The Overnight Report: Technology Trade Returns

This story features MAYNE PHARMA GROUP LIMITED, and other companies. For more info SHARE ANALYSIS: MYX

The company is included in ASX300 and ALL-ORDS

US and European markets rose overnight, as bond yields eased and Alphabet shares buoyed technology stocks on a favourable Google court ruling.

After a steep sell-off in Australian shares yesterday, ASX200 futures are pointing to the first positive start in five trading sessions.

Good Morning,

Australian shares fell sharply on Wednesday for a fourth straight session, registering the worst day in nearly five months.

The ASX200 lost -162pts or -1.8%. Technology was the worst performer on the day, down by -3.9% while financials, down -2.18%, weighed the most on the index.

The falls came on the back of a better-than-expected Australian Q2 GDP print of 1.8% YoY (versus 1.6% expected), supported by robust consumer spending due to stronger wages and RBA rate cuts. 

In a speech overnight in Perth, RBA Governor Bullock commented on the GDP print and uptick in consumer spending, hinting further rate cuts may be put on hold.

“What it means for future interest rates, I don’t know. All I would say is that, if anything, it’s probably a little stronger than we thought it would be.

“That’s good, but it does mean that it’s possible that if it keeps going, then there may not be any interest rate declines yet to come. But it all depends.”

What happened overnight, NAB Markets Research Extract

US job openings (JOLTS) fell to the lowest level in 10 months in July, at 7,181k well below the consensus’ 7,380k and off a downward revised 7,357k in June. For the first time since covid there are fewer jobs than unemployed people.

The decline was driven by the retail sector, which may relate to businesses controlling costs, in response to the tariffs. The private sector quits rate was unchanged at 2.2%. Also to note, job separations due to layoffs accounted for 33% of overall separations (two thirds therefore being voluntary) and which is very much consistent with the ‘low hiring, low firing’ narrative prevalent through 2025 to date.

Adding to the argument for a soft underbelly to the economy even though headline GDP growth still looks to be tracking comfortably above trend this far in the quarter, the Fed’s Beige Book produced ahead of the September 16-17 FOMC showed 11 of 12 districts reporting little or no change in activity or employment. The real income squeeze from prices running ahead of wages growth cited as behind flat to declining consumer spending, tariffs an obvious factor here.

Fed speak overnight included St. Louis Fed president Alberto Musalem, who in recent utterances had been expressing scepticism about the case for lower rates. He reiterated that interest rates are well positioned for the current environment, though did say that he saw rising risks to the jobs market and declining risks to inflation (from the perspective of the tariff related rise in prices being a one-off).

Yesterday, local Q2 GDP surprised higher at 0.6% QoQ and 1.8% YoY (Consensus and RBA 0.5%, NAB 0.3%). We had expected firming consumer momentum, but household consumption was stronger than we had assumed. Consumption is evidently being supported by the return to real income growth and has more than offset softer public sector contributions to growth since late 2024. NAB continues to expect the RBA to cut in November and February, but easing is not on autopilot.

US stocks have closed with the S&P500 up 0.5% and the NASDAQ up 1.0%, IT sector-led gains very much stock-specific, Alphabet’s shares jumping as much as 8.3% (to a new record) after Tuesday’s US antitrust ruling was not as severe as feared. Google will be required to share online search data with rivals while avoiding harsher penalties, including the forced sale of its Chrome business. The court’s remedies were seen as “much more favourable for Google” than earlier expected (Bloomberg reports).

In bonds, US Treasury yield declines range from -2bps at 2-years to -6.5bps at 30 years (10s -4.4bps) matched by similar sized falls for 10-year European benchmarks. Fed easing of -24bps is now priced for the Sep 17 meeting outcome out from -23bps on Tuesday and -58bps by December from -56bps.

FX moves have been modest, with gains of 0.4% in the past 24 hours for AUD, GBP and SEK at the top of the G10 table, while NOK and CAD are the only two currencies to show (very minor) slippage against an otherwise weaker USD, driven by the 2.5% fall in Brent crude (2.8% for WTI).

Another day another record high for gold (up 0.8%) while iron ore is also up by the same amount.

Commodities update, ANZ Bank extract

Brent crude oil came under renewed pressure as OPEC-Plus considers releasing more barrels in Q4. If it moves ahead, this could worsen the expected surplus, particularly during the lean demand season. The group increased output by 400kb/d, in line with planned 28.5mb/d in August, according to a Bloomberg survey. Saudi Arabia contributed more than 50% of the increase, while Iraq exceeded its production quota by 11kb/d.

Elsewhere, Ukraine continues to target Russian oil refineries, disrupting Russia’s oil product flows. Russian crude processing fell to 5.09mb/d by 27 August, its lowest level since May 2022. At the same time, the US has imposed tighter sanctions on both Russia and Iran, with the Treasury Department unveiling new restrictions on Iranian oil. President Trump signalled there could be second- and third-phase sanctions against Russia after imposing an additional 25% tariff on India for buying Russian oil.

European natural gas prices hovered around EUR32/MWh, as markets await potential US action regarding Russian sanctions. Europe faces stiff competition for LNG from other regions, making supply sensitive to sudden changes. As of 1 September, Europe’s LNG imports averaged 167,000t per day, a 44% increase over the five-year seasonal average, according to Bloomberg ship-tracking data. Its gas storage was about 78% full, nearing the target of 80% by early November. Investors are reducing speculative long positions, viewing the market as well supplied.

Concerns linger about Russia’s new pipeline deal with China, which could suppress LNG demand, but prospects of colder La Niña weather are providing some support. China’s LNG imports have consistently exceeded the five-year average since August and are expected to rise ahead of winter.

Gold continues to reach new highs, driven by expectations of Fed rate cuts and heightened geopolitical uncertainty. Risk-averse investors have continued to increase their gold exposure, with ETF holdings increasing by 18t in the first two days of September.

Silver is outperforming gold, climbing 40% year-to-date to US$41/oz, thanks to robust inflows of 2,500t into silver-backed ETFs.

Copper prices extended their gains to US$10,000/t, but failed to hold on to the gains in the later trading session. Investors weighed softer industrial activity against supply concerns. Unfavourable treatment charges are likely to curb refined copper output, which has been hitting record highs in recent months.

Shutdowns of scrap copper rod and copper materials production in many provinces have triggered substitution demand for refined copper. China’s copper price parity is also in favour of stronger imports, offsetting some demand concerns in H2 2025.

Zinc’s price hit a five-month high due to falling inventories to 55,225t. A decline in domestic production led to an increase in imports by India and Europe. The market has turned into backwardation, which reflects tighter supply.

Corporate news in Australia

-Blackstone is preparing to selldown part of Airtrunk’s $24bn Sydney hyperscale data centre.

-ASIC is investigating advisers Jeffries and Mayne Pharma ((MYX)) over  the $672m takeover by Cosette after the US company alleged Mayne withheld important information.

-Potentia Capital (private equity) is looking to exist its 19.1% stake in Vista Group ((VGL)) with Jarden offering shares at NZ$3 after the close.

-Cleanaway Waste Management ((CWY)) has had three fatalities on its sites since June 30 and an increase in recordable and serious injuries with the CEO docked -30% off his bonus.

-Chinese EV automakers BYD, GWM, MG and Chery move into Australia’s top 10 most popular carmakers.

On the calendar today:

-NZ 2Q Building Vols

-AU July HH spending

-AU July Trade Bal

-US Aug ISM services

-US Aug PMI

-US July Trade Bal

-ARN MEDIA LIMITED ((A1N)) ex-div 1.20c (100%)

-AMCOR PLC ((AMC)) ex-div 19.59c

-BAPCOR LIMITED ((BAP)) ex-div 5.50c (100%)

-BHP GROUP LIMITED ((BHP)) ex-div 92.00c (100%)

-BEACON LIGHTING GROUP LIMITED ((BLX)) ex-div 3.90c (100%)

-BIG RIVER INDUSTRIES LIMITED ((BRI)) ex-div 2.00c (100%)

-CLINUVEL PHARMACEUTICALS LIMITED ((CUV)) ex-div 5.00c (100%)

-EBOS GROUP LIMITED ((EBO)) ex-div 49.19c (95%)

-JUPITER MINES LIMITED ((JMS)) ex-div 0.75c

-LASERBOND LIMITED ((LBL)) ex-div 0.80c (100%)

-MERIDIAN ENERGY LIMITED ((MEZ)) ex-div 12.84c

-NIDO EDUCATION LIMITED ((NDO)) ex-div 1.50c (100%)

-NIB HOLDINGS LIMITED ((NHF)) ex-div 16.00c (100%)

-QUALITAS LIMITED ((QAL)) ex-div 7.50c (100%)

-RESIMAC GROUP LIMITED ((RMC)) ex-div 3.50c (100%)

-RELIANCE WORLDWIDE CORP. LIMITED ((RWC)) ex-div 3.9c

-SCHAFFER CORPORATION LIMITED ((SFC)) ex-div 45.00c (100%)

-SKY NETWORK TELEVISION LIMITED ((SKT)) ex-div 12.23c

-SERVCORP LIMITED ((SRV)) ex-div 14.00c (10%)

-SERVCORP LIMITED ((SRV)) ex-div 14.00c (100%)

-SYMAL GROUP LIMITED ((SYL)) ex-div 5.90c (100%)

-TPG TELECOM LIMITED ((TPG)) ex-div 9.00c

-WOTSO ((WOT)) ex-div 1.25c

-YANCOAL AUSTRALIA LIMITED ((YAL)) ex-div 6.2c (100%)

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.

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.)

(Readers should note that all commentary, observations, names and calculations are provided for informative and educational purposes only. Investors should always consult with their licensed investment advisor first, before making any decisions. All views expressed are the author’s and not by association FNArena’s – see disclaimer on the website)

All paying members at FNArena are being reminded they can set an email alert specifically for The Overnight Report. Go to Portfolio and Alerts on the website and tick the box in front of The Overnight Report. You will receive an email alert every time a new Overnight Report has been published on the website.

Find out why FNArena subscribers like the service so much: “Your Feedback (Thank You)” – Warning this story contains unashamedly positive feedback on the service provided. www.fnarena.com

FNArena is proud about its track record and past achievements: Ten Years On

Click to view our Glossary of Financial Terms