Daily Market Reports | 8:39 AM
This story features PRO MEDICUS LIMITED, and other companies.
For more info SHARE ANALYSIS: PME
The company is included in ASX50, ASX100, ASX200, ASX300, ALL-ORDS and ALL-TECH
US markets broke a five day positive streak as sentiment turned risk off with major liquidations in crypto markets.
Global bond yields rose on the back of higher JGB yields.
After a weak start to the week yesterday, ASX200 futures are pointing to a flat to slightly positive start.
| World Overnight | |||
| SPI Overnight | 8589.00 | + 6.00 | 0.07% |
| S&P ASX 200 | 8565.20 | – 48.90 | – 0.57% |
| S&P500 | 6812.63 | – 36.46 | – 0.53% |
| Nasdaq Comp | 23275.92 | – 89.76 | – 0.38% |
| DJIA | 47289.33 | – 427.09 | – 0.90% |
| S&P500 VIX | 17.25 | + 0.90 | 5.50% |
| US 10-year yield | 4.10 | + 0.08 | 1.97% |
| USD Index | 99.35 | – 0.06 | – 0.06% |
| FTSE100 | 9702.53 | – 17.98 | – 0.18% |
| DAX30 | 23589.44 | – 247.35 | – 1.04% |
Good Morning,
The Australian market fell -49pts or -0.6% to 8,565 on Monday.
Eight out of the eleven sectors declined, led by healthcare, tech and banks.
Energy and miners were more upbeat.
What happened overnight, NAB Markets Today Research
US and European equity markets have begun the new week with a cautious tone following a decent run of consecutive gains last week.
The crypto space added to the wary mood with Bitcoin and Ether recording hefty falls on the day.
Meanwhile core global yields edged higher led by Japanese JGBs with JPY the notable FX out performer, following yesterday’s speech by BoJ Governor Ueda.
US Treasury yields also climbed higher notwithstanding a soft Manufacturing ISM.
It seems it all started in Japan yesterday. Ahead of the BoJ meeting on December 18-19, yesterday Governor Ueda gave a speech to leaders on Nagoya and, although, as it is often the case, the Governor noted pros and cons of raising policy interest, the market was left with a sense that a December hike is now strong possibility.
The Governor made the case for a hike noting inflation and Yen weakness, but then he also talked about the need “to confirm the momentum of initial moves toward next year’s annual spring labor-management wage negotiations”. The latter implies the December meeting may be too soon to have a good understanding of the wage momentum for next year.
Perhaps what got the market going was Ueda’s comments that any hike would merely be an adjustment to the degree of easing.
The yen gained following the comments and 2-year government bond yields increased above 1.0%. This is the highest level since 2008 and reflects increased expectations for a hike.
The market is pricing 22bp of tightening for the December meeting, compared with 15bp at the end of last week.
Reaction to Ueda’s comments seem to have a broader impact on markets. US equity futures were drifting lower ahead of the speech and the Crypto space was also looking wobbly before Ueda started talking.
That said, once Yen started rising alongside JGB yields, risk sentiment took another leg lower with the negative vibes extending throughout the overnight session.
Bloomberg noted nearly US$1 billion of leveraged crypto positions were liquidated during a sharp drop in prices on Monday. Bitcoin fell over -8% and Ether was down circa -10% at one stage.
Leverage positions are seemingly being unwound with some volume.
Overnight data releases came mostly on the softer side of expectations. The US ISM index fell for a second-consecutive month in November to 48.2 vs est. of 49 (from Oct’s 48.7 and the lowest since Jul).
Details show new orders, employment and supplier deliveries all fell, while prices paid reversed a four-month falling trend to rise to 58.5.
Final Euro Zone manufacturing PMI for November came in at 49.6 vs the 49.7 prelim (and a touch weaker than Oct’s 50) with Germany posting a 48.2 vs its 48.4 prelim (and softer than Oct’s 49.6), France was unchanged 47.8 vs the prelim and Oct’s 48.8. Spain and Italy (which don’t have prelim readings) saw 51.1 vs 52.1 in Oct and 50.6 from 49.9 respectively.
UK final Nov manufacturing PMI unchanged from the prelim 50.2 and up from Oct’s 49.7. Again hugging to 50 breakeven. A decent rebound though from the depths of 45 back in March.
US treasuries moved sharply higher in yield, led by the longer end of the curve, with a pickup in expected corporate supply, partly attributed to the move. The ISM was released when yields were already higher and had limited impact on price action.
Global bond markets were broadly under pressure after a selloff in Japan on the increased prospect for a rate hike this month (see above). During our session 10y JGB gained 6bps to 1.857% while the 2y rate climbed 2bps, to close at 1.02%, a level not seen since the GFC era.
As I type 10-year treasury yields are trading at 4.09%, up 8bp while the 2/10 curve is 3bps steeper to 56bps.
Also out yesterday, the RatingDog PMI in China was weaker than expected and fell marginally into contractionary territory. This survey is concentrated on small export-orientated firms compared with the official PMIs which tend to focus on the larger state-owned companies.
The official PMIs were released in the weekend. Collectively the surveys suggest the economy is struggling for traction with consumer demand still sluggish.
The AUD is little changed at 0.6549, after trading to an overnight high of 0.6567. Yesterday we learned that Private inventories fell -0.9%, led by mining and will subtract three tenths from Q3 GDP, corporate profits were unchanged in the quarter while growth the private sector wage bill continued to be annualised at somewhat elevated rates near 6%.
NAB expects 0.7% q/q for Q3 GDP tomorrow, but we will finalise our forecast after today’s trade and public demand releases.
Oil prices gained after OPEC-Plus confirmed over the weekend it will continue with plans to pause production hikes during the first quarter of next year.
Silver prices extended higher and reached a fresh record above US$58 per ounce. Bulk commodities also did well with iron ore up 1.34%.
Unstoppable international value? Franklin Templeton extract, Global Value Outlook
Even after the market run-up in 2025, governmental fiscal policies, the potential benefits of monetary stimulus enacted this year, ongoing corporate governance changes and a weaker US dollar continue to make Europe and Japan appealing places to invest, in our view, despite ongoing political uncertainties.
After years of sluggish economic activity, massive German fiscal stimulus should begin to feed through to the broader domestic and European economies in 2026.
Not only will Germany and many other European countries be spending more on defense, but they also have begun to invest in a wider range of civilian infrastructure, which can benefit those “old economy” value industries focused on building materials, roads, rails and the like.
This German spending alone may boost broader eurozone gross domestic product growth by 0.25 percentage points from 2025 to 2027, according to the European Central Bank. In addition to boosting economic activity, it may also continue to propel regional stock markets higher over the coming few years.
Banks may also benefit as loan demand increases. This optimism has already spilled over to bank stock prices. European banks have outperformed the US Magnificent Seven tech stocks significantly over the past year, further underscoring the strength in value investments abroad.
Add the expected benefits from recently enacted interest-rate cuts and the slow but ongoing efforts to improve regional competitiveness, unify capital markets and pursue joint debt issuance, and European value stocks can see recurring benefits—potentially for years.
Meanwhile, in Japan, new Prime Minister Sanae Takaichi is focused on further boosting economic growth, which can also support a range of the country’s more domestically focused firms. Her policy proposals include new efforts to dampen inflation, investment in growth industries and more defense spending.
Japanese and European companies also are returning more cash to shareholders, and a possible pickup in merger activity may continue to bolster non-US stocks over time. Japanese companies are also unwinding their complicated cross-shareholdings and buying back stock—positives for investors.
And with earnings likely to improve, the appealing valuations for international stocks could climb and narrow the gap between both international growth and US stocks.
Unlike international markets, the US market may remain a challenging place for value investing in 2026, particularly should the enthusiasm for AI continue unabated.
Massive AI capital spending has been propelling US economic growth, and the wealth effect has been driving increased consumer spending. On the other hand, should investment returns on these sizable spending plans not materialize or should they disappoint, any resulting market correction, given the extreme market concentration, could bring value stocks back to the fore.
In the meantime, we expect to find individual value opportunities across the US market in 2026. We have seen companies that do not have AI narrative support succumb to serious corrections following disappointing earnings, helping to create interesting places to find value.
Unloved companies in stable economic areas are also attractive value opportunities, in our view, as we have found select consumer staples stocks with solid balance sheets trading at lower valuations than they have historically.
Taking a broader view of value also may help uncover attractive individual opportunities. We don’t believe a low price/earnings ratio necessarily makes for a value stock. We advocate looking for companies that offer growth but where the stock price is trading at a discount attractive enough to provide appealing upside as the market gradually begins to recognize that growth over time.
And with US value stocks trading at a substantial discount to their growth peers —a 21 price/earnings ratio versus nearly 44 for growth stocks at the end of October, according to FactSet data— there may be ample opportunities for individual US value stocks to rerate over time, in our view.
The current US administration also is likely to foster a more robust merger environment. Not only should merger arbitrage opportunities proliferate if spreads between the offer price and the spot stock price widens, but we may also see greater deal activity among small and mid-sized companies, a potential catalyst for smaller-cap US stocks.
We expect lower US interest rates, along with better earnings and a more favorable regulatory backdrop, to further help smaller value companies deliver strong long-term risk-adjusted returns.
Although we are broadly optimistic about the outlook for value, we are cognizant of the potential risks as we enter 2026. We have seen recent trouble in the private credit market, following the bankruptcy of a subprime auto company, an auto parts supplier and other apparently one-off issues, but the trends bear watching.
Additionally, US interest rates are forecast to fall, which has stoked market gains in late 2025, but higher rates because of the potential inflationary pressures from tariffs could mean rates may need to rise in 2026, potentially upending current market thinking.
Economic challenges arising from any downturn in the AI spending boom pose risks too.
While investors should closely watch these potential hazards in 2026, we remain bullish on value more broadly.
Bottom-up stock selection remains crucial, in our view, to finding those attractive stocks trading at sizable valuation discounts while simultaneously offering catalysts that can allow the market to realize this value over time.
We think international markets remain the first place to look for them.
Corporate news in Australia
-Pro Medicus ((PME)) has won a $25m contract with BayCare (US) expanding the existing partnership.
-NextDC ((NXT)) lifted FY26 capex guidance by $400m after strong new contract wins lifted utilisation and orders.
-Super funds have been accused of greenwashing after moving back into fossil fuel expansion.
-AUB Group ((AUB)) announced discussions with EQT and CVC Asia Pacific have ceased and the consortium will not proceed with its takeover proposal at $45 per share.
-Cochlear ((COH)))-backed biotech Epiminder ((EPI)) debuted on the ASX despite market outages and disruptions.
-Quadrant Private Equity sells out of Adore Beauty ((ABY)) at $1.10 or $30m.
On the calendar today:
-AU 3Q Balance of Payments
-AU Oct Building Approvals
-EZ Nov Flash CPI
-BANK OF QUEENSLAND LIMITED ((BOQ)) AGM
-COLLINS FOODS LIMITED ((CKF)) 1H26 Earnings
FNArena’s four-weekly calendar: https://fnarena.com/index.php/financial-news/calendar/
| Spot Metals,Minerals & Energy Futures | |||
| Gold (oz) | 4270.05 | + 0.25 | 0.01% |
| Silver (oz) | 58.57 | + 1.85 | 3.27% |
| Copper (lb) | 5.27 | – 0.03 | – 0.61% |
| Aluminium (lb) | 1.31 | + 0.01 | 0.66% |
| Nickel (lb) | 6.65 | – 0.00 | – 0.02% |
| Zinc (lb) | 1.41 | + 0.02 | 1.35% |
| West Texas Crude | 59.48 | + 0.93 | 1.59% |
| Brent Crude | 63.36 | + 0.16 | 0.25% |
| Iron Ore (t) | 106.94 | + 2.10 | 2.00% |
The Australian share market over the past thirty days…
| Index | 01 Dec 2025 | Week To Date | Month To Date (Dec) | Quarter To Date (Oct-Dec) | Year To Date (2025) |
|---|---|---|---|---|---|
| S&P ASX 200 (ex-div) | 8565.20 | -0.57% | -0.57% | -3.20% | 4.98% |
| BROKER RECOMMENDATION CHANGES PAST THREE TRADING DAYS | |||
| BPT | Beach Energy | Downgrade to Sell from Neutral | Citi |
| CTD | Corporate Travel Management | Downgrade to Underperform from Neutral | Macquarie |
| No Rating | Ord Minnett | ||
| Downgrade to Sell from Buy | Shaw and Partners | ||
| HVN | Harvey Norman | Downgrade to Neutral from Outperform | Macquarie |
| Downgrade to Neutral from Buy | UBS | ||
| OCL | Objective Corp | Upgrade to Accumulate from Hold | Morgans |
| QBE | QBE Insurance | Upgrade to Buy from Hold | Bell Potter |
| TPW | Temple & Webster | Upgrade to Neutral from Sell | UBS |
| Downgrade to Neutral from Buy | Citi | ||
| TWR | Tower | Downgrade to Neutral from Outperform | Macquarie |
| VEE | Veem | Upgrade to Speculative Buy from Accumulate | Morgans |
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)
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For more info SHARE ANALYSIS: ABY - ADORE BEAUTY GROUP LIMITED
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For more info SHARE ANALYSIS: PME - PRO MEDICUS LIMITED