Daily Market Reports | 8:57 AM
This story features TPG TELECOM LIMITED, and other companies. For more info SHARE ANALYSIS: TPG
The company is included in ASX200, ASX300 and ALL-ORDS
US markets ticked higher (again) with the S&P500 and Nasdaq setting new record highs, albeit some profit taking in selected sectors emerged.
ASX200 futures are indicating another positive start for the final session of the week.
| World Overnight | |||
| SPI Overnight | 8601.00 | + 28.00 | 0.33% |
| S&P ASX 200 | 8589.20 | + 50.60 | 0.59% |
| S&P500 | 6280.46 | + 17.20 | 0.27% |
| Nasdaq Comp | 20630.66 | + 19.33 | 0.09% |
| DJIA | 44650.64 | + 192.34 | 0.43% |
| S&P500 VIX | 15.78 | – 0.16 | – 1.00% |
| US 10-year yield | 4.35 | + 0.00 | 0.09% |
| USD Index | 97.29 | + 0.09 | 0.09% |
| FTSE100 | 8975.66 | + 108.64 | 1.23% |
| DAX30 | 24456.81 | – 92.75 | – 0.38% |
Good Morning,
NAB Markets Today Research extract
Markets have been trading without a whole lot of rhyme or reason in the last 24 hours, with no strong reactions to the biggest red headlines, such as confirmation of a 50% tariff on US copper imports and a threatened 50% tariff on Brazil for reasons wholly unrelated to US-Brazil trade (Brazil runs a trade deficit with the United States).
Perhaps the still capricious nature of tariff announcements from the White House is leaving markets, already showing signs of having entered the northern hemisphere summer doldrums and facing plenty of sporting events to distract them (Wimbledon, a thrilling India-England Test match series, and Euro 2025) alongside the still-high level of uncertainty about where we will land on tariffs come August 1, all contributing to current market inertia.
There is one sight for sore (importer) eyes on show this morning, namely AUD/USD being at the top of the G10 FX leaderboard (0.8%) and challenging the 0.6590 July 1 post-November 2024 cycle high but not for any obvious news related reason as best we can tell.
This is in the context of only small changes in other currencies against the USD (though NZD is 0.6%). US equities closed with gains of 0.3% for the S&P500 (new high) but just 0.1% for the NASDAQ after a mixed night for European bourses. US bond yields are slightly lower at the very long end after the market successfully navigated a 30-year bond action but 1-2 higher across the 2-10year spectrum.
One thing remains constant overnight President Trump’s love of the US stock marked and disdain for Fed chair Powell. His latest Truth Social outburst reads: “Tech stocks, Industrial Stocks, & NASDAQ, HIT ALL-TIME HIGHS! CRYPTO, ‘Through the Roof’. NVIDIA IS UP 47% SINCE TRUMP TARIFFS. USA is taking in Hundreds of Billions of Dollars in Tariffs. COUNTRY IS NOW ‘BACK’. A GREAT CREDIT! FED SHOULD RAPIDLY LOWER RATE TO REFLECT THIS STRENGTH. USA SHOULD BE AT THE ‘TOP OF THE LIST’. NO INFLATION!!!”
On the last (inflation) word here, one Bloomberg story which caught our attention yesterday afternoon was news that Japan’s automakers cut the price of products exported to the US at a record pace last month, seen as a sign that companies are sacrificing profits to remain competitive in the face of President Donald Trump’s 25% auto import tariff.
The export price index for vehicles shipped to North America plunged -19.4% from a year earlier according to the Bank of Japan’s corporate goods price report. Down under, we do hear reports from at least one client about absorbing the 10% Australia tariff via their own margins, but who notes that were the tariff to rise above 10% it could be devastating for their business given lack of pricing power in US markets.
San Francisco Fed President Mary Daly has weighed in to the topic overnight, saying some firms are negotiating to split up tariff costs so that they don’t have to pass along as much of the expense to their end customer.
“By the time they get to consumers, they’re finding that the pass-through they do have to make is lower and some of it can be taken out of margins,” Daly said Thursday during a virtual discussion hosted by MNI.
“It’s possible it just doesn’t materialize to a large increase in price inflation for consumers because the businesses find ways to adjust.” The San Francisco Fed chief said the US economy is in a good place, and that growth and consumer spending are moderating, but not yet weakening. She said inflation is on a path toward the Fed’s 2% target. “I see two cuts as a likely outcome but again there’s uncertainty bands around everyone’s projections.”
Federal Reserve Bank of St. Louis President Alberto Musalem has also been speaking and said he sees upside risks to inflation, but it’s too early to know whether tariffs will have a persistent impact on prices.
“It’s going to take time for the tariffs to settle,” Musalem said Thursday “There’s a scenario where we could be in Q4 this year, or Q1 or Q2 of next year where tariffs are still working themselves into the economy,” he added, referring to calendar quarters. Note this is the view expressed by a majority of the FOMC in the Minutes of the June meeting published yesterday.
Finally on the Fed speaker circuit, Governor Waller, who evidently has aspirations to be the next Fed Chair, repeated his mantra that the Fed is too tight and can consider cutting in July. Yesterday’s FOMC minutes revealed him and fellow Trump appointee Governor Bowman as outliers on the committee, being the “couple” of participants who called for July rate cuts.
Waller added “my view on rates is not political”. Waller also opined he sees US$2.7tn as a rough benchmark for the ample level of reserved, implying smaller shrinkage than others believe (so another tick in the box for his current ‘dovish’ characterisation)
The economic calendar has been confined to weekly US initial jobless claims which came in lower than expected, dropping -5k to a seven-week low of 227k last week, possibly affected by shifting seasonal patterns related to the annual shutdown to auto manufacturers. Continuing claims, lagged by a week, rose 10k to a fresh 3-year high of 1965k, in line with consensus, suggesting a rising cohort of longer-term unemployed.
The US bond market had no problem absorbing $22bn of new 30-year supply, with a robust auction a sign of diminished concern about the trajectory of US fiscal policy, and the ultra- long bond outperformed, with the 30-year rate down -1bp for the day, at 4.87%.
In stocks the S&P500 closed at another record high of 6,280, up 0.27% on the day, but for once the IT sector was a drag on the overall index (-0.12%) as were communications services (-0.47%) gains being led by consumer discretionaries (up 1%) energy and utilities, the latter two despite falls of around -2% for Brent and WTO crude benchmarks.
Most other commodities are stronger though, led by a 2% gains for nickel and 1.9% for iron ore futures. The copper market is still coming to terms with the 50% import tariff confirmed by President Trump this time yesterday, with the LME contract ending up 0.7%.
Taking things to extremes: Steve Sosnick, Interactive Brokers extract
It is always difficult to spot when markets are taking situations to extremes, and even more difficult to determine whether those extremes are immediately problematic. One must wonder whether traders have become so certain about buying dips that they no longer sell on bad news, fearing they’ll miss a buying opportunity.
Unfortunately, the longer a market environment is taken to or beyond its normal limits, the more painful the eventual resolution. We could be setting up situations where highly sanguine investors might be forced to once again reckon with revised earnings guidance and the eventual implementation of tariffs.
Underlying this situation is the ability for momentum-driven markets to ignore fundamentals. This is a topic that we have discussed at length before, and the key points were as follows:
Fundamentals don’t really matter when momentum rules. Price action, not the underlying justification for those prices, is all that’s important.
Fundamentals do eventually matter, but the price action can continue without regard to them for long periods of time. In theory, markets are constantly interpreting all available information to find a stable fair values. In reality, they are subject to a wide range of motivations and opinions that might have little to do with that noble search.
When momentum and sentiment are strongly positive, traders can overlook almost anything.
The original article was written as stocks were recovering from the April swoon. That drop was a reminder that momentum trades can go viciously awry, but that was not the actual catalyst for the comments. We were noting that investors who were intent upon bargain hunting were charitable rather than punitive toward companies who chose not to offer guidance, citing tariff uncertainty:
We’ve seen very charitable responses to corporate earnings in recent weeks. In any normal quarter, a company that withdraws guidance gets punished, and punished hard. Instead, because of the tariff-induced uncertainty, companies are frequently doing so without consequence. They are saying they don’t have enough information to allow investors to make intelligent valuation decisions about their stocks, yet in many cases, investors don’t care.
With earnings season beginning in earnest next week, we need to consider whether investors will be quite so charitable this time around. The first piece of evidence came this morning when Delta Air Lines rallied over 10% after reinstating guidance they removed last quarter. The new outlook is for an adjusted profit of US$5.25-US$6.25 per share, generally well above the prior consensus of US$5.35. That is indeed a solid rationale for a rally.
But it is useful to remember the company predicted earnings above US$7.35 when they last offered guidance in January. As a result, even after today’s rally, Delta is not challenging its earlier highs. Will investors be quite so enthused if companies that are trading at or near all-time highs fail to match earlier guidance?
Another extreme is the way that traders are essentially ignoring tariff news. Quite frankly, I get it.
As long as the market can plausibly assert there is room for negotiation or extension, then it won’t freak out.
Thanks to the relentless dip buying, the “half-life” of dips has been drastically shrinking.
Something occurred to me when I was asked about the “half-life” comment during a media appearance yesterday. It occurred to me that if one is conditioned to see every dip as a buying opportunity, then at some point you don’t even want to react [to bad news] and sell because why sell if it’s only going to go up more?
That sounds perverse, but when we consider the relative sizes of recent selloffs compared to rallies, we have to wonder the degree to which this mentality is embedding itself in traders’ psyches. Broad market dips seem to be getting continually shallower and shorter, meaning traders are ever more quickly pivoting toward bargain hunting.
At some point, do they even bother waiting for the dip, or risk creating one they will regret by selling on bad news?
We’ve seen lasting plunges that stick in individual stocks on catastrophic news, like Centene, but the news flow that might affect the markets’ leaders has been insufficient to cause a lasting hiccup, let alone meaningful profit-taking.
The environment is increasingly risk-on all the time. This situation can persist for a while, and even get more extreme.
It’s impossible to know when the proverbial rubber band gets overstretched, but the longer it goes, the more the risks get buried.
Corporate news in Australia
-TPG Telecom ((TPG)) is considering the return of $2.5bn in capital to investors once the regulator, Foreign Investment Review Board approves the asset sale to Vocus at $5.3bn.
-Macquarie is reported as stating Treasurer Jim Chalmers is unlikely to approve the ADNOC takeover of Santos ((STO)) due to political aspirations to succeed Prime Albanese, and energy supply concerns in the future.
-Lendlease Group ((LLC)) is at risk of losing major property funds as super funds are reported as considering Mirvac Group ((MGR)) as a new manager.
-Vulcan Energy Resources ((VUL)) raised $54m to help finance its German lithium project.
On the calendar today:
-NZ June Manu PMI
-JP June machine tool orders
-UK May industry prod’n
-UK May Monthly GDP
-UK May Trade Bal
-TURNERS AUTOMOTIVE GROUP LIMITED ((TRA)) ex-div 8.29c (85%)
FNArena’s four-weekly calendar: https://fnarena.com/index.php/financial-news/calendar/
| Spot Metals,Minerals & Energy Futures | |||
| Gold (oz) | 3333.22 | + 10.22 | 0.31% |
| Silver (oz) | 37.63 | + 1.06 | 2.88% |
| Copper (lb) | 5.62 | + 0.08 | 1.47% |
| Aluminium (lb) | 1.18 | + 0.00 | 0.16% |
| Nickel (lb) | 6.85 | + 0.12 | 1.86% |
| Zinc (lb) | 1.26 | + 0.02 | 1.32% |
| West Texas Crude | 66.88 | – 1.41 | – 2.06% |
| Brent Crude | 68.85 | – 1.28 | – 1.83% |
| Iron Ore (t) | 96.76 | + 1.44 | 1.51% |
The Australian share market over the past thirty days
| Index | 10 Jul 2025 | Week To Date | Month To Date (Jul) | Quarter To Date (Jul-Sep) | Year To Date (2025) |
|---|---|---|---|---|---|
| S&P ASX 200 (ex-div) | 8589.20 | -0.16% | 0.55% | 0.55% | 5.27% |
| BROKER RECOMMENDATION CHANGES PAST THREE TRADING DAYS | |||
| A2M | a2 Milk Co | Downgrade to Neutral from Buy | Citi |
| AMP | AMP | Upgrade to Buy from Hold | Ord Minnett |
| BOE | Boss Energy | Downgrade to Hold from Buy | Ord Minnett |
| CBO | Cobram Estate Olives | Downgrade to Accumulate from Buy | Ord Minnett |
| CIP | Centuria Industrial REIT | Upgrade to Hold from Trim | Morgans |
| COF | Centuria Office REIT | Upgrade to Hold from Trim | Morgans |
| DMP | Domino’s Pizza Enterprises | Upgrade to Buy from Neutral | UBS |
| DXC | Dexus Convenience Retail REIT | Downgrade to Hold from Accumulate | Morgans |
| DXI | Dexus Industria REIT | Upgrade to Accumulate from Trim | Morgans |
| GMG | Goodman Group | Downgrade to Hold from Accumulate | Morgans |
| JIN | Jumbo Interactive | Downgrade to Neutral from Buy | Citi |
| LIC | Lifestyle Communities | Downgrade to Neutral from Buy | Citi |
| Downgrade to Hold from Accumulate | Ord Minnett | ||
| PTM | Platinum Asset Management | Upgrade to Buy from Hold | Bell Potter |
| QAL | Qualitas | Downgrade to Accumulate from Buy | Morgans |
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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CHARTS
For more info SHARE ANALYSIS: LLC - LENDLEASE GROUP
For more info SHARE ANALYSIS: MGR - MIRVAC GROUP
For more info SHARE ANALYSIS: STO - SANTOS LIMITED
For more info SHARE ANALYSIS: TPG - TPG TELECOM LIMITED
For more info SHARE ANALYSIS: TRA - TURNERS AUTOMOTIVE GROUP LIMITED
For more info SHARE ANALYSIS: VUL - VULCAN ENERGY RESOURCES LIMITED