The Overnight Report: Saudi Arabia Emerging

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Nasdaq took a breather with Nvidia shares falling on Soft Bank's equity sale while the S&P500 moved higher building on yesterday's gains. 

Australia's largest bank dragged the ASX lower yesterday with futures pointing to a positive start on Wednesday.

Good Morning,

The ASX200 slipped by -17 points or -0.2% on Tuesday with the largest index constituent CommBank ((CBA)) shares dragging on the index with a -6.6% fall post quarterly update.

Utilities led the gains with some support from miners and energy. Still not much love left for local technology stocks.

Tech Rotation Bites AI Leaders (J.L. Bernstein)

The Dow rose while the Nasdaq fell as some cash rotated out of tech.

CoreWeave lowered near-term guidance due to data center delays.

High multiples met inconvenient headlines.

I think the AI trade needed a reset and we got a small one last week.

What happened overnight, NAB Markets Today Research

The S&P500 lifted 0.21% on Tuesday, extending yesterday’s rally driven by progress towards ending the government shutdown.

Across sectors, gains were led by health care and energy, while big tech underperformed after leading yesterday’s gains. The Nasdaq is down -0.25%. Nvidia fell -3%, with SoftBank selling its entire stake for US$5.83 billion to fund its own artificial-intelligence investments. European equities were higher. The Euro Stoxx50 was up 1.1%.

The Senate passed a temporary funding measure to end the government shutdown in a 60-40 vote. The bill now moves to the Republican-controlled House for a final vote.

Politico reports the House Rules Committee is aiming to meet Tuesday evening to advance the package for a floor vote Wednesday, and that GOP leaders want the House to start voting sometime after 4pm Wednesday.

The package extends funding until January 30 and includes full-year funding for the Agriculture Department, military construction and the legislative branch, as well as language guaranteeing the reversal of federal layoffs initiated during the shutdown. GOP leaders promised a vote on extending enhanced Affordable Care Act subsidies by mid-December.

As for when data could begin to be released. September Payrolls should be relatively quick; it was set to be published day after the start of the shutdown. In 2013, the shutdown ended 17 October and Payrolls was released 5 days later.

Data where collection was disrupted could take longer and it is not clear yet what approach will be taken for missing data. The unemployment rate for October, which relies on household surveys, and many October consumer prices which are actively surveyed, are key challenges.

ADP’s newly published weekly jobs numbers was soft, pointing to an average decline of -11250 jobs in the 4 weeks to 25 October. That follows a 42k gain reported in the October Monthly report that aligns to the reference week containing the 12th of October and at face value suggests renewed falls in jobs in the second half of October. Separately, the NFIB small business optimism survey showed a marginal fall to 98.3 from 98.5.

The ADP data supported a rally in US treasury futures (the US bond market was closed for Veterans Day) and a broadly weaker USD. The dollar was -0.2% lower on the DXY. EUR was 0.3% higher at 1.1591, while JPY was little changed.

Scandinavian currencies outperformed, as did the Swiss franc, up 0.7% amid reports that Switzerland is close to securing a 15% tariff on its exports to the US, down from the 39% level announced in August. The AUD underperformed but is just -0.1% lower against the USD at 0.6531. 

UK labour data was soft. Unemployment was 5.0% in the three months to September, up from 4.8% and above the 4.9% expected. Private sector pay growth slowed to 4.2% from 4.4%. There were larger than expected falls in both the 3month average employment change and the timelier October Payrolls estimate.

For the BoE, Bailey at last week’s meeting said the latest inflation data was good but needed more evidence. Signs of spare capacity and cooling wages growth are a step in the right direction for a December cut. There is still one more labour market release, and two CPI prints to come before the 18 December meeting, where there is now -22bp priced, up from -18bp.

The release contributed to a decent rally in gilts. 10-year yields closed -8bp lower at 4.38% and lower rates weighed on the pound.

Back home, the NAB Business Survey, confidence fell -2pts in October but remains just above its long run average after improving through mid-2025. Business conditions rose 2pts in October to up 9 index points, driven by a rise in trading conditions and profitability (up 5pts and 3pts respectively).

Employment was steady at up 3, with the improvement in conditions and profitability outpacing employment so far. Trend capacity utilisation is above trend in 5 of 8 industries.

Despite the strength on the activity side, the cost and price measures continue to look relatively benign and have now largely returned to their average.

Westpac-Melbourne Institute consumer confidence jumped 13% in November, more than unwinding the previous 2 months declines.

Saudi Market Signals: Franklin Templeton ETFs extract

Hints of reforms to ease foreign-ownership limits in Saudi Arabia set off the sharpest rally for its equity market in years this autumn, reigniting investor curiosity. The prospect of lifting the 49% cap has already boosted sentiment and, if realized, could channel billions in passive inflows and deepen the Kingdom’s liquidity base.

While no formal policy has yet been enacted, the Capital Market Authority (CMA) has begun consulting on a draft framework that could allow greater direct foreign access to Saudi equities. The move reflects a broader shift: The Kingdom is actively positioning itself to integrate more fully with global capital markets. For global investors, these indicators point to a market still in transition—but increasingly open, liquid and institutionally credible.

In the one month since the reform news, Saudi Arabia’s equity market has outperformed that of other major oil-producing nations, up 1.1% compared to Canada, Brazil and China, which all showed relatively flat or negative returns for the period. 

Saudi Arabia’s new Investment Law, effective as of February 2025, has enshrined equal treatment for foreign and domestic investors and has streamlined registration, and—with CMA updates—is demonstrating clear intent to align with global capital-flow standards.

Meanwhile, the Kingdom’s Vision 2030 giga-projects—from NEOM and Qiddiya to Soudah Peaks— continue to drive diversification. Its Public Investment Fund (PIF), with assets around US$900 billion, anchors this transformation and attracts global capital.

At the same time, investment in renewables and hydrogen underscores the shift toward energy diversification, offering index investors exposure beyond oil. Cooperation and economic growth among Gulf nations also stand to be amplified by Saudi Arabia’s capital projects, Qatar’s gas expansion and Kuwait’s policy reforms, with consumption in Saudi markets particularly robust.

Within the Gulf Cooperation Council (GCC), Saudi Arabia remains the most dynamic equity market, yet we believe its approximately 4% weighting in the FTSE Emerging Markets Index understates its significance. As new listings, privatizations and ownership reforms expand the investable universe, Saudi Arabia’s influence on regional and global benchmarks could gradually rise.

Even under current limits, many large capitalization companies have foreign holdings under 15%. Easing or removing the foreign-ownership cap could unlock latent demand and prompt upward repricing.

Regional cooperation and strong consumption trends add further tailwinds. While policy shifts remain a risk, we believe this ongoing liberalization—involving social reforms such as greater female workforce participation—continues to spur growth drivers in retail, real estate and services.

Corporate news in Australia

-Megaport ((MP1)) has acquired Latitude.sh for up to -$459m to expand into India, raising $200m to help fund the transaction.

-Catalyst Metals ((CYL)) acquires Aureka’s ((AKA)) 49% stake in Tandarra for $1.3m.

-PwC markets Solar Battery Group, which generates $100m p.a. in battery installations, is for sale.

-SGH Ltd ((SGH)) is on the lookout for acquisitions

-Mineral Resources ((MIN)) is looking for buyers for its Bald Hill lithium mine to reduce its debt load.

-Bain is seeking to re-list Estia Health for an enterprise value of at least $2bn.

On the calendar today:

-AU Sept Qtr Housing Finance

-US NFIB Small Biz Optimism

-ACORN CAPITAL INVESTMENT FUND LIMITED REGISTERED ((ACQ)) ex-div 2.75c (50%)

-ARGENICA THERAPEUTICS LIMITED ((AGN)) AGM

-ARISTOCRAT LEISURE LIMITED ((ALL)) FY25 Result

-BEACH ENERGY LIMITED ((BPT)) AGM

-CAMPLIFY HOLDINGS LIMITED ((CHL)) AGM

-DIGICO INFRASTRUCTURE REIT ((DGT)) AGM

-DOMINO’S PIZZA ENTERPRISES LIMITED ((DMP)) AGM

-FLIGHT CENTRE TRAVEL GROUP LIMITED ((FLT)) AGM

-HUMM GROUP LIMITED ((HUM)) AGM

-INCOME ASSET MANAGEMENT GROUP LIMITED ((IAM)) AGM

-JUMBO INTERACTIVE LIMITED ((JIN)) AGM

-KAIROS MINERALS LIMITED ((KAI)) AGM

-LITTLE GREEN PHARMA LIMITED ((LGP)) investor briefing

-MOUNT GIBSON IRON LIMITED ((MGX)) AGM

-NETWEALTH GROUP LIMITED ((NWL)) AGM

-RESMED INC ((RMD)) ex-div 6c

-STEP ONE CLOTHING LIMITED ((STP)) AGM

-UNICO SILVER LIMITED ((USL)) AGM

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

The Australian share market over the past thirty days…

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