The Overnight Report: Two Weeks Extension

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This story features BANK OF QUEENSLAND LIMITED, and other companies.
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US markets staged a late afternoon recovery as the countdown to President Trump's 8pm (EST) deadline approached, boosted by Pakistan's Prime Minister urging a two-week extension of the deadline.

The Australian market rallied sharply higher on Tuesday, with futures indicating a positive start on Wednesday.

Media reports are suggesting that two-week extension has been granted, suggesting SPI futures are understating today's rally at the open.

Good Morning,

The Australian share market rallied strongly at the start of the shortened week, up 2% before pulling back to a 1.7% gain.

The ASX200 added 149 points to close at 8,729. Technology rallied 4% alongside solid gains across banks and miners.

Iran Flashpoints: Escalation Endgame, RBC Capital Markets, Helima Croft extract

Ahead of President Trump’s 8pm deadline tonight, we continue to see the near-term conflict path clearly pointing to escalation, even if the White House announces another extension.

The negotiating gap between Tehran and Washington remains wide and hence, we recommend treating the almost-clockwork Sunday news leaks pointing to “peace talk progress” with extreme caution.

The last 24 hours alone have brought further attacks on critical infrastructure, with both Kharg Island and Saudi Arabia’s Jubail facility struck, along with ongoing decapitation strikes, including one that killed the head of IRGC intelligence.

Our conversations in Washington last week have led us to conclude that the Overton window for kinetic action is potentially widening and that a decision by Washington to “finish the job” could entail the use of weapon types not previously used on the battlefield to-date if it does not want to commit to a massive troop mobilization.

We continue to hear that a full reopening of the Strait would require substantial military assets, including significant ground troops to secure over 100 miles of coastline and up to 20 miles of sea lanes.

Alternatively, the US could seek to occupy Kharg Island or the numerous islands surrounding the Strait, but such operations would not immediately free up the waterway for maritime traffic.

In the absence of a sweeping peace settlement, shipping traffic will remain below February levels as long as the IRGC retains drone and missile capabilities, with some leading experts suggesting a scenario resembling the Bab El Mandeb Strait.

While Houthi maritime attacks have largely subsided from highs in 2024, traffic volumes year-to-date are down roughly -50% from 2023.

We think Iran will continue to prioritize keeping oil prices high and therefore only allow a small number of fee-paying ships to pass. Hence, the Iraqi exemption is expected to be limited and may be the necessary price for keeping a militia presence in the country.

Today’s Big Picture, J.L. Berstein Market Overview extract

Trump’s Iran Deadline Arrives With No Deal

Trump posted that “a whole civilization will die tonight” as his 8 p.m. deadline for Iran hit with no agreement. Pakistan’s PM asked for a two-week extension.

The New York Times reported Iran walked away from talks entirely.

He’s pushed this deadline back multiple times now, but the language tonight is more aggressive than anything we’ve heard so far. 

Ackman Bids US$64 Billion for Universal Music 

Bill Ackman proposed a cash-and-stock deal to buy Universal Music Group and move its stock listing from Amsterdam to New York.

He owns about five percent and thinks the company is undervalued sitting in Europe.

The plan involves loading up on debt, buying back shares instead of paying dividends, and selling UMG’s Spotify stake.

Big financial makeover if it goes through. 

Medicare Payment Reversal Sends Health Insurers Higher 

The government finalized a 2027 Medicare payment increase for insurers averaging about two and a half percent.

That’s US$13 billion more going to insurance plans — a complete reversal from the original proposal which was basically flat.

Insurers had been lobbying hard, and it worked. UnitedHealth, Humana, and CVS Health all saw heavy buying.

NAB Markets Today Research extract

The world is once again on tenterhooks as the clock counts down to Donald Trump’s latest deadline for Iran to agree to US demands by 8pm Eastern Time Tuesday (10am AEST Wednesday).

Over the last 24-hours, while the US and Israel continue to attack Iran from the air, the US has increased its verbal pressure, with Trump threatening civilisation destruction, in addition to attacking civilian power plants and bridges. 

Markets have traded in narrow but volatile ranges and while the latest bellicose language snuffed out early session US equity gains for losses, a late-day report from Axios that claims progress has been made in negotiations between the US and Iran has seen equities pare a chunk of their losses.

Last minute news of mediator Pakistan requesting a two-week extension has seen US equities close  flat to slightly positive.

News early in the European session the US had bombed Kharg Island, coming against the backdrop of Iran’s counter threats of regional infrastructure attacks should civilian assets be targeted, brought fears of repercussions and an escalation of tensions into the deadline. 

The US confirmed, however, it was targeting Iranian military facilities, not civilian.

US President Donald Trump’s dire warning on Truth Social about threats to Iranian civilisation later today –-though he said he ‘does not want that to happen’– saw markets turn more negative and US equity futures turn sharply lower. 

Trump, however, continues to retain some optimism that, “something revolutionary wonderful can happen, who knows?” 

US Vice President J D Vance said, “Very shortly, this war will conclude” and the US hopes Iran “is smart,”. Like Trump, Vance remains hopeful in getting a ‘good resolution.’

While European equities could not recover and ended the day down around -1%, US equities had begun to pare the worst of their losses during early afternoon trading, underlining the view that markets continue to err on the side of either a further extension of the deadline or some sort of resolution.

The few responses from Iran on Tuesday, suggest however, there is little appetite to concede any ground. An unsubstantiated media report from Iran that followed Trump’s civilisation posting, claimed Iran had closed all diplomatic channels with the US. This was later denied.

Meanwhile Iran’s UN mission ruled out the possibility of a temporary ceasefire.

Late in the day, Axios reported progress had been made in the past 24-hours in US-Iran negotiations, though reaching a ceasefire before the US President’s deadline still looked, ‘like a long-shot.’ Axios quoted a US official saying, “the thinking in the White House has shifted from, ‘can we get there?’ to, ‘can we get there by 8pm?”

That saw US equities pare losses to around -0.5%. Oil prices fell back from early session highs of US$111.8 (Brent) to US$108 at one stage, before gyrating between US$109 and US$111. 

A very late session media alert that mediator Pakistan had requested a two-week extension to the looming deadline, and that Tehran was, ‘reviewing’ Pakistan’s proposal, has seen US equities return to flat. Oil prices have fallen back, with Brent last at US$107.

Yields pushed a little higher early on, led by German yields after ECB hawk Wunsch said he was going into the April (30th) meeting being ‘open in both directions.’

He said, “Either this crisis ends quite soon, and you know if we hike then we can probably undo that after a while”. “Or, this crisis is going to last and then the first hike will only be the first hike of probably a series.”

He added, “the way I feel comfortable putting this is, if this is not done by June, I think we’re going to have to hike, but I don’t want to exclude a hike in April.”

New York Fed’s Williams said his outlook for underlying inflation in the US was largely unchanged, despite his expectation that higher energy costs stemming from the war in the Middle East will boost overall inflation. 

While Williams sees higher headline inflation, he said there was no need to consider any change to the Fed’s benchmark rate. Williams said he had slightly downgraded his 2026 GDP forecast to a 2% to 2.5% range.

US economic data was second tier, with preliminary February durable goods declining -1.4% m/m against a forecast of a -1.2% decline. Non-defence, ex-air capital goods orders were better at 0.6% m/m against a 0.5% consensus, but January goods were revised to -0.4% from flat.

Earlier, EZ (Eurozone) and UK final March services PMIs fell back towards the 50 breakeven in moves that mirror US services activity that was released on Monday. EZ final services PMI for March slowed to 50.2 from a preliminary 50.1, but 51.9 in February and above 53 late in 2025.

Input prices, especially for construction materials, chemicals and technology equipment rose markedly. UK final March services PMI slowed to 50.5 from 51.2 in the preliminary and levels around 54 at the start of the year. 

A world of self-interest, Oxford Economics extract

The shift towards international economic policies driven by narrow self-interest that we identified in our April 2025 briefing has advanced further in the past year.

The key elements remain intact and have evolved in ways that reinforce our view that this change is structural, with lasting implications for economies and markets. 

Trade is fracturing, but more slowly and chaotically than we anticipated. Instead of splitting on regional lines, trade is becoming splintered by a series of bilateral deals.

Volatile policymaking and shifts in the legal landscape –-notably, the US Supreme Court’s decision to rule the IEEPA tariffs illegal-– are keeping uncertainty high. A slow process of deglobalisation lies ahead.

Tariffs haven’t solved imbalances, and pressure on surplus countries is intensifying. Sharply higher US tariffs have only modestly reduced the US trade deficit.

Pressure on surplus countries, such as Germany, Japan, and especially China, will persist. Resistance to China’s aggressive export policies is starting to spread protectionist policies beyond the US.

Fiscal policy has become a defining economic force, but with some surprises. The salience of fiscal and related industrial policies has risen as governments seek growth and security.

In Europe, a notable pivot towards larger budget deficits is underway, led by defence spending. In the US, attempts at spending restraint have proved fitful, with the budget deficit remaining large.

The supply of safe assets is rising, pushing up bond risk premia. This trend will continue, reflecting increased bond supply and a world of more frequent supply shocks, implying higher macroeconomic volatility and reduced value for bonds as a diversifying asset.

The repricing of risk premia still has further to go.

The dollar’s sharp decline in 1H2025 and the underperformance of US equities are important changes, but the new global environment –-brought into sharp relief by the Middle East conflict-– in our view demands further repricing.

Corporate news in Australia

-Bank of Queensland ((BOQ)) forms $3.7bn partnership with Challenger ((CGF)) to boost funding and returns

-CSL ((CSL)) expects minimal impact from new US tariffs

-NextDC ((NXT)) raises $1bn in hybrid bonds to support expansion via Canada’s La Caisse

-Macquarie Capital ((MQG)) prepares local super fund for SpaceX $2.9trn IPO

-DigiCo Infrastructure REIT ((DGT)) cancels LA data centre project due to approval uncertainty

-Taurus Funds Management prepares IPO or sale of Abra Mine and Endurance Mining two years after collapse

-a2 Milk ((A2M)) settles class action for -$62m

-Texas based Swipejobs hires Barrenjoey for $2bn IPO

-High fuel prices drive record Australian EV sales

-T&G Global weighs up the break-up of its T&G Fresh division

On the calendar today:

-NZ RBNZ rate decision

-JP Feb BoP

-EZ Feb PPI

-EZ Feb Retail sales

-US March FOMC minutes

-ASX LIMITED ((ASX)) March update

-MYER HOLDINGS LIMITED ((MYR)) ex-div 1.50c (100%)

-RIVCO AUSTRALIA LIMITED ((RIV)) ex-div 3.72c (100%)

FNArena’s four-weekly calendar: https://fnarena.com/index.php/financial-news/calendar/

The Australian share market over the past thirty days…

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