IREN.
The “Magnificent Seven” outperformed, but beneath the surface, about 350 S&P500 constituents retreated, highlighting narrow market leadership. Sector performance was mixed: consumer discretionary (up 1.9%) and IT (up 0.33%) led, while materials (fell - 0.63%) and consumer staples (down -0.32%) lagged.
In Europe, the Stoxx 600 edged up (0.07%), led by travel and autos, while Asia was mixed—Japan’s Nikkei was flat, China’s CSI300 and Hang Seng posted modest gains, but concerns lingered over China’s growth momentum.
US Treasury yields rose across the curve (10y up 3.3bp to 4.11%, after trading in a 4.07% to 4.12 range), with the move echoed in Europe (Bund 10y up 3.4bp to 2.67%).
Heavy high-grade issuance was a theme, as Alphabet tapped both US and European markets for fresh funding to support AI investments, drawing US$90bn in orders for its latest US deal. The German long end underperformed, and UK gilts also saw yields edge higher.
The US dollar continued its ascent (albeit modestly this time), rising for a fourth consecutive day (DXY up 0.07%). The AUD was closer to the top of the leader board, down just -0.08%. .
Moving onto commodities, Gold hovered near US$4,000/oz, rebounding in US hours after a brief dip on news of China’s tax changes for gold retailers. Oil prices were mixed, with WTI up 0.16% and Brent down -0.26%. Coal prices surged over 5%, while base metals were mixed—aluminium and zinc gained, copper slipped.
In other news, yesterday we learned China’s private manufacturing PMI (RatingDog) slipped to 50.6 in October, just above the expansion threshold but below expectations.
New export orders fell at the fastest pace since May, and business optimism hit a six-month low. The data add to concerns about China’s economic momentum as the year winds down (the average of official manufacturing and Ratingdogs is 49.9 vs 50.5 in September).
Super-Duper Earnings, Yardeni Quick Takes, extract
S&P500 earnings per share continue to beat expectations. Q3 earnings per share are on track to rise to a new record high. They are driving the S&P500 stock price index to new record highs. The Magnificent-7 are leading the way higher on both fronts. As a result, the S&P500 market-weight index continues to outperform the equal-weight index.
The Q3 earnings season is beating expectations, even though industry analysts didn't lower their estimates as they did before the Q1 and Q2 earnings seasons, which also beat expectations significantly.
On Friday, Amazon provided the latest amazing earnings report from the Magnificent-7. Amazon shares jumped 9.6% after the online retail giant reported that AWS, its cloud computing unit, saw revenue increase 20% in Q3. CEO Andy Jassy said that AWS is "growing at a pace we haven't seen since 2022" and that AI and core infrastructure are experiencing "strong" demand.
This confirms our view that AI is essentially a high-powered app with myriad uses, which is significantly increasing demand for cloud computing. The profits aren't so much in monthly fees for AI software (i.e., large language models, or LLMs), but in providing cloud capacity in data centers to run the models.
The Digital Revolution, which started in the 1960s, is all about processing more data, more quickly and more cheaply. As a result, more and more data are being processed. There is no limit to the supply of data. So the outlook for the Digital Revolution is to “infinity and beyond”!
That's clearly a very bullish outlook for earnings, assuming the demand for processing data is as open-ended as we suggest. That is a bet that AI will deliver on the promise of boosting the productivity and earnings of companies that are the customers of the cloud providers. The stock market is currently discounting this version of our Roaring 2020s scenario.
As for where earnings stand now, S&P500 companies’ aggregate forward earnings per share rose to yet another record high during the week of October 30 of US$299.61.
It is nearly at the US$300 we have been predicting it would reach by the end of this year; clearly, the year-end level will be higher than that. We expect forward earnings to rise to US$350 per share by the end of 2026.
The Q3 earnings season is beating expectations, even though industry analysts didn't lower their estimates as they did before the Q1 and Q2 earnings seasons, which also beat expectations significantly.
At the start of the current earnings season, industry analysts projected an increase of just over 6%. The blended growth rate is over 10% so far.
We also track the growth rate of earnings on a pro forma basis, i.e., apples-to-apples. It is up 13.8% y/y (so far) for Q3.
Remarkably, S&P500 forward revenues on a pro forma basis is up 7.5% so far for Q3.
Q3's earnings beats have been widespread among the 11 sectors of the S&P500.
While earnings are bullish, sentiment is bearish in the very short term.
Corporate news in Australia
-Microsoft has signed a $14.8bn to purchase AI cloud capacity from Sydney-based Iren (US listed).
-Westpac ((WBC)) has sold RAMS loans to KKR-led group for $21bn.
-Droneshield ((DRO)) has won a Latin American defense contract for $25m.
-Lendlease Group ((LLC)) is in discussions to sell Keyton stake to Scape.
-Australia Post has appointed Bain & Co for a major restructure.
-ResMed ((RMD)) is doubling US output with a new Indianapolis plant by 2027.
-APA Group ((APA)) is aiming to expand its Victorian gas pipeline to boost supply and reduce reliance on LNG.
On the calendar today:
-AU RBA Cash Rate/SMP
-US Sep Durable Goods
-WAM LEADERS LIMITED ((WLE)) ex-div 4.7c (100%)
FNArena's four-weekly calendar: https://fnarena.com/index.php/financial-news/calendar/
| Spot Metals,Minerals & Energy Futures |
| Gold (oz) | 4020.52 | + 7.22 | 0.18% |
| Silver (oz) | 47.99 | - 0.38 | - 0.79% |
| Copper (lb) | 5.06 | - 0.06 | - 1.09% |
| Aluminium (lb) | 1.32 | + 0.01 | 0.71% |
| Nickel (lb) | 6.83 | - 0.00 | - 0.02% |
| Zinc (lb) | 1.41 | + 0.02 | 1.71% |
| West Texas Crude | 61.04 | + 0.06 | 0.10% |
| Brent Crude | 64.86 | + 0.09 | 0.14% |
| Iron Ore (t) | 105.84 | + 0.01 | 0.01% |
The Australian share market over the past thirty days…
ASX200 Daily Movement in %
| Index | 03 Nov 2025 | Week To Date | Month To Date (Nov) | Quarter To Date (Oct-Dec) | Year To Date (2025) |
| S&P ASX 200 (ex-div) | 8894.80 | 0.15% | 0.15% | 0.52% | 9.02% |
| BROKER RECOMMENDATION CHANGES PAST THREE TRADING DAYS |
| ANZ | ANZ Bank | Downgrade to Lighten from Hold | Ord Minnett |
| ASB | Austal | Upgrade to Outperform from Neutral | Macquarie |
| CIA | Champion Iron | Downgrade to Hold from Buy | Bell Potter |
| CMM | Capricorn Metals | Upgrade to Neutral from Underperform | Macquarie |
| COS | Cosol | Downgrade to Hold from Buy | Bell Potter |
| CSC | Capstone Copper | Upgrade to Buy from Accumulate | Morgans |
| DTL | Data#3 | Downgrade to Neutral from Outperform | Macquarie |
| EDV | Endeavour Group | Upgrade to Buy from Hold | Bell Potter |
| IGO | IGO Ltd | Downgrade to Sell from Neutral | UBS |
| MGH | Maas Group | Downgrade to Accumulate from Buy | Morgans |
| NCK | Nick Scali | Downgrade to Sell from Lighten | Ord Minnett |
| SDF | Steadfast Group | Downgrade to Hold from Buy | Ord Minnett |
| WOW | Woolworths Group | Upgrade to Buy 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.)
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