The Overnight Report: Oracle Hits AI Sentiment

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A public fall-out between Oracle and a key financial partner triggered sell orders for AI stocks on Wall Street.

SPI futures are suggesting another nothing burger awaits Australian investors today, though oil prices jumped and (selected) mining stocks might still be flavour of the season.

Good morning,

Tech and AI were once again at the centre of sagging market sentiment on Wall Street overnight. If one needs to blame someone, let’s point at Oracle founder, CTO and executive Chair Larry Ellison.

Oracle was always going to be the weakest link at the pinnacle of today’s AI development race, see founder Ellison, its questionable history and legacy and a much weaker constituency when compared to Microsoft, Alphabet & Co.

Overnight Oracle’s share price took another beating, widening the draw down since peaking in September to some -40% on what appeared to be a public fall-out with its key financial backer for data centres development, Blue Owl Capital.

In short: Blue Owl is no longer involved in a US$10bn deal for Oracle’s next facility in Michigan, raising questions about what exactly is happening, why, and what’s next for Oracle’s plans?

The FT reported Blackstone is in talks with Oracle, but no deal has been signed.

The funding turbulence is widely interpreted as a signal of increasing strains in Oracle’s AI infrastructure strategy.

Overnight, the Oracle news dragged down everything AI related. That’s how sensitive markets have become to (potentially) negative developments surrounding AI.

Sentiment was further shaken by news Google is pushing to break Nvidia’s AI stranglehold by making its own chips work seamlessly with Meta-backed PyTorch in a new initiative.

Amazon is reportedly in talks to invest US$10bn in OpenAI.

And oh yeah, US President Trump has ordered a blockade of sanctioned oil tankers entering and leaving Venezuela.

Locally, ANZ Bank ((ANZ)) and Elders ((ELD)) are holding annual meetings today.

Four central banks hold meetings on Thursday: Sweden’s Riksbank, Norway’s Norges Bank, the Bank of England and the European Central Bank.

ANZ Bank, Extract

US equity markets fell ahead of tomorrow’s November CPI report.

US Treasuries pared earlier losses following dovish comments from Fed Governor Waller. Waller reiterated his view that labour market conditions are soft and said he views current policy settings as 50–100bp above neutral.

That suggests he is one of the four FOMC members who see fed funds below 3% by the end of 2026, as shown in the FOMC’s December dot plot.

In Europe, the Euro Stoxx 50 was down -0.6%, while the FTSE 100 rose 0.9% following softer UK inflation data.

The US 10y Treasury yield fell -2bp to 4.15%. WTI rose to USD56.2/bbl and gold was at USD4,335/oz.

Australia’s Mid-Year Economic and Fiscal Outlook (MYEFO).

The half year update shows little change from the May 2025 budget. For 2025-26, the deficit is now estimated at -$36.8bn (from -$42.1bn), while the three forward estimate years show only small changes since May.

We see four main points to take away from the MYEFO:

1) Fiscal policy is more supportive of growth relative to the pre-pandemic period;

2) there is a ‘wedge’ between the underlying and headline cash balance estimates;

3) Treasury appears to have a more optimistic view than the RBA on GDP growth; and

4) over the medium term an increase in revenue returns the budget to balance

Crude Oil

Crude oil rallied in response to a sudden ratcheting up of geopolitical tensions. President Trump increased pressure on the Venezuelan government by ordering a blockade of sanctioned oil tankers going into and leaving the country.

Last week, the US seized an oil tanker and positioned warships, aircraft and troops near Venezuela’s coast. The moves threaten to disrupt a significant amount of crude oil.

Venezuela exported around 950kb/d of crude and fuel in November. Crude oil alone was 780kb/d. The market rallied on the news, with Brent crude jumping more than 1%.

However, the gains were limited amid conjecture on the amount of oil that would be impacted. The Centre for Strategic & International Studies estimates less than 20% of this oil is transported on shadow/sanctioned tankers.

This brings the total amount of crude oil at risk to around 200–300kb/d. Despite signs that Ukraine is close to agreeing a proposed peace plan, there are mounting concerns that Russia will reject its terms.

So much so that the US is preparing a fresh round of sanctions on Russia’s energy sector if that occurs.

Such measures may include targeting vessels that Russia uses to transport its oil, as well as traders who facilitate the transactions.

Rising geopolitical risks overshadowed the EIA’s weekly inventory report which showed a rise in domestic fuel inventories.

Gasoline stockpiles rose 4,808kbbl last week, while distillate fuel was up 1,712kbbl. There was also a relatively small draw in crude stocks (-1,274kbbl).

Copper

Copper led the base metals higher ahead of economic data that could impact the US Federal Reserve’s stance on monetary policy.

Further interest rate cuts would be a tailwind for the sector. The market also shrugged off yesterday’s selloff as it looks ahead to tightening markets.

Copper demand has been relatively strong, with China’s imports elevated. Demand in the US is also expected to pick up amid an AI-related investment boom.

Gold

Gold rose, approaching record levels, as investors sought haven assets amid rising geopolitical tensions around Venezuela. Expectations of further rate cuts also boosted sentiment.

Platinum hit a 17-year high amid tight supply and elevated trading activity in a new Chinese future contract. The London market continues to show signs of tightening as banks store metal in the US to insure against the risk of tariffs.

The annualised cost of borrowing platinum for one month is at around 14%, a historically high level.

This has been exacerbated by the new contract on the Guangzhou Futures Exchange. Trading volumes on the new offering were significant, raising the prospect of rising imports into the Chinese market.

Corporate news in Australia

-GrainCorp ((GNC)) issued profit warning and plans to sell its Canadian supply chain GrainsConnect at a -$5–10m loss, causing its shares to fall sharply

-Yet another profit warning from Treasury Wine ((TWE)) highlighted ongoing weakness in the US and China markets.

-Boss Energy ((BOE)) paused trading ahead of an update on its troubled Honeymoon project.

-Continental AG puts Australian Mycar chain up for sale

-Humm Group ((HUM)) waited four weeks before reporting a take-over approach from Credit Corp ((CCP)) amidst shareholder push to oust board members

-Westgold Resources ((WGX)) sells Mt Henry project to Alicanto for $64.6m, retaining 19.9% stake

-Santos ((STO)) is divesting two non-core assets as part of its portfolio optimisation

On the calendar today:

-NZ 3Q GDP

-EZ ECB MonPol Decision

-US Nov CPI

-US Nov Real Earnings

-US Weekly Jobless Claims

-ANZ GROUP HOLDINGS LIMITED ((ANZ)) AGM

-ELDERS LIMITED ((ELD)) AGM

-GOLDEN HORSE MINERALS LIMITED ((GHM)) 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.

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