The Overnight Report: ASX Set For Positive Start

This story features CODAN LIMITED, and other companies. For more info SHARE ANALYSIS: CDA

Good morning.

It appears the Australian share market is now moving  out of sync with US equities with today’s opening expected to be positive after a rather hesitant session on Wall Street.

Yesterday, the local index booked relatively over-sized losses as sellers piled on in the late afternoon of the day’s session.

A quick rise in US treasury yields has caught the attention of US equity investors and is opening up a debate about what the possible message and implications might be?

The debate has taken the wind out of the sails for US equities, at least for now.

The yield on the US 10yr Treasury bond fell 1.6bp to 4.20%. Oil was firm with WTI futures up 2.5% at USD72.1/bbl. Gold rose 0.4% to USD2,746.2/oz.

The S&P500 and Dow Jones closed unchanged, while the Nasdaq managed a small gain. In Europe, the Euro Stoxx 50 ended flat and the FTSE100 lost -0.1%.

Economists at ANZ Bank report some Fed policymakers are leaning towards a modest pace of easing while others still deem it appropriate to continue a more aggressive cutting cycle.

San Francisco Fed President Daly (voter) said she does not see reasons to stop cutting rates. Her views are based on the tight interest rate environment which led to the economy progressing towards 2% inflation, and the need to arrest further labour market weakness.

Separately, Kansas City Fed President Schmid (non-voter) said that his preference would be to avoid outsized moves given the uncertainty over the neutral level of rates and desire to avoid financial market volatility.

Dallas Fed President Logan (non-voter) said that a strategy of gradual lowering of rates would be appropriate from a risk management perspective.

The collective guidance from the Fed speakers seems to indicate that an encore of the September -50bp cut is off the table for the upcoming meeting in November and a -25bp easing is on the cards.

Also catching the news was legendary hedge fund trader Paul Tudor stating he was long gold and bitcoin as he expects the path forward will be inflationary regardless of who lands in the White House though he has started positioning for a Trump victory.

Tudor’s reasoning might also explain why US treasuries are weakening (yields higher).

The IMF published their latest World Economic Outlook, lowering its global growth forecast for next year and highlighting risks from geopolitics and trade protectionism.

The IMF expects global output will expand 3.2%, down -0.1% from its July estimate.

SPI futures are indicating the local index is set to open circa 0.28% higher after yesterday’s retreat.

On the calendar today:

-Eurozone Oct Unemployment

-US Sept Beigh Book

-Codan ((CDA)) AGM

-Champion Iron ((CIA)) 1H25 earnings report

-Ebos Group ((EBO)) AGM

-Fletcher Building ((FBU)) AGM

-MyState ((MYS )) AGM

-National Storage REIT ((NSR)) AGM

-Service Stream ((SSM)) AGM

-Tabcorp ((TAH)) AGM

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

Corporate news in Australia:

-Coles Group ((COL)) and Woolworths ((WOW)) appear in the Federal Court in Melbourne this morning for a hearing of the ACCC’s lawsuit over accusations of misleading discount pricing strategies

-Hotel Property Investments ((HPI)) directors urge shareholders to reject a takeover offer, stating it undervalues the company and lacks sufficient premium

-The Pharmacy Guild urges rejection of the $8.8bn Sigma Healthcare ((SIG)) and Chemist Warehouse merger, arguing it would dominate the sector and that concessions are merely tokenistic

-Harmony Gold Mining is interested in acquiring the $2bn Ravenswood Gold Mine

-Nine Entertainment ((NEC)) may seek to bring Domain Group ((DHG)) in-house

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.

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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