The Overnight Report: Bitcoin Rally A Boost

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US markets moved higher as crypto currencies staged a strong rally from yesterday's sell off.

The Australian market squeaked out a positive performance yesterday and ASX200 futures are pointing to another up day ahead of 3Q GDP data release.

Good Morning,

Australian shares ended slightly higher on Tuesday.

The ASX200 rose 15pts or 0.2% to end at 8,580.

Weakness in technology stocks (yet again) was offset by gains in energy and miners.

What happened overnight, NAB Markets Today Research

Overnight the OECD’s global growth forecasts were little changed, seeing global GDP growth of 3.2% this year, and 2.9% next year. Even so, the OECD said the global economy has proved more resilient than expected this year, supported by improved financial conditions, rising AI-related investment and trade, and macroeconomic policies. 

US growth forecasts were again revised higher to 2.0% this year and 1.7% next as AI enabling investment offsets headwinds and effective tariff rates are expected to be a little lower relative to their earlier baseline.

The OECD’s outlook anticipates the full impact of tariffs is yet to be felt and notes revenues as a share of import values remains well below effective tariff rates. Incidentally, the Walmart CFO also said overnight the peak impact from tariffs is likely in 1Q.

Closer to home, the OECD forecasts Australian growth of around 2.3% in 2026 and 2027 and inflation settling near target. The OECD sees some spare capacity in the economy and scope for two interest rate cuts in 2026.

That contrasts the RBA’s November assessment the economy has moved closer to balance, but some capacity pressures will remain over the next couple of years.

GDP data today is expected to confirm the cyclical upswing in private demand has sustained, and contrary to the OECD’s assessment, recent inflation outcomes highlight the risk the RBA may need to recalibrate policy modestly tighter to lean more firmly against the current echo of inflation pressures.

US equity indices moved higher, with the S&P500 up 0.25 % and on track for its sixth advance in seven sessions. Nvidia Corp. led gains in tech mega caps, though Tesla fell.

In Korea, stocks rallied in Seoul after the US confirmed tariffs on South Korean vehicles will drop to 15% from 25%. The change will be retroactive to early November and brings the tariffs into line with Japanese and European levels.

Crypto markets recovered with Bitcoin moving above US$91,000.

In New Zealand, RBNZ’s Breman spoke at parliament’s finance and expenditure select committee on second day in the role. She said under her leadership the bank will be “laser focused” on its core mandate which is low and stable inflation, and emphasised transparency, accountability and clear communication. She said she will discuss attributed votes and views in policy decisions with the monetary policy committee.

In Japan, 10yr bonds saw some support after a 10yr auction drew solid demand. Yields are less than 1bp over the day and -2bp off their intraday higher. Another test comes with a 30yr auction Thursday.

Comments yesterday from the Japanese finance minister didn’t object to the prospect of a December hike. There is 21bp rise pricedin, little changed from a day prior and up from 14bp at the end of last week prior to Ueda’s remarks.

US yields were little changed, with the 2yr -2bp lower at 3.51% and the 10yr little changed at 4.08%. President Trump said he will announce the new Fed Chair “probably” early 2026. Prediction markets give Kevin Hassett about an 80% probability of getting the job.

Expectations of a BoJ hike in December has provided minimal support for the yen, which retraced much of yesterday’s gain. USDJPY was 0.3% higher at 155.9. As our FX strategists noted yesterday, JPY weakness is a function of both loose fiscal and monetary policies.

Elsewhere, the AUD was at the top of the G10 leaderboard, helped by the more positive risk tone, but even then, was up only 0.3%.

Preliminary euro area inflation was 2.2% y/y, a tenth above expectations and the October read on the back of higher energy and services inflation. the core measure was steady at 2.4% as expected. October unemployment remained stable at 6.4%, just above its historic low. The data will leave the ECB happy to stay put, and there was little market reaction.

September quarter GDP is due to be released today and NAB expects GDP growth of 0.7% q/q and 2.2% y/y, in line with the consensus.

The RBA pencilled in 2.0% y/y back in November. While the contribution from consumption looks set to be more modest than in 2Q, there is broad-based strength across other final demand components in 3Q. Inventories are set to subtract sharply in the quarter.

The RBA’s Bullock and Kent are set to appear before the Senate Economics Legislation Committee – Supplementary Budget Estimates 2025-26 at 9am.

Hasset and liability, Benoit Anne, MFS Investment Management

 Kevin Hassett, the white House economic adviser, is reportedly in the front seat to get the big Fed job. 

So, what does that mean? 

For a start, this would likely tilt the balance towards a more dovish Fed, given that the White House economic adviser is perceived to be fully aligned with the President’s wish for lower policy rates. On this basis, this would be supportive of being long US duration. 

The US 10yr rates have not convincingly broken down the 4% barrier but the market will likely take another strong shot at that when we get more Fed dovish signals in the period ahead, although the dovish signals will likely be more supportive of the front end of the curve. 

While there are a lot of rate cuts already priced in, four over the next year, a more dovish Fed will likely meet market expectations. On the more negative side, however, a Hassett appointment would prolong concerns over the persisting attacks on the Fed independence, which, in an extreme case, could seriously undermine global investor confidence and impact the long end. 

The path to a full take-over of the FOMC is not straightforward, but global investors are going to watch this issue closely.

Are rate hikes on the horizon? Not in the US of course, where the Fed seems to be firmly in dovish mode, but rather on the other side of the world. Talking to our Asia Pacific rates strategist, Carl Ang, Australia indeed appears to be a prime candidate for some policy tightening in the pipeline. This reflects stronger activity and inflation strengthening above RBA’s target. 

Against this backdrop, Carl is of the view the local curve may bear flatten in the period ahead, especially as rate hike pricing remains relatively modest. Bear flattening is an outlier these days, as bull steepeners are still in fashion in quite a few places, but that also illustrates that we are facing significant monetary policy divergence across the globe, which provides attractive opportunities for an asset manager with a global mandate.

Emerging market equities on our radar. 

Emerging market equities can offer a compelling outlook for investors driven by robust earnings growth and positive revisions, particularly in Asia. Recent data highlights strong performance in Korea, India, and Latin America, with technology and digital platforms accelerating expansion as younger consumers embrace innovation. 

Sectoral momentum is evident in Financials, Industrials, and Materials, while local brands and fintech are gaining market share by meeting evolving needs in a young and dynamic consumer market. 

Critically, emerging markets are at the heart of the global AI supply chain, supplying essential hardware and semiconductors, and indifferent as to whose GPU’s or hardware wins. They are key sources of strategic raw materials for national security and industrial independence. For example. last week the US Dept of Defense, MP Materials and Saudi Arabia’s Maaden announced a joint expansion of rare earths and critical minerals processing. 

Although the EM index is concentrated in a few countries, China, Taiwan, India, and South Korea, earnings forecasts remain strong, with 12-month forward growth expected to outpace developed markets. Risks such as regional divergence and macroeconomic uncertainty persist, but the dynamic landscape offers differentiated opportunities to engage on accelerating structural changes. 

Overall, in our view emerging markets present attractive prospects, supported by structural changes, digital adoption, with improving earnings growth.

The nature of these divergent economies supports the need to be selective and informed which will be key to navigating these shifts and capturing their full potential.

AI shortages to define 2026 for markets: Nigel Green, deVere CEO

AI hardware shortages are set to define markets in 2026 as pricing power shifts and volatility rises.

The warning comes as the AI boom is rapidly evolving from a growth story into a supply-shock story, and it is shaping up to be one of the defining investment themes of next year.

The pace of AI infrastructure expansion is colliding with physical limits in global supply chains, creating shortages of critical components and forcing markets to confront a new reality.

This imbalance is already pushing up prices, concentrating market gains, and raising the risk of volatility.

 In 2026, this dynamic is likely to move from background noise to centre stage for investors. The buildout of data centres, cloud capacity, and AI computing power is driving intense demand for advanced chips, high-bandwidth memory, networking hardware, and power systems.

 Supplies of several of these components are tight, with prices for advanced memory and specialised silicon rising sharply as manufacturers prioritise large AI customers.

This is where the AI story turns hard-edged. It becomes about bottlenecks, allocation, and who controls supply. Those bottlenecks are already altering behavior across markets.

Hyperscalers and enterprise buyers are locking in long-term supply agreements and committing capital well in advance, effectively reserving capacity for themselves. This enhances revenue visibility for some suppliers but leaves others exposed.

When scarcity appears, pricing power moves instantly. The companies sitting on essential components can protect margins and dictate terms. Everyone else absorbs the pressure.

 Equity markets are responding in kind. A small group of hardware and infrastructure firms is capturing a growing share of returns, while large parts of the tech universe struggle to keep pace.

Index performance increasingly rests on a narrow base, masking weakness elsewhere. This concentration matters. Markets look stronger on the surface, but underneath they’re becoming increasingly fragile.

The impact does not stop with AI specialists. Consumer electronics producers rely on many of the same components now being diverted into data centres.

 Smartphone makers, laptop manufacturers, and device producers face higher input costs and constrained supply, increasing the likelihood of price rises for consumers.

For markets, this tension matters because it distorts signals. Falling headline inflation encourages expectations of easier financial conditions but rising tech costs squeeze margins for manufacturers and slow upgrade cycles for consumers.

 It creates earnings risk in parts of the tech sector even as macro indicators appear supportive.

 In 2026, this divergence is likely to be more pronounced as AI-related demand scales further and supply constraints persist.

 Investors may face an environment where inflation looks under control in aggregate, yet pricing pressure remains intense in precisely the sectors driving capital expenditure and market leadership.

 The implication is a shift in how risk should be assessed. The classic assumption that tech benefits broadly from innovation cycles no longer holds in the same way when hardware scarcity dominates.

 AI is not lifting all boats; it is selecting winners and losers.

Volatility is likely to rise as 2026 approaches. Earnings surprises tied to delivery delays, pricing changes, or capacity expansions will move stocks more sharply than macro headlines. Investors will need to pay closer attention to contract structures, supply visibility, and inventory dynamics.

The days of vague AI exposure are over. AI demand is real and durable, but scarcity, among other factors such as performance over hype, will now be driving the market narrative.

Investors ignoring that shift do so at their own risk.

Corporate news in Australia

-Tulla Resources is selling down a -6.5% stake  ($129m) in Pantoro Gold ((PNR)).

-Collins Foods ((CKF)) shares fell despite record 1H26 earnings and an upgraded outlook for the FY26.

-Analysts continue to expect robust M&A activity in insurance broking despite the failure of the AUB Group ((AUB)) buyout.

-Di Pilla’s family takes a 20%-plus stake in HMC Capital ((HMC)).

-Healthscope receiver is expected to decide on Calvary’s 12-hospital bid with multiple competitors.

-Five V Capital invests in Agile Energy to increase solar and battery capacity to 200MW-plus.

-Qantas Airways ((QAN)) upgrades first class with luxury amenities and Neil Perry menus.

-Macquarie Technology Group ((MAQ)) completes its $350m IC3 Super West centre and readies for expansion and new financing plans.

-Corporate Travel Management ((CTD)) to audit Australian government charges after -GBP80m UK overcharge.

-Melbourne start-up Bodd raises $15m, valuing the body scanning start up at $110m.

On the calendar today:

-AU 3Q GDP

-US ADP Nov Employment

-US Sept Import/Export Price Indexes

-BATHURST RESOURCES LIMITED ((BRL)) AGM

-FISHER & PAYKEL HEALTHCARE CORPORATION LIMITED ((FPH)) ex-div 22.35c

-RADIOPHARM THERANOSTICS LIMITED ((RAD)) EGM

-TOUBANI RESOURCES LIMITED REGISTERED ((TRE)) AGM

-WISETECH GLOBAL LIMITED ((WTC)) investor briefing

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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