The Overnight Report: Risk On Into Thanksgiving

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US markets rose for the fourth consecutive day ahead of Thursday's Thanksgiving holiday with Nasdaq leading the gains.

After a third positive day on the ASX200 yesterday, futures are pointing to a modestly positive start, with the last day of trade for November tomorrow.

Good Morning,

The Australian market rose for a third straight session on Wednesday, despite a stronger-than-anticipated inflation reading for October.

The ASX200 rose 70pts or 0.8% to 8,607, led by miners with technology and utilities lagging.

What happened overnight, NAB Markets Today Research

Stock markets are higher everywhere, with gains in Japan and Europe exceeding the US so far on Wednesday.

US yields sre slightly higher at the front end following a low weekly jobless claims print, with little reaction to the just-released Fed Beige Book.

The UK Budget has been well received by the gilts market where 10-year yields are down -7bp, and GBP has rallied while unable to surpass the gains recorded earlier by the NZD post yesterday’s RBNZ rate cut and intimation the easing cycle is now complete, or AUD after the hot October CPI print.

In US economic news weekly jobless claims were a low 216k, versus 222k (upward revised) the week before and 225k expected. Continuing claims at 1,960k were close to expectations and up slightly on the prior week’s 1,953k. 

Durable goods orders (for September so very dated) rose 0.5% as expected, though the core ‘capital goods non-defense ex-aircraft’ measure was 0.9% against the 0.3% consensus.

More relevant than both, the Fed’s Beige Book released ahead of the 10 December FOMC meet shows economic activity was little changed since the previous report, according to most of the twelve Federal Reserve Districts.

Overall consumer spending declined further, while higher-end retail spending remained resilient.

On the labour market, it notes employment declined slightly over the current period with around half of Districts noting weaker labor demand.

Despite an uptick in layoff announcements, more Districts reported contacts limiting headcounts using hiring freezes, replacement-only hiring, and attrition than through layoffs (i.e. consistent with a continuing ‘low hire, low fire’ characterisation of the labour market – my emphasis).

On prices, it says they rose moderately during the reporting period. Input cost pressures were widespread in manufacturing and retail, largely reflecting tariff-induced increases.

No Fed speakers to note, though Treasury Secretary Scott Bessent on CNBC said that a key theme of his interviews for the next chair of the Federal Reserve has been simplifying the US central bank, which he indicated has become too complex in how it manages money markets.

“One of the things in terms of the criteria that I’ve been looking for” has been the interplay of the Fed’s various instruments, Bessent said on CNBC Tuesday. “I realize the Fed has become this very complicated operation.”

Bessent said his final second-round interview with the five candidates to succeed Chair Jerome Powell will be today, and reiterated President Donald Trump may make his announcement on the Fed chair nomination before Dec. 25. (Bloomberg reporting)

The long awaited UK Budget was released –- much of it inadvertently an hour or so ahead of schedule via a leak on the Office of Budget Responsibility’ (OBR) website.

The Budget raises UK taxes by GBP26bn –-putting taxes as a share of GDP up to a record 38%– but as expected, without any rise in the rates of income tax, national insurance or VAT.

Rather, freezing of tax thresholds for three years is the major revenue raising measure, against which welfare spending is increased by GBP16bn, of which GBP3bn comes from a lifting of the cap on child benefits (so appeasing the most left wing of the Labour party).

The OBR says the budget has no implications for GDP and as foreshadowed has lowered its estimate of trend productivity growth by -0.3 percentage points. 

The gilts market was cheered by the news the so called fiscal buffer against future shortfalls in the fiscal arithmetic is now GBP22bn, more than doubled and against a GBP15bn analyst consensus, and too reduced long end issuance.

10 year gilt yields ended the London day -7bp down. GBP/USD is up about 0.5% on the day, making it the third best G10 FX performer after NZD and AUD.

Yesterday, the RBNZ cut its cash rate -25 basis points as universally expected, and while leaving the door open to further easing next year, it is barely so.

The Bank’s accompanying interest rate projection revealed a terminal rate of 2.20%, implying the central case sees minimal chance of further reduction in the overnight cash rate.

Governor Hawksby confirmed as much in the press conference indicating the track is consistent with rates on hold in 2026. Our BNZ colleagues note incoming data would have to surprise significantly on the downside to encourage the RBNZ to ease again.

Wednesday’s inaugural monthly Australian CPI release revealed elevated and broad-based inflation pressures evident in 3Q were largely sustained in October. The share of the CPI basket running above 3.5% on a 3-month annualised basis is 64%, almost 30 points higher than it was in June.

The monthly trimmed mean measure was 0.3% m/m and is 3.6% in 3 month annualised terms, off its peak after a very strong July outcome.

Market services inflation was mixed. While meals out and takeaway food inflation moderated from its recent peaks, sports and recreation related price pressures strengthened.

Overall, market services categories look set to contribute a little less to 4Q inflation than they did in 3Q, but remain much hotter than they were through 1H2025 and stronger than has historically been consistent with inflation at the midpoint of the target.

US equities are showing a gain of 0.8% for Nasdaq and 0.7% for the S&P500. Most S&P sub-sectors are showing gains of 1% or more (IT in the lead) but with a drag from Communication Services and Health Care.

Earlier the Nikkei ended 1.8% up and the Eurostoxx600 and German DAX both 1.1%.

ANZ Bank Australian Morning Focus, Commodities Extract

Gold extended recent gains, as expectations of a rate cut by the US Federal Reserve build following dovish comments from policymakers. Earlier this week Governor Waller said concerns about the labour market warrant advocating for a cut at the next meeting.

President Williams surmised that near-term cuts remain a possibility. This has been exacerbated by reports that Kevin Hassett is the front runner to be the next Fed chair. He is a close ally of President Trump and shares his view of lower interest rates.

The latest jobless claims data, which showed applications unexpectedly fell last week, are unlikely to derail the Fed from delivering a rate cut in December. Spot gold rose 0.9% to US$4,168/oz, while the rest of the precious metals complex was higher.

Copper led the base metals sector higher, as the prospect of Fed rate cuts triggered a risk-on mood across markets. Sentiment is also being boosted by reports that Chilean copper producer Codelco is pushing for a hike in its annual premium to US$350/t over the LME prices for 2026 annual contracts.

This is up from only US$89/t agreed for this year, and reflects the increased tightness in the global copper market.

This month’s rally in lithium prices stopped following reports of a Chinese mine reopening. Reports have emerged that Contemporary Amperex Technology Co Ltd (CATL) is on the cusp of reopening its Jianxiawo lithium mine, which was suspended in August after it failed to get an extension on its operating permit.

The company is said to be asking suppliers and partners to ready equipment, chemicals and workers for its restart, possibly in early December. The mine accounted for 3% of global supply before its suspension.

Crude oil steadied as traders took stock of recent developments in the Russia/Ukraine war. The prospect of an end to the war received a boost in recent days from the release of a US-proposed peace deal.

US envoy, Steve Witkoff, will lead a delegation for talks in Russia next week, a Kremlin official said. Ukraine’s Chief of Staff said negotiations in Geneva had laid a good foundation.

The market also noted a rise in US oil inventories. The weekly Energy Information Administration reported total commercial crude oil stockpiles rose by 2.8mbbl last week. Inventories of refined fuel also rose, with gasoline and distillate up 2,513kbbl and 1,147kbbl respectively.

North Asia LNG prices threatened to dip below US$11/MMBtu, as buying by Japan and China remains subdued. US tariffs are keeping industrial activity in markets such as China and South Korea muted.

India, however, has been active in the spot market in recent days. European gas benchmark futures were steady, as traders weigh the prospect of a return of Russian gas to the global market against low inventories.

Gas storage levels are sitting at only 78%, compared with the five-year average of 89%. This comes after a recent cold snap saw gas withdrawals increase amid strong heating demand.

European Union regulations also call for storage facilities to be at least 90% full by 1 December

Corporate news in Australia

-KKR is looking for buyers for Laser Clinics A&NZ operations.

-Northwest Healthcare Properties has agreed to transfer operating rights of 12 Healthscope hospitals to Calvary Health.

-Beach Energy ((BPT)) is keen to invest with Santos Energy ((STO)) in the stalled -$3.6bn Narrabri gas project.

-ASIC is suing Electro Optic Systems’ ((EOS)) founder and former CSEO, Ben Greene, alleging he failed to communicate an earnings downgrade.

-Private equity owned SkinKandy is preparing a $400m IPO on the ASX in 2026.

-Homart Pharmaceuticals is planning an IPO with a $300m valuation post Blackmores buyout.

-AirTrunk says Australia is lagging Asia by around 18 months in data centre approvals.

On the calendar today:

-NZ Q3 Retail Trade

-AU 3Q Capex/Expected Capex

-US Thanksgiving Holiday

-ATLANTIC LITHIUM LIMITED. ((A11)) AGM

-AMCOR PLC ((AMC)) ex-div 13c

-AURELIA METALS LIMITED ((AMI)) AGM

-ALLIANCE AVIATION SERVICES LIMITED ((AQZ)) AGM

-AURUM RESOURCES LIMITED ((AUE)) AGM

-BETR ENTERTAINMENT LIMITED ((BBT)) AGM

-BLACK CAT SYNDICATE LIMITED ((BC8)) AGM

-BEAMTREE HOLDINGS LIMITED ((BMT)) AGM

-BLUESCOPE STEEL LIMITED ((BSL)) NZ Site Visit

-CURVEBEAM AI LIMITED ((CVB)) AGM

-DELTA LITHIUM LIMITED ((DLI)) AGM

-DOWNER EDI LIMITED ((DOW)) Investor Day

-ELEMENTOS LIMITED ((ELT)) AGM

-EARLYPAY LIMITED ((EPY)) AGM

-EQ RESOURCES LIMITED ((EQR)) AGM

-FENIX RESOURCES LIMITED ((FEX)) AGM

-FINDI LIMITED ((FND)) earnings report

-GARDA PROPERTY GROUP ((GDF)) AGM

-GENESIS ENERGY LIMITED ((GNE)) investor briefing (Day 2)

-HUB24 LIMITED ((HUB)) Investor Strategy Day

-IMMUTEP LIMITED ((IMM)) AGM

-KINGSGATE CONSOLIDATED LIMITED ((KCN)) AGM

-NORTHERN MINERALS LIMITED ((NTU)) AGM

-NRW HOLDINGS LIMITED ((NWH)) AGM

-ORION MINERALS LIMITED ((ORN)) AGM

-PENINSULA ENERGY LIMITED ((PEN)) AGM

-PEET LIMITED ((PPC)) AGM

-PEOPLEIN LIMITED ((PPE)) AGM

-QBE INSURANCE GROUP LIMITED ((QBE)) 3Q Trading update

-RETAIL FOOD GROUP LIMITED ((RFG)) AGM

-SOMNOMED LIMITED ((SOM)) AGM

-TECHNOLOGY ONE LIMITED ((TNE)) ex-div 30c (65%)

-TOWER LIMITED ((TWR)) FY25 Result

-VEEM LIMITED ((VEE)) AGM/Mfg Facility Tour

-VYSARN LIMITED ((VYS)) AGM

-WEBJET GROUP LIMITED ((WJL)) ex-div 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.

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