The Overnight Report: October CPI Awaits

This story features WOODSIDE ENERGY GROUP LIMITED, and other companies.
For more info SHARE ANALYSIS: WDS
The company is included in ASX20, ASX50, ASX100, ASX200, ASX300 and ALL-ORDS

As hopes for a Federal Reserve rate cut on December 10 grows, US markets rallied for the third straight day.

Ahead of Australia's October CPI print, to be announced at 11.30am AEST, ASX200 futures are looking at the market opening sharply higher.

Good Morning,

The ASX200 eked out a 12pt gain or 0.1% with five out of eleven sectors up, led by miners and the tech sector, with financials and real estate lagging.

The October CPI is due out at 11.30am AEST. More details below.

What happened overnight, NAB Markets Today Research

Overnight US data releases came mostly on the softer side of expectations. The latest ADP report showed US private payrolls fell by an average of -13.5k per week over the past month, underscoring persistent softness in the labour market.

Meanwhile, retail sales painted a picture of consumer fatigue, with headline sales rising just 0.2% in September—well below consensus. 

Excluding autos, sales edged up only 0.1%, and control group sales dipped -0.1%. The data suggest that while Q3 consumption growth held up, momentum has slowed sharply into Q4, with tariff-induced price increases and a weak labour market weighing on demand.

Producer price inflation (PPI) was benign, with the headline index up 0.3% in September and core measures running below expectations. The inflation impulse from tariffs appears modest, and underlying services inflation continues to slow.

Pantheon economics suggest retailers are absorbing some tariff costs, and the data suggest core PCE inflation will likely undershoot the Fed’s latest forecasts, giving policymakers room to ease.

The Conference Board’s consumer confidence index plunged to 88.7 in November, the lowest since the initial tariff shock in April. The drop was driven by a sharp fall in expectations, consistent with real consumption growth of less than 1% in Q4.

The job availability index also weakened, pointing to a flat lining in private employment and a gradual uptick in unemployment. On a more positive note, pending home sales surprised to the upside, rising 1.9% in October, but the outlook for housing remains constrained by high mortgage rates and weak labour market conditions.

Sticking with US news, White House National Economic Council Director Kevin Hassett has emerged as the front runner to become the next Federal Reserve Chair. Hassett is viewed as closely aligned with President Trump’s preference for lower interest rates, and his appointment would likely reinforce the administration’s push for easier policy.

The softer data flow (although some of if was delayed September releases) and Hassett news supported expectations for the Fed cutting rates in December, with market pricing implying a greater than 80% chance. 

Speaking yesterday, San Francisco President Daly said she supported a December rate cut. While she is a non-voter this year, she has rarely taken a public position at odds with Chair Powell. Her comments also follow New York Fed President Williams’ view at the end of last week which favoured a near-term rate cut.

Oil prices fell sharply as signs of progress in peace talks between Russia and Ukraine buoyed expectations that Russian supply will remain online. The situation remains fluid, with Russia launching fresh attacks on Kyiv even as diplomatic efforts continue.

Moscow has signaled resistance to changes in the proposed peace plan, and Western allies are still negotiating security guarantees for Ukraine. The mixed signals have left markets cautious, but any resolution would have significant ramifications for energy markets and broader risk sentiment.

US Treasury yields declined with the move led by the front end of the curve. The 2y Note now trades at 3.46%, down -3.8bps over the past 24 hours while the 10y is sub 4% (3.99%), after trading to an overnight low 3.986% on the back of US data releases and speculation around the Fed Chair appointment.

European yields also traded lower with UK Gilts leading the way down 4bps to 4.49%, ahead of the UK budget release tonight.

In currency markets, the USD is broadly weaker with the DXY index down -0.4% for the day. The euro got a lift after the ABC News report on Ukraine’s acceptance of the peace deal, but GBP has performed even better, as positions are adjusted ahead of the UK Budget tonight.

JPY also found some support against the backdrop of lower global rates. Commodity currencies are modestly higher, but have underperformed the other noted majors. The AUD is up 0.12% over the past 24 hours, it traded to an overnight low of 0.6436, and now starts the new day at 0.6468, close to its intraday high.

US equities are higher across the board, the S&P 500 rose 0.9% and the Nasdaq100 lifted 0.67%, reversing earlier losses.

Alphabet (Google) shares surged on news of new AI software and chip deals, pushing the company closer to a US$4 trillion market cap. The broader tech sector benefited from renewed optimism around AI.

Dow Jones outperformed up 1.43% as hopes for a December rate cut grow.

Oil prices tumbled (around -1.8%) as hopes for a Russia-Ukraine peace deal raised the prospect of sustained Russian supply and a potential market surplus next year. Gold , copper and iron ore gained, up between 0.8 and 1.25%.

This is the first release of the Australian Monthly CPI. The RBA has indicated they will still focus on a quarterly trimmed mean measure for now; monthly trimmed mean is not the ‘preferred’ underlying indicator.

We will be assessing what the detail says about underlying momentum, particularly (September and October) data for market services categories, which are key to the RBA’s assessment of capacity.

We expect headline CPI of 3.6% y/y, a tenth higher than our estimate of the September print. Among key swing factors for headline, a modest fall in fuel prices should have little effect.

Electricity prices will fall in the month as NSW and ACT customers receive overlapping rebates due to the delayed start of their Q3 payment and as WA customers started receiving their rebate from mid-month.

That sets up a subtraction from electricity in the fourth quarter, but a similar dynamic a year ago means it will have little influence on the year-ended rate in October.

Looking ahead, electricity rebate timing will pull year-ended inflation lower in November and December due to base effects, before adding again in Q1 if the Commonwealth rebate extension ends as scheduled.

Joy Ride, Yardeni Quicktakes extract

At the start of November, we expected a pullback in the stock market because the Bull-Bear Ratio we monitor indicated too many bulls. That’s bearish from a contrarian perspective. Could the pullback be over already? It might be if the Fed delivers a rate cut on December 10. 

The stock market took a gut-wrenching dive on Thursday last week. It’s still not obvious why the drop occurred. But the immediate conclusion was that investors had lost their confidence in the AI trade. The free-fall in bitcoin also unsettled them.

Thursday evening, we noted that a few participants on the Federal Open Mouth Committee said earlier that day that they were in no rush to lower the federal funds rate again at the December 10 FOMC meeting. The CME FedWatch Tool showed that the odds of a rate cut fell below 50%. 

On Friday, Federal Reserve Bank of New York President John Williams came to the rescue with some dovish comments, and a couple of his colleagues said the same today. So the odds of a December rate cut jumped to 80.9%. Investors love the Fed Put.

So stock prices edged higher on Friday and rebounded strongly today, led by AI-related stocks, and especially by GOOGL, which jumped 6.3%. NVDA was a bit of a laggard, rising only 2.1%. It helped that bitcoin rallied from $81,180 on Friday morning back to $89,000 this afternoon.

The DXY dollar index held firm around 100.00 despite the increased odds of a Fed rate cut. Supporting the US dollar are strong net capital inflows, which totaled US$1.5 trillion over the past 12 months through September. That’s near the recent record high.

Contrary to the popular myth, foreign investors are not bailing out of US Treasuries and equities. Foreign private purchases totaled US$492.7 billion in the former over the past 12 months . However, central banks collectively did reduce their holdings by -US$47.0 billion.

Foreigners held a record US$9.2 trillion in US Treasuries during September.

Most impressive, and somewhat surprising, is that foreign private purchases of US equities totaled a record $646.8 billion over the past 12 months.

Over the past 12 months, foreign private purchases of US equities outpaced those of US Treasury notes and bonds

Corporate news in Australia

-Blackstone has launched the $1.5bn sale of AirTrunk’s Malaysian JHB1 data centre,

-Woodside Energy ((WDS)) and Timor-Leste have revived the Sunrise project with production targeted for 2032-2035.

-CSIRO sells $85m Chrysos Corp ((C79)) shares at a -6.7% discount.

-Droneshield ((DRO)) announced a $5.2m European military contract.

-Star Entertainment Group ((SGR)) may be privatised if its financial problems continue.

-Ashurst predicts a rise in IPO’s in 2026 due to global activity and its deal pipeline.

-Macquarie Technology’s  ((MAQ)) CEO is considering as one option selling a majority stake in existing data centre assets to fund the group’s new $3bn data centre campus.

-Austrac is looking at acting against Bendigo and Adelaide Bank ((BEN)) after internal investigations into its management of anti-money-laundering risks found broad failures.

On the calendar today:

-NZ RBNZ OCR Decision

-AU 3Q Construction Work

-AU Oct CPI

-US Advance Sept Durable Goods

-US Fed Beige Book

-US Weekly Jobless Claims

-ALS LIMITED ((ALQ)) ex-div 19.4c (30%)

-AIRTASKER LIMITED ((ART)) AGM

-AIRTASKER LIMITED ((ART)) Investor Day

-ANDEAN SILVER LIMITED ((ASL)) AGM

-ANSON RESOURCES LIMITED ((ASN)) AGM

-BEFOREPAY GROUP LIMITED ((B4P)) AGM

-BIOME AUSTRALIA LIMITED ((BIO)) AGM

-ELEMENT 25 LIMITED ((E25)) AGM

-FISHER & PAYKEL HEALTHCARE CORPORATION LIMITED ((FPH)) 1H25 Earnings/Investor Call

-FELIX GOLD LIMITED ((FXG)) AGM

-GRAINCORP LIMITED ((GNC)) ex-div 24c (100%)

-GENESIS ENERGY LIMITED ((GNE)) investor briefing (Day 1)

-HARVEY NORMAN HOLDINGS LIMITED ((HVN)) AGM

-INFRATIL LIMITED ((IFT)) ex-div 8c

-JUPITER MINES LIMITED ((JMS)) AGM

-LIONTOWN RESOURCES LIMITED ((LTR)) AGM

-LYNAS RARE EARTHS LIMITED ((LYC)) AGM

-MEDADVISOR LIMITED ((MDR)) AGM

-MLG OZ LIMITED ((MLG)) AGM

-MEGAPORT LIMITED ((MP1)) AGM

-NEURIZON THERAPEUTICS LIMITED ((NUZ)) AGM

-PREDICTIVE DISCOVERY LIMITED ((PDI)) AGM

-PANTORO GOLD LIMITED ((PNR)) AGM

-PRAEMIUM LIMITED ((PPS)) AGM

-QPM ENERGY LIMITED ((QPM)) AGM

-ST. GEORGE MINING LIMITED ((SGQ)) AGM

-SELECT HARVESTS LIMITED ((SHV)) FY25 Earnings

-STRAKER LIMITED ((STG)) 1H26 Earnings/Call

-SILVER MINES LIMITED ((SVL)) AGM

-TORQUE METALS LIMITED ((TOR)) AGM

-TEMPLE & WEBSTER GROUP LIMITED ((TPW)) AGM

-TESORO GOLD LIMITED ((TSO)) AGM

-TYRO PAYMENTS LIMITED ((TYR)) AGM

-VIRIDIS MINING AND MINERALS LIMITED ((VMM)) AGM

-WINSOME RESOURCES LIMITED ((WR1)) AGM

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