The Overnight Report: Reflex Rebound

This story features COMMONWEALTH BANK OF AUSTRALIA, and other companies. For more info SHARE ANALYSIS: CBA

All is forgiven, with markets responding to oversold conditions and poor sentiment, boosted by some positive tones from the White House. The Australian market futures are pointing to a strong opening, up over 1.3%.

US markets rallied strongly overnight on short-covering and murmurings of trade deals. US futures are very strong after the close, with President Trump backpedalling on the narrative to remove Fed Chair Powell.

US institutional money finds a home Downunder

The Australian market, ASX200, traded down only -2ppts on Tuesday, finishing flat on the day, in contrast to Monday’s steep sell-off in US equities.

Energy and technology sectors were the losers, while bank stocks found strong buying support. CommBank ((CBA)) ended higher by 4.2%, a new record share price at $168.

The Coppo Report highlighted market participants have been seeing big US institutional buying, with investors taking money out of the US and acting as major buyers last Thursday when the ASX200 ended up despite the S&P500 down -2.24%. The buying continued yesterday.

A weakening US dollar continues to drive investors out of USD-based assets into the rest of the world, with Coppo noting US institutions tend to buy the Australian market when our currency is appreciating, and the market-leading stocks are the recipients due to the liquidity.

What happened overnight

So volatile are US markets that even a whiff of positive news sends stocks rallying.

Last night was Treasury Secretary Scott Bessent’s turn to suggest a China trade deal was in the making, albeit reported by Bloomberg that he expects the China tariff situation to de-escalate.

Towards the end of the trading day, the remarks were retracted by media reports from a White House source who said the frameworks the administration is looking to announce are, “Basically, (it’s) an agreement that we would like to talk about doing a deal.”

After the market close, President Trump also spoke to the media about having no intention of removing Chairman Powell before the end of his tenure in May 2026.

“I have no intention of firing him,” Trump told reporters. US futures are pointing higher. Go figure!

Interestingly, a change in tone that registered for the market supported what was already good buying. Most of the gains were logged before the Bessent report.

The initial rally was aided by short-covering activity and contrarian-minded buying interest driven by reports of an overly pervasive bearish position.

The level of bearish sentiment among individual investors has exceeded 50% for eight straight weeks, the longest such streak on record dating back to 1987, according to the American Association of Individual Investors.

The rebound bid also gathered momentum with the US Dollar Index up 0.7% to 98.97, and the 10-yr note yield sliding two basis points to 4.39% despite a weak 2-yr note auction.

The moves took a little edge off the “sell America” trade.

The mega-cap stocks were key drivers of the broader market today. Notably, they weren’t the only drivers. Advancing stocks led decliners by a nearly 9-to-1 margin at the NYSE and better than a 4-to-1 margin at the Nasdaq.

The market cap-weighted S&P500 and equal-weighted S&P500 both finished up 2.5%.

All 11 S&P500 sectors logged good gains. Eight sectors were up at least 2.1%.

The biggest movers were the financials, up 3.3%, and consumer discretionary, up 3.2%. The industrials sector, rising 1.8%, was a relative laggard, held back somewhat by losses in Northrop Grumman, down -12.7%, and RTX Corp, falling -9.6%, following their earnings reports.

Investors traded out of safe-haven Gold, with the price trading below the recent record high of US$3500.

There was no US economic data of note today.

US indices year-to-date performance

-Dow Jones Industrial Average: -7.6%

-S&P500: -10.1%

-S&P Midcap400: -11.9%

-Nasdaq Composite: -15.6%

-Russell 2000: -15.2%

Beneath the Bounce, a Buyer Strike Brews: Extract from Stephen Innnes

Sure, the S&P ripped. Tape looked healthy on the surface. But under the hood, there’s trouble, and it showed up in the bond market like a warning shot.

The US 2-year auction was an absolute mess. Indirect bidders and foreign demand collapsed to 56.2% from 76.8%. That’s the lowest in two years, and it’s not just noise. It’s a clean signal: overseas accounts are stepping back.

Whether you want to frame this as fallout from Trump’s tariff tantrums or chalk it up to the Fed’s muddled communication strategy, the message is the same: US policy credibility is on the ropes.

Let’s be real. Treasury debt used to be the apex haven asset, unquestioned, unrivalled. Now it’s trading like the market doesn’t know who’s driving the ship: the White House or the Fed.

One day it’s Waller jawboning rate cuts, the next it’s Powell backpedaling like he never saw the headline. Now we’ve got the rest of the Fed choir lining up behind Powell, all in the name of protecting “independence.”

Great optics, sure, but it does nothing for confidence when the tone shifts by the hour.

This auction flop wasn’t about yield levels. It was about trust. The view on the street? We’ve entered a buyer strike. Investors – foreign and domestic – don’t want to play policy guessing games with trillions of dollars at stake. And can you blame them?

The fix isn’t complicated.

The White House needs to shut down the scattergun press ops and let Bessent or someone with a filter and a game plan do the talking.

But the real issue? The Fed has to grow up. We’ve had eight years of data-dependent dithering. We can’t afford another four. Markets don’t need certainty, but they need direction. And forward guidance is not optional anymore; it’s the only anchor left in a sea of fiscal volatility.

Bottom line: this isn’t about bond pricing anomalies. It’s about broken policy signaling. Without a credible roadmap from the Fed and a coherent trade posture from the White House, we’re flying blind, and the smart money just stepped off the plane.

Corporate news in Australia

– Selfwealth ((SWF)) shareholders approve Syfe Group’s Svava acquisition, with delisting planned for May after Federal Court approval.

– Fonterra’s sale of its consumer business faces a setback as Bega Cheese ((BGA)), a potential buyer, is excluded due to a legal dispute with the seller.

– Northern Star’s ((NST)) $5bn De Grey ((DEG)) takeover gains court approval, with shares to be suspended post-court orders

– Santos ((STO)) received final regulatory approval for its $5.8bn Barossa gas project in the Timor Sea, clearing the way for production to begin in the third quarter of 2025, despite sustained opposition from environmental groups over its high carbon emissions.

On the calendar today:

– US March Building permits

– US March new home sales

– Global PMIs

– ATLAS ARTERIA ((ALX)) Qtr Report

– AURELIA METALS LIMITED ((AMI)) Qtr Report

– GENERATION DEVELOPMENT GROUP LIMITED ((GDG)) EGM

– INSIGNIA FINANCIAL LIMITED ((IFL)) Qtr Report

– PALADIN ENERGY LIMITED ((PDN)) Qtr Report

– STEAMSHIPS TRADING CO. LIMITED ((SST)) ex-div 10.40c

– WOODSIDE ENERGY GROUP LIMITED ((WDS)) Qtr Report

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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