The Overnight Report: Relief Reversal

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            [2] => ((AUE))
            [3] => ((CVL))
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            [2] => AUE
            [3] => CVL
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This story features KMD BRANDS LIMITED, and other companies.
For more info SHARE ANALYSIS: KMD

Everything that went up yesterday is poised to sell off today and vice versa as the US President's TACO happened overnight.

But is it real or sustainable?

Those questions will be asked later. First we have a positive opening of Tuesday's session ahead.

Good morning,

Is US President Trump playing the markets, and rewarding his mates by signalling them beforehand about his next TACO move?

The past 24 hours have seen multiple indications both statements in that opening sentence might be correct.

Consider the following: 5 minutes before the President announced a halt to attacks on Iran someone placed a $1.5bn bet on stocks going up and dumped US$192m in oil.

As someone stated on his social media post: nobody risks US$1.5bn on a hunch.

Someone else just posted: you can’t make up this unbelievable level of insider trading.

Anyway, the official messaging from Iran is there are no talks taking place whereas Trump was posting updates on “productive talks” to end hostilities.

Traders won’t fight the tape today, of course, and SPI futures are suggesting yesterday’s index retreat is likely to be compensated for at today’s opening through a relief bounce of similar magnitude.

J.L. Bernstein

We finally got the headline everyone wants. Trump paused the Iran strikes for five days to allow for talks. 

Oil sold off hard, equities caught a massive bid, and the bond market took a deep breath. 

I’m glad for the relief, but I’m not deeming this as the beginning of the end until we see actual ships moving through the Strait again.

The Five-Day Window 

Trump backed off his weekend ultimatum to destroy Iranian power plants. He’s giving diplomacy a five-day runway after citing productive talks. 

This triggered an immediate relief rally across every major asset class. But Iran’s foreign ministry denied direct talks are even happening. 

One bad headline breaks this market right back down.

Crude Gives Back The War Premium 

Oil fell out of bed the second Trump’s post hit Truth Social. Brent dropped below US$100 for the first time in days. WTI settled near US$88. 

The paper market is selling off aggressively, but physical supply remains tight. Chevron CEO Mike Wirth said fuel markets in Asia are much tighter than futures suggest. 

Even in a best case, Société Générale sees oil holding around US$75 at year-end… well above the US$70 level before the war started.

Wall Street’s Reality Check 

The market is cheering today, but the math from the last few weeks is still doing damage. 

Goldman Sachs bumped recession odds to 30 out of 100, citing the energy shock and tightening financial conditions. 

Traders now see a 57-in-100 chance of at least one Fed rate hike this year, up from zero a week ago. 

Gold is officially in a bear market, down more than -20% from its all-time high.

Chris Weston, Head of Research Pepperstone

The S&P 500 closed up 1.2%, with the Nasdaq also gaining 1.2%. Breadth was strong, with 76% of S&P 500 stocks closing higher and all sectors finishing in the green, led by consumer discretionary, materials and technology. 

S&P futures traded down to 6,500 before staging a strong rebound, with buyers stepping in aggressively after range lows were taken out and short positions were covered.

Despite the rebound, markets are not out of the woods. Price action could remain choppy into Friday’s revised deadline. 

The improvement in risk sentiment may carry into Asia, which had previously positioned for the earlier deadline. 

The key question is whether participants see this as a genuine extension that brings a deal closer, or simply a delay that prolongs uncertainty.

The US dollar has seen selling on the back of the move lower in crude and the broader repositioning in risk. However, there is little conviction in the move, and conditions remain ripe for sharp reversals.

It has been a highly active session driven by headline risk and rapid repositioning. 

Attention now turns squarely to Friday, with markets bracing for the next phase as we head into the weekend.

RBC Capital:

President Trump once again triggers an oil market selloff by signaling that the war will end soon, but it is unclear how far back-channel talks have progressed or if the IRGC is in any mood to settle at this stage when they remain in firm control of the Strait of Hormuz.

Iranian state media swiftly denied President Trump’s claims that there had been successful talks, and the Foreign Ministry released a subsequent statement that the White House was merely seeking to buy time for US military operations and to reduce energy prices. 

Certainly, we think it is likely that Qatar, Turkey, Pakistan, and Oman have been passing messages between Tehran and Washington, but we are skeptical that we are just days away from a lasting deal, even if Iran Parliament Speaker Mohammad-Bagher Ghalibaf was indeed on the receiving end of those diplomatic overtures. 

Ghalibaf, for his part, also denied that negotiations have been held, calling the commentary “fake news […] intended to manipulate financial and oil markets.”

Everything indicates the IRGC is now being run by younger, more hardline members, and the killing of national security head Ali Larijani likely eliminated an interlocutor who would have been expected to play a key role in any diplomatic negotiations with Washington. 

Ongoing oil exports and the recent lifting of US sanctions likely reduces their near-term financial need to make sweeping concessions to Washington.

This latest “over soon” intervention comes against a backdrop of an increasing buildup of US forces, with thousands of Marines being deployed to the region along with additional US naval assets. 

Meanwhile, the Israelis are continuing with their attacks on infrastructure sites, today hitting multiple targets around Tehran, with widespread blackouts reported. 

Lower oil prices likely advantage those seeking a more maximalist agenda aimed at degrading IRGC capabilities. 

At the same time, Iran continues its efforts to raise the economic cost of the war, with multiple regional energy facilities targeted in recent days, along with attacks targeting US military bases and diplomatic sites today.

All this underscores the essential fact that we are not dealing with single decision-maker dynamics.

ANZ Bank: Australia’s CPI steady before petrol impact

We expect February’s data to be flat, translating to stable 3.8% y/y growth. 

Trimmed mean inflation is expected to have decelerated slightly to 3.3% y/y from 3.4% y/y in January. 

The data will not include the impact of late February’s escalation of the Middle East conflict, which will flow through to the March data primarily through automotive fuel which is around 3% of the basket. 

The indirect impacts of the oil price shock on inflation will likely become more evident after March. 

Corporate news in Australia

-KMD Brands ((KMD)) has rejected a takeover approach from US surfwear group Stokehouse after concluding the proposal would dilute shareholders and fail to deliver value.

-Multiple market participants have informed Capital Brief that ASIC has intensified its scrutiny of the private credit sector in recent weeks

-Perseus Mining ((PRU)) buys 9.9% stake in Aurum Resources ((AUE))

-Google halts $20bn Australia data centre plan over tax fears

-ABC staff to strike for first time since 2006

On the calendar today:

-JP Feb CPI

-US 4Q Non-farm productivity

-US 4Q2025 Unit labor costs

-XX Global PMIs Manufacturing

-CIVMEC LIMITED ((CVL)) ex-div 2.50c (100%)

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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