The Overnight Report: When In Doubt

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Too many uncertainties and share market indices at or near all-time record highs are keeping markets in limbo this week, or so it appears.

Commodities are grabbing their chance to have a little run.

SPI futures are suggesting little impetus to make a lot of noise in Australia, except for individual stories as the results season keeps ramping up.

The local corporate results calendar today includes Fortescue ((FMG)), Goodman Group ((GMG)), James Hardie ((JHX)), National Australia Bank ((NAB)), Rio Tinto ((RIO)), Santos ((STO)) and many more.

Goodman Group ((GMG)) has announced a $4bn equity capital raise to accelerate growth in its data centre operations

https://fnarena.com/index.php/reporting_season/

By Chris Weston, Head of Research, Pepperstone

Good morning.

A certain quiet descends on the capital markets, almost as though we were back in early 2024, and in a pre-Trump era, and while headlines on US/Russia/Ukraine peace talks have been a central focus, it seems the noise in markets has been temporarily dialed down a notch.

The AUD was the clear focus for Australia-based clients yesterday, and while the swaps market was spot on with its high expectations for the -25bp cut, I would also argue that the volatility markets absolutely nailed the call for the RBA meeting to be a low-volatility affair – it was.

In the wake of RBA Gov Bullock’s presser, in which she essentially detailed the -25bp cut as an insurance move to unwind the hike seen back in November 2023, the intraday tape of the AUDUSD showed a real battle from market players to push the spot rate higher or lower subsequently, the price action has been a bit of a chop fest.

Interestingly, despite a defiant view from Gov Bullock that the cash rate will be anchored close to the current rate of 4.1%, AU swaps still imply a strong chance of a further -25bp cut in May and one more by December.

Traders will now look to the Aussie Wage Price Index (11:30 AEDT) as an intraday risk. Wages are an important consideration for the RBA, but I suspect the outcome shouldn’t lead to sizeable intraday volatility in the AUD through trade today.

Eyes on the RBNZ Meeting: a -50bp cut fully priced

AUDUSD aside, traders have engaged with AUDNZD longs, given its long-held role as the cleanest expression of central bank policy and interest rate differentials.

NZDUSD has also seen higher volumes than would usually be the case, with the selling picking up on the break of Friday’s lows of 0.5716.

The RBNZ meeting will be a risk event to manage through trade today, with the bank almost certainly set to cut rates by 50bp again, the move in the NZD today will likely come from the RBNZ’s guidance and appetite for further easing and how it reconciles to the additional -63bp of rate cuts implied by December.

New Closing Highs for the S&P500

A big-picture overview of the session suggests traders were better-adjusting positioning than really seeing any material change in their tactical cross-asset directional views.

The USD the weak link last week was the notable performer in G10 FX, following UST yields higher, with the Treasury curve bear steepening, with 10s +8bp to 4.55%.

The S&P500 saw incredibly choppy intraday conditions, tracking a tight range of 6123 to 6110 for the most part, before a quick rip lower took the cash index to 6100.

Buyers have since stepped back in with the S&P500 cash index closing up 0.2% on the day, and at a record closing high.

S&P500 energy names worked best on the day, partly helped by some switching out of Meta and Netflix and backed by crude rising 1.4% in response to news that OPEC-plus will push back yet again on its output curbs in April.

Gold has seen an out-and-out trend day, with volumes in the futures building on the rally through US trade, despite the strength in the USD and both US nominal and real Treasury yields higher on the day, gold targets yet another all-time new high. 

Turning to Asia, the ASX200 looks to open on a flat note, and we prepare for earnings from Santos, James Hardie and Magellan, with ASX energy names set to start the day recouping the losses seen yesterday.

We also look to see the full reaction from interest rate sensitive plays, given we’ve had time to fully digest Bullock’s presser and the reaction in the swaps/rates market.

Looking ahead, aside from earnings, the Aussie WPI, and the RBNZ meeting, we will also see the UK CPI and the FOMC minutes. 

On the calendar today:

-New Zealand 4Q PPI

-New Zealand RBNZ cash rate

-Australia 4Q Wage price index

-Japan Jan trade balance

-UK Jan CPI

-UK Jan PPI

-US Jan FOMC minutes

-US Jan Housing starts

-CommBank ((CBA)) ex-div 225c (100%)

-Corporate Travel Management ((CTD)) 1H25 earnings report

-Cleanaway Waste Management ((CWY)) earnings report

-Domain Holdings Australia ((DHG)) ex-div 2c (100%)

-Data#3 ((DTL)) earnings report

(and more)

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

Corporate news in Australia:

-Westgold Resources ((WGX)) sells Lakewood Mill after $2.5bn Karora Resources merger

-Bupa is reportedly interested in operating about half of Healthscope’s hospitals as part of a takeover bid led by HMC Capital ((HMC))

-Goodman Group ((GMG)) has announced a $4bn equity capital raise to accelerate growth in its data centre operations

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.)

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