The Overnight Report: Fresh Highs For US Indices

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This story features COCHLEAR LIMITED, and other companies.
For more info SHARE ANALYSIS: COH
The company is included in ASX50, ASX100, ASX200, ASX300 and ALL-ORDS

Despite higher oil prices, the S&P500 and Nasdaq indices hit fresh closing highs, post President Trump's cease-fire extension (indefinite) with Iran.

The Australian market fell on Wednesday with a sharp sell off in Cochlear shares (-40%) dragging down healthcare (-6%) and general sentiment.

ASX200 futures are pointing to more weakness on Thursday morning.

Good Morning,

The ASX200 fell on Wednesday by -106 points or -1.2% to 8844 led by Healthcare down -6% after Cochlear ((COH)) shares collapsed by -40%.

Consumer staples outperformed.

Overnight, both the S&P500 and Nasdaq posted fresh all-time highs, while crude oil futures gained, and the price of gold bullion joined in.

On the calendar today is Woodside Energy’s ((WDS)) AGM, as well as quarterly updates and result releases from the likes of Droneshield ((DRO)), Newmont ((NEM)), PLS Ltd ((PLS)), Santos ((STO)), and others.

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

Today’s Big Picture, J.L. Bernstein extract 

Ceasefire Extended, Hormuz Still Hot

Trump pushed the Iran ceasefire out until Tehran submits a unified proposal.

Iran skipped the Pakistan talks and fired on three ships in the Strait anyway.

Brent back above US$100/bbl while stocks rallied. That split screen is the whole tape right now.

Nasdaq Prints Record As Chips Run

Nasdaq hit a fresh all-time high led by semis.

XLK ETF is on pace for 16 straight wins and SOXX ETF notched its 10th straight record close.

AMD, Cisco, Dell, Micron, and Texas Instruments all made new highs.

This looks like a real breakout.

Trump Moves To Reclassify Weed

White House is reportedly close to moving cannabis to Schedule III.

That kills the 280E tax penalty that’s been strangling the industry.

Canopy, Curaleaf, Trulieve, and Tilray all ran hard.

Catch is Washington has to actually follow through, and this group has been burned on hope trades before.

NAB Markets Today Research extract

The oil price surged higher overnight as Iran said it seized two container ships in the Strait of Hormuz despite Trump’s announcement of an indefinite extension of the ceasefire.

Whether it’s conflict fatigue or confidence that the conflict between the US and Iran will be resolved soon, there is limited evidence that the rise in the oil price dampened bond and equity markets.

The latter rallying strongly in the US, supported by strong US earnings.

Oil prices have rallied overnight as the US and Iran remain deadlocked on opening the Strait of Hormuz. US naval ships continue to blockade Iranian ports which Iran views as a violation of the ceasefire.

Iran has said that it will not re-open the Strait or take part in ceasefire negotiations until the US naval blockade ends. It has been reported Iran had fired on and seized two ships (and possibly a third) in the Strait, taking them to shore for inspection.

Highlighting the risks that the economic impact of the current conflict will extend into year-end, the Washington Post has reported a senior Defence Department official shared with the Pentagon it could take six months to fully clear the Strait of Hormuz of mines deployed by the Iranian military.

Such an operation would unlikely begin until the conflict ends.

It is questionable whether financial markets are correctly pricing the reality that supply constraints will remain an issue for some time.

It was a quiet session in terms of economic data releases. Of note was the UK inflation report which showed annual inflation lifting to 3.3% in March (as expected) from 3% with petrol prices rising 8.7% (diesel up 17.6%), the largest monthly gain since 2022.

Services inflation lifted to 4.5% (vs expectations of 4.3%) with higher airfares impacting. Prior to the conflict in the Middle East, inflation in the UK had been expected to fall to the 2% target in Q2, which had been seen to open the door for the BoE to deliver further interest rate cuts.

With inflation set to remain at around 3% into 3Q, the UK OIS curve prices cumulative 49bps of tightening by year end with a full rate hike priced by July. Note though UK inflation will ease in the coming months (before lifting again) as the quarterly resetting of regulated natural gas prices and measures taken in the Nov’25 budget flow through. 

Eurozone consumer confidence fell to -20.6 in April (down from -16.4) reaching its lowest level since December 2022. This reading was well below expectations which had centred at -17.2. The sharp decline in confidence since the conflict in the Middle East began reflects the sensitivity of the consumer to higher energy prices.

Equity markets are mixed overnight. European stocks were heavy at the open, holding those losses through a choppy session while US stocks opened higher and have largely sustained those gains with strong corporate earnings (from GE Vernova, Boston Scientific, Boeing and Philip Morris) supporting sentiment. Tech stocks have out-performed.

Credit spreads opened firmer with cash spreads holding gains through the session but movements have been small. In terms of issuance, the EUR Investment grade sector printed a combined volume of EUR8.2bn.

Of note amongst the corporates was the Goodman Group ((GMG)) 7yr EUR500m deal launch which was upsized to EUR600m amid solid demand (demand built to EUR2.8bn).

It was a quiet session in the US with Blackstone Private Credit Fund the only issuer in the US IG primary market with a US$850 million single-tranche deal that attracted US$4.3 billion in demand.

Bond yields are higher, although the moves look muted against the rally in energy prices. Auction results for the US$13bn 20yr bond were ok with the auction benefiting from higher yields relative to the previous auction in March.

While there was a small rally in treasuries immediately post the auction, treasury yields remain higher on the day. Bunds have out-performed, reflecting the weaker sentiment around the European outlook relative to the US.

Currency moves have been limited. The Bloomberg dollar index has recovered earlier loses, to be little changed.

The Euro remains weak, falling for the fourth time in the past five trading days, and reaching an intra-day low of 1.170 overnight (just above the 100 day moving average).

The AUD has been hovering around 0.7160.

S&P500 Prints New Highs as Oil Surge Fails to Rattle Risk, Stephen Innes, SPI Management

Stocks powered to fresh highs, riding a wave of earnings strength and a last-minute ceasefire extension that flipped risk back on after a brief retreat, while bitcoin caught the same tailwind and surged alongside the equity complex.

No bombs dropping, no fire drill. That is the market’s working assumption, and right now it is trading like a desk convinced the oil market alarms are broken, even as the smoke thickens at the gates of the Strait of Hormuz.

Oil is screaming higher again, clawing back above yesterday’s highs after Iran turned the Strait into a live fire exercise, striking three vessels and reminding anyone watching this is no theoretical choke point. It is active, contested, and tightening.

Yet equities refuse to flinch. They are not just steady; they are leaning forward, chasing earnings, chasing AI, chasing the promise of a post-conflict boom that exists only in the imagination, but trading like it is already printed in next quarter’s guidance.

The last twenty-four hours in crude have not been a market; they have been a pinball machine. This is not price discovery. This is headline arbitration. 

And yet, through all of it, stocks barely flinched and instead surged to fresh record highs. Make that make sense.

The remarkable part is not that oil is volatile. That is expected when the world’s most important shipping lane becomes a battlefield. The remarkable part is that equities have chosen to look through it entirely.

The old reflex, where higher oil meant tighter financial conditions and immediate pressure on risk assets, has quietly broken down. That relationship snapped two weeks ago when the first pause in hostilities hit the tape, and nothing since has been able to stitch it back together.

Even bonds have shrugged. Yields are not pricing panic. They are watching tech rip higher, watching bitcoin catch a bid, watching liquidity rotate into the same narrow leadership that has defined this entire cycle.

The rally is thin, concentrated, almost fragile in its construction, but still relentless in its direction.

The dollar, on the other hand, has found its footing. Higher crude feeds directly into the US external balance in a way that the market understands instinctively.

Every barrel trapped in the Strait is a marginal tailwind for the US current account. Energy scarcity abroad becomes dollar demand at home. It is not dramatic, but it is persistent, a slow tightening of the financial vice that runs beneath the surface of the more visible equity euphoria.

Chaos in the headline, while calm in stocks. That is the tape in one line.

If there is logic behind the calm, it sits in the collective reading of the endgame. Markets are not pricing the current conflict. They are pricing the exit.

The dominant narrative is that both sides are searching for an off-ramp. Washington does not want to own a ground war, and Tehran does not have the balance sheet to sustain a prolonged economic siege.

The ceasefire extension, however fragile, reinforced that belief. It told traders escalation is a choice, not an inevitability, and the choice is still being deferred.

What the market cannot tolerate is a shift from maritime pressure to full-scale infrastructure destruction or a US ground operation. That is the line that would force a repricing. Until then, every flare-up is treated as noise around a central expectation of eventual de-escalation.

That expectation has evolved into something more mechanical. The TACO trade is no longer a joke; it is a behavioural framework. Investors have been conditioned to believe policy shocks under this administration resolve themselves in a V-shaped fashion.

Sell-offs are seen as temporary dislocations, not regime shifts. The pattern has repeated enough times that it now anchors positioning. Retail and institutional flows alike are leaning into it, almost reflexively, almost algorithmically.

And this is where the modern twist comes in. The market is no longer just trading flows; it is trading code. Since the arrival of generative AI platforms like ChatGPT, capital has reorganized itself around a new narrative spine.

Roughly 45% of the S&P is now effectively tethered to AI-adjacent names, whether directly through semiconductors and cloud infrastructure, or indirectly through capital expenditure cycles tied to compute demand. That concentration matters. It means the index is no longer a clean reflection of the broad economy. It is a leveraged expression of a single theme.

So when oil spikes, it collides not with a diversified market, but with a market whose leadership is driven by a different physics. Chips do not burn oil; they burn electricity and capital. Data centers do not shut down because tankers stall in the Strait.

In fact, the capital cycle behind AI often accelerates through uncertainty as firms double down on productivity and automation. That is why the Philadelphia Semiconductor Index can rip higher even as crude trades like a war asset. The two ( oil and semis) are no longer moving on the same axis.

The broader US market is echoing the same playbook. Semiconductors, AI, and the usual leadership cohort are pulling the tape higher, all underpinned by a US consumer that simply refuses to crack.

The S&P is being hauled upward by a narrow but powerful cluster of names whose earnings engine runs on silicon, not crude. That creates a layer of insulation, almost a safe harbour within the index, where pockets of the old oil-driven economy can wobble while the digital economy continues to accelerate.

Even the broader global picture is bending to support that view. Asian emerging markets are not behaving like a region under energy stress. They are behaving like a region plugged into an entirely different narrative.

Since late 2022, the center of gravity has shifted toward AI and the supply chains that feed it. North Asia has become the engine room, with Taiwan and South Korea now dominating the benchmark indices in a way that was unthinkable just a few years ago.

Chip demand, memory capacity, compute power, these are the new commodities, and they are not being choked by events in the Strait.

China adds another layer. The world’s largest factory has effectively stress tested itself against this kind of disruption and come through intact. Years of oil and commodity stockpiling have turned what would have been a vulnerability into a buffer.

Oil reserves alone could cover years of consumption. Add in strategic hoarding of metals, food, and industrial inputs, and you have an economy that can keep its assembly lines running even as upstream supply chains are strained.

Factories continue to produce, exports continue to flow, and investors take that as confirmation that the system can absorb the shock.

Put it all together, and you get a market that is not ignoring risk; it is repricing its relevance.

The Strait remains constricted. Tanker traffic is throttled. Energy flows are under pressure. But equities are trading on a different timeline, one where disruption is temporary, policy finds a way, and the next leg higher is already being discounted.

Still, stocks caught a lucky break. Without that last-minute ceasefire extension, crude would likely be trading at levels that start to bite into margins and sentiment, and nip at the heels of the rally’s foundation. Instead, the market was handed just enough breathing room to keep the narrative intact.

That is the razor’s edge.

Because beneath the calm, the structure is tightening. Oil is not just a price; it is a constraint. The longer the Strait remains compromised, the more pressure builds in the system. Each additional week does not add linearly to the strain; it compounds it. Storage fills, flows reroute, costs rise, and eventually something gives.

For now, nothing has.

And so the tape floats, carried by earnings optimism, AI momentum, and a deeply ingrained belief that the worst outcomes will be avoided.

It is a market trading hope with conviction, even as the physical world sends increasingly urgent signals that hope may be running ahead of reality.

Corporate news in Australia

-Coronado Global Resources ((CRN)) continues to seek a buyer for its $1bn Curragh coking coal mine to pay down debt

-Malaysian used car platform, Carsome is looking at an ASX IPO

-Edible Blooms is seeking private equity backing to support growth

-Edge Early Learning is facing cash flow pressure, fuelling tension among shareholders

-Herbert Smith Freehills and Ashurst are benefiting from increased US deal activity, lifting partner promotions

-Woolworths Group ((WOW)) is defending its pricing rules as necessary to prevent supplier manipulation

-Private credit funds on the ASX are delivering fewer buybacks than expected, raising liquidity concerns

-Strong investor demand has led Omega Oil and Gas ((OMA)) to upsize its capital raising amid energy security interest

-Steel Dynamics says BlueScope Steel ((BSL)) has not re-engaged after rejecting its takeover offer, leaving the bid situation unresolved

On the calendar today:

-US Jobless claims

-XX Global PMIs

-ALKANE RESOURCES LIMITED ((ALK)) Qtrly Update

-DRONESHIELD LIMITED ((DRO)) Qtrly Update

-FORTESCUE LIMITED ((FMG)) Qtrly update

-INSIGNIA FINANCIAL LIMITED ((IFL)) Qtrly update

-MIRVAC GROUP ((MGR)) Qtrly update

-NEWMONT CORPORATION REGISTERED ((NEM)) earnings report

-ORA BANDA MINING LIMITED ((OBM)) Qtr Update

-PLS GROUP LIMITED ((PLS)) Qtr Update

-PERSEUS MINING LIMITED ((PRU)) Qtrly Update

-SANDFIRE RESOURCES LIMITED ((SFR)) Qtrly update

-SANTOS LIMITED ((STO )) Qtrly update

-WOODSIDE ENERGY GROUP LIMITED ((WDS)) 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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