The Overnight Report: Aussie Dollar Lifts

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This story features COMMONWEALTH BANK OF AUSTRALIA, and other companies.
For more info SHARE ANALYSIS: CBA
The company is included in ASX20, ASX50, ASX100, ASX200, ASX300 and ALL-ORDS

US markets took a breather, trading flat to slightly down on a higher than expected January jobs report.

After a robust rally on the ASX200 yesterday, boosted by CommBank and financials, futures are pointing to a weak to flat start as the (volatile) earnings season rolls on.

Good Morning,

The Australian share market rallied strongly on Wednesday with the ASX200 closing up 147 points or 1.7% to 9015, edging closer to a fresh record high.

CommBank’s ((CBA)) financial update surprised positively and its shares rallied sharply, up 6.8%, taking financials up 3.5%.

Healthcare lagged as CSL ((CSL)) –in search of a new CEO– yet again disappointed. Its shares lost -4.6% after opening the day’s session down in double digits.

Today’s calendar includes results releases by AMP ((AMP)), ASX ((ASX)), Pro Medicus ((PME)), and South32 ((S32)).

https://fnarena.com/index.php/reporting_season/

What happened overnight, NAB Markets Today extract

US January Payrolls rose 130k, well above the consensus 70k. The unemployment rate fell to 4.3%, below consensus for it to remain at 4.4%. It was good news wherever you looked in the household survey. 

Participation ticked up, prime age employment rebounded to a new cycle high of 80.9%, and a sharp drop in youth unemployment erased almost all the increase seen through 2025.

One month’s data does not make a trend, but for a Fed that saw ‘some signs of stabilisation’ in January, this data will only further solidify that assessment. 

There may have been some support from warmer-than-usual weather during the survey week, and the WSJ headlines that gains were concentrated in healthcare and social-assistance fields, but it is still an overwhelmingly positive report.

Usual benchmark revisions to March 2025 were incorporated to reflect comprehensive count of jobs from the QCEW. The March 2025 employment level was revised -862k lower. That’s a big revision –0.5% of employment, compared to a 10yr absolute average of 0.2% – but it was well anticipated and near consensus for -825k. 

There were also revisions to the post benchmark period due to an update to the birth-death model to incorporate more timely information. Payrolls growth now averaged 15k over 2025, down from 49k. The revisions shouldn’t change the assessment. Fed Chair Powell said in December there was likely an upward bias of around 60k a month to payrolls estimates. This is just removing some of that bias.

Kansas’s Fed Chair, Schmid spoke after the data, and, true to form, does not see a case for cuts. He called the jobs report ‘good’ and said that “in my view, further rate cuts risk allowing high inflation to persist even longer”. 

He said it was appropriate to hold rates at a somewhat restrictive level and that that may not currently be the case. He also repeated his view the composition of the Fed’s Treasury holdings should mirror the overall market. He said that by concentrating new purchases in Treasury bills, the Fed is moving in that direction.

Locally, new housing credit was strong. The value of new housing loan commitments rose another 9.5% q/q in4Q2025 to be 21.5% higher over 2H2025. While growth in 3Q was led by investor lending, owner occupier lending growth accelerated in 4Q. 

RBA Deputy Governor Hauser spoke in a ‘fireside chat’ and reiterated the key messages from the February meeting. He said inflation was too high and the RBA can’t let it persist. He summarised the shift to a rate increase last week to three things that surprised their earlier assessment.

Global growth was much stronger than feared, low risk premia and strong credit growth mean broader financial conditions were not as restrictive as earlier assessed, and demand growth in the economy has been stronger than they thought relative to supply. 

Governor Bullock appears at Senate Estimates this morning and Assistant Governor Hunter speaks late this afternoon (at a lunch in Perth) on the labour market.

In China, CPI was up just 0.2% y/y, from 0.8% and below the 0.4% consensus. The slowing was a little larger than expected but was mostly driven by base effects due to the timing of lunar new year, which means it should rebound next month. PPI deflation slowed to 1.4% from 1.9%, near expectations for 1.5%.

US yields jumped on the strong payrolls release but have retraced some of the initial move. 2yr yields were up 10bp to an intraday high of 3.55% and remain around 6bp higher over the day at 3.50%. Fed pricing pushed out cuts. 

There is now -53bp priced by the end of the year, from 60bp, and 1-8bp for June, from 26bp. That more than reverses the deepening cut pricing after second tier indicators a week ago were interpreted as weak. 10yr yields rose around 7bp on the data to an intraday high of 4.20% and had mostly unwound that move ahead of the Treasury’s US$42 billion 10-year note auction. 

The auction was awarded at 4.177% vs 4.163% when-issued yield, a sign demand fell short of expectations and seeing yields back up a couple of bp. 10yr yields are currently around 4.17% and 4bp higher than the Sydney close. Treasuries underperformed other markets, with global benchmark yields generally a little lower.

In FX markets, the USD is little changed on the DXY after paring initial gains in after payrolls. The euro lost -0.1% at 1.1883, while the yen was again the G10 out performer, up 1.0% against the dollar. USDJPY fell to 152.85, 2.8% below the end of last week as the market continues to give PM Takaichi the benefit of the doubt in terms of LDP election promises and the implications for the fiscal outlook. 

The AUD was 0.8% stronger, outperforming both through Asia yesterday and overnight to currently sit near its intraday highs at 0.7133, just shy of its February 2023 high of 0.7158.

US equities initially responded positively to the payroll’s numbers, but the S&P500 ended flat with the Dow Jones stepping back from record highs and down -0.56%.

Nasdaq was slightly softer. Gains were led by energy, while financials, communications services, and consumer discretionary fell.

ANZ Bank, Australian Morning Focus, Commodities extract

Gold and silver rallied early in the session as investors contemplate the outlook for further rate cuts by the Fed. 

The case was strengthened following Tuesday’s surprisingly weak US retail sales data. White House counsellor Peter Navaro warned Wall Street to prepare for low official jobs growth. 

Those comments echoed those of Keven Hassett, the director of the National Economic Council. However, the US jobs report ended up stronger than anticipated. That saw US Treasuries hit the hardest, with 2y bond yields rising to 3.5%. 

Gold and silver prices fell but quickly recovered to end the session higher. 

Silver prices were particularly strong, as traders weighed up a bullish industry report. The Silver Institute said the market will be in deficit for a sixth consecutive year as surging investment outweighs weaker demand for jewellery. 

The base metals sector edged higher amid improved risk appetite among global investors. Sentiment was also supported by reports that China may boost copper stockpiles. This follows concerns of that the US is building its strategic stockpile to help mitigate risks to the supply chain. 

Nickel rallied sharply after reports that output must be slashed at the world’s biggest nickel mine in Indonesia. Production at Weda Bay, operated by Eramet and Tsingshan Holding, will be capped at 12mt of nickel ore this year. That’s down from 42mt in 2025. The country also intends to slash production quotas across its nickel industry. 

Authorities have announced that nickel production would be reduced to 260–270mt, down from 379mt in 2025. This appears to be a response to lagging nickel prices, which have fallen by more than -40% over the past three years as Indonesian nickel has swamped the market. 

Iron ore futures were relatively unchanged as the industry slows down ahead of the Lunar New Year holiday. Traders have been reluctant to add to already plentiful stockpiles while demand remains subdued. However, this week’s pledge by the People’s Bank of China to continue implementing moderately loose monetary policy and prioritising stable economic growth has provided some optimism on demand later this year. 

Crude oil futures gained, as geopolitical tensions in the Middle East outweighed concerns of a surplus in oil. The Wall Street Journal reported the US is considering seizing oil tankers with Iranian crude. 

This follows a report from Axios earlier this week that Trump might send a second aircraft carrier to the Middle East if US-Iran talks fail. Israel’s Prime Minister Netanyahu is due to meet Trump this week, with reports he will urge Trump to push for a broad curtailment of Iran’s military activities in the region. 

This overshadowed an unexpectedly large increase in inventories in the US. EIA data showed US commercial crude oil stockpiles rose by 8,530kbbl last week. This was the biggest increase since January 2025. The rise was driven by a surge in imports. European natural gas rose for the first time in three days following weather reports that point to a cold snap later this month. 

North Asia LNG prices were largely unchanged as buyers remain on the sidelines ahead of the Lunar New Year.

Corporate news in Australia

-Neuren Pharmaceuticals ((NEU)) announces a 12-month, up to 5% on-market share buyback, citing undervalued assets

-AGL Energy ((AGL)) seeks partner to develop a 2GW-plus portfolio of wind farms and agreed to sell its telco business (400k customers) in exchange for $115m in Aussie Broadband ((ABB)) shares, with an option to increase its stake

-Aussie Broadband ((ABB)) will become the third biggest internet services provider after AGL Energy ((AGL)) deal

-CEO of ASX ((ASX)), Helen Lofthouse is stepping down in May with the board in no rush to appoint a new CEO

-Lendlease Group ((LLC)) has secured Cbus Property and a super fund investor to buy out investors in a vehicle which controls interests in four major Australian malls 

-PBIM’s real estate arm is investing $1.2bn into a data centre campus in Melbourne

-Firmus is seeking to raise US$300m post a US$10bn debt commitment from Blackstone and Coatue

-Nuveen Natural Capital, PSP Investments and Omers are among the parties circling Paraway Pastoral at around a $3bn valuation

On the calendar today:

-UK Dec GDP

-US Initial Jobless Claims

-AMP LIMITED ((AMP)) FY25 Earnings

-ASX LIMITED ((ASX)) 1H26 Earnings

-BREVILLE GROUP LIMITED ((BRG)) 1H26 Earnings

-CHARTER HALL LONG WALE REIT ((CLW)) 1H26 earnings report

-INSURANCE AUSTRALIA GROUP LIMITED ((IAG)) 1H26 Earnings

-NORTHERN STAR RESOURCES LIMITED ((NST)) 1H26 Earnings

-ONEVIEW HEALTHCARE PLC ((ONE)) FY25 Earnings

-ORORA LIMITED ((ORA)) 1H25 Earnings

-ORIGIN ENERGY LIMITED ((ORG)) 1H26 Earnings

-PALADIN ENERGY LIMITED ((PDN)) 1H26 Earnings

-PRO MEDICUS LIMITED ((PME)) 1H26 Earnings

-SOUTH32 LIMITED ((S32)) 1H26 Earnings

-TEMPLE & WEBSTER GROUP LIMITED ((TPW)) 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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