The Overnight Report: Meta & Microsoft Surge

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US markets moved into risk off mode overnight as Fed Chair Powell dampened expectations around rate cuts with too many unknowns remaining over tariff impacts on inflation. 

After a robust rally on the Australian market yesterday, ASX200 futures are pointing to selling pressure at the open.

By Danielle Ecuyer

Good Morning,

Post yesterday’s June quarter CPI release, the ASX200 rallied a further 28 points or 0.32% to be trading at 8752, within touching distance of its 8776.4 record high of two weeks ago. The ASX200 finished up 52 points to 8,756.40, led by banks, supermarkets and property stocks while utilities lagged.

The Australian interest rate market is fully priced for a -25bps rate cut from the RBA in August. It is pricing in a cumulative -65bps (or two and half 25bp cuts) of RBA rate cuts between now and year end. 

Further out along the curve, -86bps of cumulative RBA rate cuts are priced between now and March 2026 taking the cash rate back to 3%.

Overnight, Rio Tinto ((RIO)) reported a decline in 1H2025 underlying earnings of -16% and declared an interim dividend of US$1.48, down from US$1.77 in the previous period. The stock traded lower in New York by -4.46% (-1% in London).

Meta and Microsoft reported after the close and are trading up 11% and almost 9%, respectively, in the US aftermarket, with quarterly earnings far exceeding market expectations as demand for AI-related and cloud services continues to grow strongly.

What happened overnight: NAB Markets Today Research

A less dovish interpretation of US Fed Chair Powell’s press conference saw yields higher despite the Fed keeping rates on hold with two dissenters (Waller and Bowman). Fed funds pricing was pared with a cumulative -36.4bps of cuts priced by end 2025 from -46.2bps on Tuesday. A September rate cut is now only 49% priced (from 70% previously). 

Key to the less dovish interpretation was the provision of no guidance for September “we have made no decisions about September”, a quip that the Fed is already taking it easier than it should with rates. Powell stated “You could argue we are a bit looking through goods inflation by not raising rates. We haven’t reacted to new inflation. But, I mean, I wouldn’t insist upon that” and “What we’ve seen now is the very beginnings of whatever the effects turn out to be on goods inflation” and “It doesn’t feel like we are very close to the end of that process”.

Meanwhile the labour remains solid.

The reporting season also suggests the US may be still in the early stages of the inflation impact from tariffs. Adidas noted it was awaiting confirmation on the duties and said it will adjust prices once the final rates are known, but noted any price hikes would only apply in the US. Procter & Gamble also noted they were going to lift prices from next month, and also said consumers are using up their pantry inventory, delaying purchases and shopping at stores less frequently. 

US data were strong with the 2Q 2025 GDP beating expectations at 3.0% annualised versus 2.6% consensus. To be fair the Atlanta Fed GDP Now estimate which updated on Tuesday stood in 2.9% prior to the figures.

The biggest driver was a 5.0 percentage point contribution from net trade, the mirror image of the -4.6ppt drag in 1Q as the surge in imports unwound. Averaging 1Q and 1Q GDP growth gives a growth rate of 1.2% which is broadly in line with the domestic private components of final sales to private domestic purchasers which rose 1.2% after 1.9% in 1Q.

The Core CPE deflator meanwhile was slightly hotter at 2.5% from 2.3%, which suggests upside risks to tonight’s monthly PCE figure.

ADP Employment also beat at 104k vs. 76k expected, though with the usual caveats on interpretation for Friday’s Payrolls. 

The BoC also met overnight and kept rates on hold as largely expected. 

The US Treasury said it anticipates keeping coupon treasury issuance steady with the quarterly refunding announcement having little impact on markets. Bills will be used to restore the cash balance after the debt ceiling was raised at the beginning of July. 

ANZ Bank Commodities extract

Copper prices in the US slumped after Trump announced refined metal would not attract a 50% levy. Instead, the tariff will apply to all semi-finished copper products coming into the US. 

Prices on the New York-based COMEX plunged more than -20% after Trump’s proclamation, setting the biggest intraday drop since at least 1988. The new rate becomes effective on 1 August. 

Most of the market had been expecting the tariff to include raw metal, the key input for wiring and other electrical products. The levy will not stack on top of separate levies on automobile imports; so, if a copper product is subject to auto tariffs, the import tax on vehicles will apply and not the copper duty. 

Trump also invoked the Defense Production Act, which allows him to direct industries to boost production of materials critical to national security. It requires that 25% of high-quality copper scrap and forms of raw copper made in the US be sold domestically. The percentage of raw copper materials mandated for US sales would increase to 30% in 2028 and then 40% in 2029. 

This is intended to boost US refining capacity by ensuring low-cost inputs while domestic refiners grow their operations, according to the White House. The move to exclude refined copper is expected to roil copper markets. In anticipation of the levy, consumers had been importing huge amounts of the metal into the US. The massive volumes currently sitting in COMEX warehouses are now at risk of being re-exported to international markets. 

Iron ore edged lower after a policy readout from a Chinese leadership meeting underwhelmed investors. China vowed to implement forceful macroeconomic policies to shore up the biggest metal consuming economy at its latest Politburo meeting. This included a more proactive fiscal agenda and moderately loose monetary policies.

However, the readout didn’t provide any details of large-scale stimulus measures, causing prices to reverse earlier gains in Asia. This also undid gains achieved earlier in the week after US-China trade talks broached the topic of a 90-day extension of the trade truce. 

Crude oil rose to its highest level since June, after Trump threatened to penalise Indian buyers of Russia crude. He warned that India could face a 25% tariff “plus a penalty” while criticising the country for being one of the largest buyers of Russian energy. 

India’s Nayara Energy has already trimmed processing rates at a refinery because of the measures, stocking fears of exacerbated tightness in refined product markets that could bleed into oil prices. Prices were also supported by data that showed resilience in the US economy. Limiting the gains was EIA’s weekly inventory report, which showed crude oil stockpiles rose by 7.7mbbl last week, the biggest increase since January. 

Stockpiles at the key storage hub of Cushing also ticked up. At the same time, diesel inventories increased, shaking trade confidence in a sector that has been underpinning oil market resilience. 

Global gas markets were dragged higher by the gains in oil. In addition, reports of a drop in power at the Freeport LNG terminal also induced fears of further supply disruptions. 

The strong US economic data weighed on gold prices. The USD and bond yields rose after the print, sending the precious metal lower by as much as -1.1%

Corporate news in Australia

-Scott Farquhar noted no one is immune from AI disruption and wants Australia to lead on data centres, reform copyright and build ‘tech embassies’.

-Betr Entertainment ((BBT)) has lifted its bid for PointsBet ((PBH)) due to Takeovers Panel restrictions.

-Spark NZ ((SPK)) nears the decision on the auction of a stake in its data centre platform which could be worth more than NZ$600m.

-Evolution Mining ((EVN)) is being urged to reconsider its no-acquisition strategy and buy Greatland Resources ((GGP)) after shares declined on an underwhelming market update.

-Bowen Coking Coal ((BCB)) has entered administration over $43.7m in unpaid debts.

-Star Entertainment ((SGR)) has larger losses and delays in exiting its Queen’s Wharf stake with the deadline likely to be missed.

On the calendar today:

-AU 2Q Retail sales

-AU June Building Approvals

-AU June Private Sector Credit

-JP BoJ decision

-JP June Industrial Prod’n

-JP June retail sales

-CH July PMI

-EZ June employment

-US June PCE

-US June Personal Income & Spending

-ALS LIMITED ((ALQ)) AGM

-ATLAS ARTERIA ((ALX)) Qtrly update

-BEACH ENERGY LIMITED ((BPT)) earnings report

-CENTURIA INDUSTRIAL REIT ((CIP)) earnings report

-GARDA PROPERTY GROUP ((GDF)) earnings report

-IGO LIMITED ((IGO)) Qtrly update

-ILUKA RESOURCES LIMITED ((ILU)) Qtr Report

-LIONTOWN RESOURCES LIMITED ((LTR )) Qtr Report

-ORIGIN ENERGY LIMITED ((ORG)) Qtly report

-PILBARA MINERALS LIMITED ((PLS)) Qtrly update

-PINNACLE INVESTMENT MANAGEMENT GROUP LIMITED ((PNI)) earnings report

-UNIBAIL-RODAMCO-WESTFIELD SE ((URW)) earnings 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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