The Overnight Report: Tech Animal Spirits Soar

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The Dow Jones was dragged down by United Health overnight, but technology stocks continued to rally hard, boosting both the S&P500 and Nasdaq Composite. ASX200 futures are suggesting the domestic market will open slightly higher.

World Overnight
SPI Overnight	8309.00	+ 17.00	0.21%
S&P ASX 200	8269.00	+ 35.50	0.43%
S&P500	5886.55	+ 42.36	0.72%
Nasdaq Comp	19010.08	+ 301.74	1.61%
DJIA	42140.43	– 269.67	– 0.64%
S&P500 VIX	18.22	– 0.17	– 0.92%
US 10-year yield	4.50	+ 0.04	0.94%
USD Index	100.77	– 0.84	– 0.83%
FTSE100	8602.92	– 2.06	– 0.02%
DAX30	23638.56	+ 72.02	0.31%

Good Morning,

All is forgiven, the travails of the Trump Tariff Tantrum are now firmly in the rear vision mirror as the AI technology theme is back with vigour after a six month hiatus. Commondities are also finding a bid post the 90-day tariff reprieve between China and the US. Inflation and growth concerns are moderating and risk on is back.

What happened overnight? 

US equities were higher. The S&P500 rose 0.7%, led by chip stocks and extending yesterday’s 3.3% gain. 

The Nasdaq rose 1.6%. Palantir hit an all-time high rising 8.14% and is now the preferred retail trading stock, taking the title from Nvidia and Tesla which rose 5.63% and $4.93%, both still well below 52-week highs.

President Trump’s visit to Saudi Arabia with a suite of CEOs and billionaires, including Musk, Huang and Palantir’s Alex Karp, with potential trade deals in the making, no doubt boosted the animal spirits in tech stocks.

Gains were not broad-based, with 5 of 11 sectors experiencing weakness, led by healthcare (UnitedHealth fell nearly -18% after its chief executive quit). 

On the other side of the ledger, chipmakers were supported by news that Nvidia and AMD will supply semiconductors to Saudi Arabian firm Humain for one massive data-center project. 

The S&P500 is now higher than at the start of the year and only -4% lower from its February high.

Commodity markets go risk-on: Extract ANZ Bank Australian Morning Focus

The US-China trade truce triggered further gains across the commodity complex

Base metals including copper gained as the relief rally from the US-China trade truce extended to a second day. 

US Secretary Scott Bessent said that the trade deal from Trump’s first tariff war with China provides a very good framework for upcoming discussions. 

The macro backdrop overshadowed signs that supply constraints are easing. 

Chilean national miner Codelco said output in March rose nearly 15% year-on-year to 123.2kt. This confirmed its position as the world’s largest copper producer. 

Meanwhile, BHP’s Escondida copper mine post an impressive performance, with output surging almost 19% to 120.6kt. 

These gains were partly offset by a -29% fall in production from the Collahuasi mine to 35.2kt. 

President Trump’s desire to see more aluminium capacity built in the US looks increasingly challenging. Alcoa warned the industry will not build new smelters in the country unless the government provides more support in the form of lower electricity and construction costs. 

Alcoa’s chief commercial officer, Renato Bacchi, said the expense of building a smelter in the West is three to five times greater than in Asia. 

Iron ore extended gains as concerns of weaker demand eased following the reduction in tariffs by US and China. 

Around 10% of China’s steel output is exported to international markets, which were at risk amid a trade war between the world’s two biggest economies. 

Tightening supplies were also back in focus. Rio Tinto told customers its flagship product will contain less iron in the future. Declining grades from its Pilbara operations are the cause. 

Gold managed to rebound following yesterday’s sharp selloff after the latest US inflation data offered support for bets on interest rate cuts this year. 

US inflation rose less than forecast in April amid tame prices for clothing and new cars. The CPI report suggest importers and retailers are absorbing some of the extra costs, and imported products sold now arrived before the tariffs were in effect. 

The data led to a USD selloff, which triggered a pickup in investor demand for the precious metal. 

Crude oil gained amid concerns of further supply disruptions. Trump warned the US will exert maximum pressure on Iranian energy exports if a nuclear deal with the OPEC member is not reached. 

This was backed up by the US State Department, which said it’s sanctioning an international network facilitating the shipment of Iranian crude to China. The comments come as the President visits the Middle East for the first time since returning to the White House. 

However, these losses may be offset by rising output from the rest of the OPEC-Plus alliance. Expectations are rising Saudi Arabia may push for another acceleration of production hikes the group has already approved. 

A Quiet Day For A Change: Extract Ed Yardeni

The Dow Jones Industrial Average wasn’t up or down by 1,000 points today. The S&P 500’s VIX was back down below 20 on Monday and again today. The yield spread between corporate junk bonds and the 10-year Treasury bond has narrowed recently. The latter seems to be settling down around 4.50%, in the middle of our 2025 range of 4.25%-4.75%. President Donald Trump is in the Middle East and focusing his remarks on relationships with Saudi Arabia today.

Following the surprising de-escalation of the China-US trade war over the weekend, Wall Street’s economists are scrambling to lower their odds of a recession this year.

The economists and strategists at Goldman Sachs reduced their US recession probability for the next 12 months to 35% from 45% and raised their S&P500 year-end target to 6100.

JP Morgan’s chief economist lowered his recession odds to “now below 50%.” The odds of a recession according to Polymarket.com dropped to 41% on Monday from 51% on Friday. We lowered our recession odds on Monday to 25% from 35% and raised our year-end S&P500 target to 6500 from 6000.

Giving stock prices a lift today was April’s CPI report. It was in line with our expectations but slightly lower than the consensus. The headline and core CPI inflation rates were 2.3% and 2.8% year-on-year. Even more impressive is that, excluding shelter costs, they were up just 1.4% and 1.8%.

Trump’s tariffs (10% base and 25% on autos, aluminium, and steel) are likely to boost imported goods prices over the next few months. A stronger dollar might offset these tariffs somewhat. Energy prices might also remain subdued.

Today’s release of NFIB’s survey of small business owners for April showed the Small Business Optimism Index declined by -1.6 points last month to 95.8, the second consecutive month below the 51-year average of 98. The Uncertainty Index decreased four points from the March level to 92 but remained far above the historical average of 68.

Seasonally adjusted, 34% of business owners reported job openings they could not fill in April, down six points from March. That was still a relatively high reading. The percentage of small business owners planning to increase hiring over the next three months ticked up to 13%, which is a relatively normal reading for this series.

Inflationary pressures remained relatively high during April, according to the latest NFIB survey. All in all, April’s NFIB survey was not as stagflationary as we expected it might be in response to Trump’s Tariff Turmoil (TTT).

Then again, on April 9, Trump postponed his April 2 Liberation Day reciprocal tariffs. The stock market has been soaring since then, suggesting that investors, like small business owners, are less fearful about the negative economic impact of TTT.

Corporate news in Australia

-Abacus Group ((ABG)) has rejected the $1.8bn takeover offer from Ki Corporation and Public Storage.

-Ampol ((AMP)) is leaving the retail electricity market to concentrate on EV charging and improved earnings.

-ASX ((ASX)) is cutting one hundred jobs due to rising costs and regulatory imposts.

-EToro is listing on Nasdaq100 above the indicated IPO price of US$46-US$50 range due to robust demand.

-Macquarie Group ((MQG)) is urging lenders to the struggling UK’s Southern Water to write off GBP370m in debt to allow for an equity injection of GBP900m.

On the calendar today:

-NZ March net immigration

-AU 1Q lending

-AU 1Q Wage prices index

-JP April PPI

-ARISTOCRAT LEISURE LIMITED ((ALL)) earnings report

-COMMONWEALTH BANK OF AUSTRALIA ((CBA)) 3Q Report

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

Spot Metals,Minerals & Energy Futures
Gold (oz)	3256.34	+ 14.65	0.45%
Silver (oz)	33.08	+ 0.35	1.05%
Copper (lb)	4.72	+ 0.09	1.92%
Aluminium (lb)	1.13	+ 0.01	0.81%
Nickel (lb)	7.02	– 0.00	– 0.07%
Zinc (lb)	1.23	+ 0.02	1.43%
West Texas Crude	63.68	+ 1.61	2.59%
Brent Crude	66.63	+ 1.58	2.43%
Iron Ore (t)	99.51	– 0.24	– 0.24%

The Australian share market over the past thirty days

Index	13 May 2025	Week To Date	Month To Date (May)	Quarter To Date (Apr-Jun)	Year To Date (2025)
S&P ASX 200 (ex-div)	8269.00	0.46%	1.76%	5.43%	1.35%

BROKER RECOMMENDATION CHANGES PAST THREE TRADING DAYS
AVH	Avita Medical	Downgrade to Speculative Buy from Add	Morgans
CRN	Coronado Global Resources	Downgrade to Hold from Speculative Buy	Morgans
CYL	Catalyst Metals	Upgrade to Buy from Hold	Bell Potter
GMG	Goodman Group	Upgrade to Buy from Neutral	UBS
MQG	Macquarie Group	Upgrade to Neutral from Sell	Citi
		Upgrade to Add from Hold	Morgans
NST	Northern Star Resources	Upgrade to Buy from Neutral	Citi
SIQ	Smartgroup Corp	Downgrade to Hold from Buy	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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