The Overnight Report: Tech,The Comeback Kid

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This story features PMET RESOURCES INC, and other companies.
For more info SHARE ANALYSIS: PMT
The company is included in ASX300 and ALL-ORDS

US markets continued to recover at the start of the week, led by further snap back buying in technology shares.

The Nasdaq led American indices after last Thursday's sell off. 

The day after the strongest day on the ASX200 since April 2025, futures are pointing to further gains as earnings season warms up.

Good Morning,

The Australian market rebounded strongly on Monday, up 161points or 1.9% to 8,870, its best daily gain since April 2025.

Tech rallied 3.3%, alongside strength in miners and property.

Healthcare posted the smallest sector gain on the day.

What happened overnight, NAB Markets Today extract

It has been a positive start to the week for equities with US and European stocks showing positive returns, following the good vibes from Asia and particularly Japan on the back of PM Takaichi’s landslide win. 

It all started in Japan, after news late Sunday that Prime Minister Takaichi had won the Lower House election with a super majority. On Monday the PM sought to reassure markets, pledging to maintain fiscal responsibility as she pursues a two year cut to the food sales tax without issuing new debt. 

She said the measure is a temporary bridge toward a future tax credit system, while promising to find offsets through savings and subsidy reforms. Markets reacted positively, with equities surging and the yen steadying, amid optimism over her strong mandate and reform agenda, which includes strengthening defense, pursuing constitutional revision, and maintaining solid US ties.

The Nikkei closed almost 4% higher on the day while JGB yields from 2 to 10 years maturity closed up between 3-6bps with ultra long bonds showing a small fall in yield. USD/JPY traded as high as 157.75 in early trading before reversing course.

Overnight broad USD weakness has seen it trade down towards 155.50 with the pair now trading a tad higher at 155.70.

The market is clearly giving PM Takaichi the benefit of the doubt, the LDP now has a super majority which means election promises are very likely to be delivered (VAT suspension, defence spending, depreciation incentives, etc).

How they are funded remains an unknown. Meanwhile, the BoJ is also expected to play a supporting role, does this mean a slower pace of normalisation? Time will tell, but for now our sense is that USD/JPY is likely to remain a volatile currency.

In other news, Bloomberg reported Chinese regulators have urged major banks to curb their exposure to US Treasuries, warning that concentrated holdings could heighten vulnerability to market volatility, according to people familiar with the guidance.

The verbal instructions, which don’t affect China’s official state-held Treasury portfolio, ask banks to limit new purchases and trim large positions as part of a broader push to diversify risk rather than signal geopolitical tensions or doubts about US credit.

The move comes as global investors increasingly debate the safe haven status of US debt.

News of the China guidance nudged Treasury yields higher and the dollar slightly lower, in the end the impact on UST proved short lived. The 10y traded to an overnight high of 4.2479% and now trades at 4.19%, -2.6bps lower relative to Sydney closing levels. 

The 2y Note declined by a similar amount and now trades at 3.48%. Earlier in the session European bonds closed little changed with UK Gilts the notable under-performers with the 10y tenor up 1.3bps to 4.53%, political uncertainty not helping Gilts. Australian bond futures followed the move down in UST yields with the 3y up 1.5 pts to 95.67 and the 10y up 2.5 to 95.13.

UK assets underperformed from equities, bonds (gilts) and GBP amid a rise in domestic political uncertainty. Prime Minister Starmer’s grip on power remains tenuous. Adding to his already unpopular status, the revelations that he knew Mandelson’s links to Jeffrey Epstein when he appointed him as Ambassador to the US haven’t helped.

Overnight, Starmer received unified backing from his cabinet after Scottish Labour leader Anas Sarwar called for his resignation, giving the prime minister crucial breathing room. As my BNZ colleague Jason Wong noted in his daily note, contenders to replace Starmer are probably thinking it best to wait until a poor showing by Labour in May local/regional elections before attempting a bid.

The USD is broadly weaker with a mix of safe havens (CHF) and commodity linked currencies (NOK), including the AUD, at the top of the leader board.

Australian Household spending volumes rose 0.9% in Q4 (1% excluding tobacco), lifting annual growth to 2.4%, driven by stronger outlays on clothing and footwear, household furnishings, and hospitality services. 

While the result signals solid consumption in the quarter, it also suggests some downside risk to the RBA’s Q4 consumption forecast, though policymakers had already anticipated that much of the strength reflected spending pulled forward to take advantage of discounts.

The final Q4 real consumption figures will be confirmed in the 4 March GDP release, with January spending data providing an early read on consumer momentum heading into 2026.

Speaking overnight and with little impact on the euro, ECB’s Lagarde noted the Bank “remains focused on price stability and fostering a stronger Europe,” but called on policy makers to implement “urgent collective action” to establish a savings and investment union, create a digital version of the euro, deepen the single market, boost innovation and simplify laws.

Moving onto commodities, Gold is leading the gains up 2% with metal prices (1.56%) and oil not too far behind (Brent up 1.25% and WTI up 1.05%). 

In geopolitcal news, the US warned American flagged vessels to avoid Iranian waters in the Strait of Hormuz after Iran’s Revolutionary Guard harassed a US flagged tanker, reigniting geopolitical risk in a key chokepoint that handles about a third of global crude flows.

Lastly, credit has had a quiet start to the week with spreads little changed both in the US and Europe. Issuance on the other hand has been a different story. 

Alphabet is set to raise US$20bn from a US dollar bond offering on Monday –more than the US$15 billion initially expected with US$100bn demanded– and is also pitching investors on what would be its first ever offerings in Switzerland and the UK.

Bloomberg notes the jumbo offering puts weekly issuance more than halfway toward dealers’ US$40bn estimate. Europe also had a busy day with Bloomberg reporting Monday was the busiest by number of issuers and sales volumes since January 12, with 15 borrowers raising a total of EUR13.61bn.

What’s next for gold? Franklin Templeton extract, Steve Land

What has driven gold prices higher, created volatility and what is next?

Gold has historically performed well during periods of financial and geopolitical stress, and recent trade tensions, global conflicts and fiscal uncertainty across major economies have reinforced this trend.

Structurally, elevated government debt, persistent fiscal deficits, and greater tolerance for inflation are undermining confidence in fiat currencies.

High levels of leveraged speculation, particularly in China, helped to push prices higher before a sharp correct to end of January.1 Despite the record declines, we still see fundamental support for elevated gold prices given constrained supply and growing demand.

From a supply side only 216,000 tonnes of gold have been mined. It would fit into a cube 22 meters on each side. At spot price of US$4,500 it would be worth US$31 trillion. Production only adds about 2% per year.

About two thirds of gold has been extracted since the 1950s. Central banks have been net buyers since 2008, but still hold less than 20% of the world’s gold. 45% of gold exists as jewellery.

Why are miners lagging bullion?

Central banks and bullion-backed ETFs have fueled gold’s rally, allowing bullion prices to rise materially faster than flows into mining equities. Many miners trade below historic multiples, with elevated free-cash-flow yields and attractive enterprise value (EV)/ cash-flow multiples.

We think valuations have been trailing gold spot prices by ~20% for the past couple years, a striking disconnect.

Is the valuation gap justified?

We don’t think so. The disconnect reflects investor perception rather than fundamentals. Investors still remember past cycles of cost inflation, capital misallocation, and dilution, but in our view, the industry has changed.

Today, miners have stronger balance sheets, better capital discipline and higher shareholder returns.

At recent elevated gold prices, miners offer real operational leverage, with earnings and free cash flow climbing faster than the bullion price. Add continued macro tailwinds and gold’s meaningful negative correlation with the US dollar, and the case for miners looks well supported.

Do fundamentals support higher gold equity valuations?

In our view, absolutely. Elevated gold prices have driven exceptional earnings and cash flow growth. Third-quarter (Q3) 2025 delivered record profits for many producers, with Q4 likely to exceed those levels as gold averaged around US$4,150/oz, up circa US$700 quarter-on-quarter (q/q) and around US$1,500 year-on-year (y/y).

Revenues should rise circa 20% q/q and 55% y/y, while operating costs have been tracking less than 10%, materially expanding margins.

With flat production, the combination of strong cash generation and attractive valuations has also powered mergers and acquisitions (M&A), helping miners unlock value y/y, replace reserves and position for long-term growth.

How resilient are miners if gold prices decline?

While elevated bullion prices warrant some caution, we estimate miners have a substantial buffer. Sentiment can shift, think rising rates, easing inflation or declining geopolitical tensions but we estimate gold prices would need to fall below around US$3,500/oz before sector economics would start to resemble prior down cycles.

Higher gold prices improve access to capital, increasing the exploration and development potential as well as project viability.

We believe gold miners are supported by strong balance sheets, attractive valuations and multiple catalysts, including M&A.

When combined with an uncertain fiscal and macro backdrop, we remain constructive on gold and gold equities heading into 2026.

Corporate news in Australia

-PMET Resources ((PMT)) launches $110m capital raising

-Western Union is eyeing OFX Group ((OFX)) amid a strategic review

-KKR is continuing with Australian investments after GenesisCare losses

-Seek ((SEK)) is taking a -$356m impairment on Zhaopin investment ahead of 1H26 result

-Lenders push for receivership of Gupta’s Tahmoor mine

-Pepper Money ((PPM)) has confirmed a bid from Challenger ((CGF)) at $2.60 for no more than a quarter of the company and KKR would remain a shareholder

-Alphabet has attracted more than US$100bn of order for its US dollar bond sale, expected to total around US$15bn

-Zara billionaire joins Macquarie ((MQG)) as well as Brighter Super, Mercer and UniSuper in the $11.6bn take-over bid for Qube Holdings ((QUB))

-Perpetual ((PPT)) advances wealth unit sales discussions with Bain Capital

-Ironbark Asset Management is close to securing a global backer for its M&A plans

-Ramsay Health Care ((RHC)) to sell European hospital stake with a de-merger reported as unlikely

-Alliance Nursing is up for sale with McGrathNicol’s guidance

On the calendar today:

-AU NAB Business Confidence

-AU Westpac-MI Feb Consumer Sentiment

-US 4Q Employment Cost Index

-US Dec Import/Export Indexes

-AMOTIV LIMITED ((AOV)) 1H26 Earnings

-COMPUTERSHARE LIMITED ((CPU)) 1H26 Earnings

-REGION GROUP ((RGN)) 1H26 Earnings

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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