The Overnight Report: Six Down Days In A Row?

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This story features BEACH ENERGY LIMITED, and other companies.
For more info SHARE ANALYSIS: BPT
The company is included in ASX200, ASX300 and ALL-ORDS

The S&P500 and Nasdaq inched higher on Monday to new record closes led by Big Tech, ahead of five of the Mag7 reporting earnings this week.

The Australian market fell for a fifth straight session on Monday, impacted by Anzac Day holidays.

Ahead of Wednesday's 1Q2026 CPI print, ASX200 futures are indicated weakness (again!).

Good Morning,

The Australian market fell for a fifth straight session on Monday, down -20 points or -0.2% to 8,766 with utilities and energy lower, while miners outperformed.

Trading was thin with public holidays in NSW, WA and the ACT.

March quarterly updates continue today with Beach Energy ((BPT)), Greatland Resources ((GGP)), Karoon Energy ((KAR)), and Whitehaven Coal ((WHC)) on the day’s scheduling.

See also FNArena’s Corporate Calendar https://fnarena.com/index.php/financial-news/calendar/

It is a big week ahead for US corporate results with Alphabet, Microsoft, Amazon and Meta Platforms due to report quarterly earnings after the close on Wednesday (EST), followed by Apple on Thursday after the close (EST).

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

Markets are ignoring the energy risk

The Pakistan peace trip is canceled and the Strait of Hormuz is essentially blocked.

Iran offered to reopen it but wants nuclear talks pushed back.

Goldman just raised its Q4 Brent forecast to US$90/bbl from US$80/bbl.

Stocks hit records anyway. Someone is wrong here.

The Microsoft and OpenAI break up

Microsoft lost its exclusive grip on OpenAI.

The revenue sharing deal is capped through 2030 and OpenAI can now sell across any cloud.

Same day, reports surfaced that OpenAI is working with Qualcomm ($QCOM) on AI-first smartphone processors targeting 2028.

The hardware playbook just got rewritten.

Airlines are burning cash

Jet fuel costs are double last year’s levels.

Higher fares are killing demand and air travel has slowed below 2024 and 2025 levels.

Frontier and other budget carriers are pitching Washington for a US$2.5bn relief package.

I’d avoid the sector.

NAB Markets Today Research extract

Following a weekend that saw US President Trump calling back envoys Steve Witkoff and Jared Kuschner from a planned visit to Pakistan for fresh talks and which saw a mild ‘risk-off’ start to the week, currencies, less so equities, have been encouraged by an Axios report that Iran has made a new proposal for reaching a deal on the reopening of the Strait of Hormuz, entailing deferring nuclear negotiations to a later stage.

According to Iranian media, Foreign Minister Araghchi conveyed the government might accept an interim deal.

This outlined the reopening the Strait of Hormuz, in exchange for the US ending its naval blockade, agreeing to a new legal framework for traffic through the strait, and guaranteeing no future military action against Iran.

Araghchi noted significant alignment between Iran and Oman regarding the strait’s future, likely referring to a toll revenue sharing scheme. US Secretary of State Rubio stated the US could not accept Iran retaining control of the Strait of Hormuz or allowing Iranian tolls.

Data out since the Australia market closed on Friday included final University of Michigan consumer sentiment, which saw a slight upward revision to confidence, albeit still leaving the index at a record low of 49.8 (vs 47.6 preliminary).

1-year inflation expectations dipped back to 4.7% from the 4.8% preliminary read while the more widely watched 5-10 year series rose to 3.5% from the preliminary 3.4%.

Overnight, the Dallas Fed Manufacturing survey showed a fall in the overall index to -2.3 from -0.2 (0.9 expected) though this is hard to square with the report itself which shows Texas manufacturing output growth accelerated in April.

The production index jumping 12 points to 19.0 (an above-average pace) and the capacity utilization index up 13 points to 19.8. New orders rose four points to 9.9 and the shipments index rose 13 points to 15.0. A flat employment index weighed slightly.

In Europe, UK real retail sales ex-auto fuel rose by 0.2% against a flat expected reading, but February was revised to -0.6% from -0.4% with y/y coming in at 1.7% against 2.0% expected.

More troubling, overnight the CBI Retail Sales survey for April plunged to -68, its weakest on record, from -52, against an expected recovery to -40.

April’s retail sales (volume) figures threaten to be ugly.

The April German IFO business survey fell to a post-covid low of 84.4 versus 85.7 expected, dragged down by both the Current Conditions and Expectations series.

Overnight the GfK German consumer confidence survey showed a fall to -33.3 from -28.1 against -30.0 expected, its weakest read since February 2023.

In other US news and ahead of this week’s FOMC meeting, the US Attorney announced the closure of her office’s investigation into Powell’s congressional testimony regarding cost overruns in Fed building renovations, removing a barrier to Kevin Warsh’s confirmation as the next Fed Chair.

Over the weekend, Senator Tillis declared his support for Warsh’s nomination and removed his block on the nomination going to a full Senate voted (51 votes required).

Warsh now seems all but certain to be in situ for the June 17 FOMC meeting, the question before then being whether Jay Powell will resign his Board seat, creating a new vacancy to be filled by President Trump.

Otherwise, Stephen Miran will need to vacate his current seat.

The US Treasury market is undergoing mild bear steepening, the 2-year up 2.5bps to 3.80%, 5s up 3.5bps at 3.95% and 10s 3.8bps to 4.34%.

This comes after the US$69bn auction of 2-year notes cleared at 3.812% against its when-issued yield of 3.81%, and the US$70bn sale of 5-year notes cleared at 3.955% versus the 3.95% when-issued.

In both cases bid-cover ratios were slightly up on their prior sales. 

It’s been a similar (higher yield) story in Europe where the rise in 10-year benchmarks ranges from 4bps for Bunds to 6bps for gilts.

The longer end of the gilts market is independently troubled by the prospects of a hammering for the Labour government in next week’s local elections and what that means for Kier Starmer’s Prime Ministership (and that of his chancellor, Rachel Reeves).

A shift further left in a new PM/Cabinet and what that means for fiscal policy, is the market’s concern here.

ANZ Bank, Global Markets Overview extract

Bank of Japan decision today: It’s a busy week of central bank meetings, with the Fed, ECB, BoJ, and BoE all scheduled.

The BoJ decision is due today. We expect an unchanged policy rate at 0.75%, with the accompanying guidance to skew hawkish.

We had previously seen a strong possibility for a rate hike at this meeting, but guidance from Governor Ueda in recent weeks has struck a more measured tone, with the BoJ showing concern about downside growth risks stemming from the conflict in the Middle East that could undermine the sustainable achievement of the 2% inflation target.

Data since the last meeting, namely the Q1 Tankan Survey, the spring wage negotiations and firming CPI inflation in April have all supported the case for the further withdrawal of policy accommodation.

Nonetheless, the BoJ is likely to proceed cautiously, awaiting further clarity on developments in the Middle East.

We expect it will revise up its inflation forecasts, though the extent to which it downgrades its growth forecasts will be key for assessing the outlook for further policy tightening.

The BoJ is unlikely to be swayed into action by cost-push inflation alone as long as inflation expectations remain well-anchored.

We expect the BoJ will deliver one further 25bp hike, likely in June, and will be looking for such a signal in the BoJ’s guidance.

Commodities

Crude oil rose as stalled peace talks between the US and Iran lowered expectations of a resumption of oil supplies through the Strait of Hormuz.

Last week Iran stated it had no plans to negotiate with the US, after it failed to send a delegation to Islamabad to meet with a US envoy. However, reports on Monday suggested Iran had proposed an interim deal whereby it reopens the strait in exchange for the US ending its blockade of Iranian ports.

The US is reviewing the proposal but maintains red lines on any deal to end the conflict, including preventing Iran from obtaining a nuclear weapon. The market viewed the to-and-fro as a sign that the two sides remain well apart, and an imminent end to the conflict looks unlikely.

Without any prospect of the strait being reopened in the near term, the disruption to the oil market continues to worsen. The subsequent impact on oil supplies will be compounded by the US decision to maintain its blockade of Iranian vessels.

The US is ramping up pressure on buyers of Iranian oil. US forces also intercepted a sanctioned vessel in the Arabian Sea over the weekend.

In the meantime, consumers are cutting back consumption. European airlines are culling tens of thousands of flights, as high prices make many routes uneconomic.

North Asia LNG prices edged higher as more buyers turn to the spot market to make up for shortages emanating from the Middle East conflict.

Vietnam has imported more LNG despite elevated prices as it braces for rising cooling demand from above-average temperatures. Thailand and Singapore have also been buying from the spot market.

European gas futures failed to follow LNG prices higher, with traders hopeful that the region will be able to cope with shortages. Most LNG from the Persian Gulf finds its way to Asia, but the region has become increasingly reliant on the LNG market to refill its storage facilities in the face of a sharp reduction in piped gas supplies in recent years.

It now faces its first monthly drop in imports in over a year. Fewer LNG tankers have reached Europe so far in April compared to the same month last year. Ship tracking data suggest total volumes could be down over 3% y/y.

The risk-off tone across markets weighed on the base metals complex. Copper ended the session lower while zinc and lead also suffered heavy losses. In early trading, nickel rose to its highest level in almost two years on the prospect of tighter supplies from Indonesia.

The country has reduced its mining quotas to boost prices, which have been under pressure due to oversupply from its burgeoning mining industry. This is being compounded by a global shortage in sulphur, which is a key reagent used in processing of nickel.

Aluminium prices were also steady, as the market contemplates significant supply disruptions in the Middle East.

Gold also struggled in the face of the risk-off tone. The price dipped below US$4,700/oz after Axios reported Iran was postponing negotiations on its nuclear program.

Gold is down around -10% since late February’s escalation of the Middle East conflict, as investors seeking havens have instead gravitated towards the USD.

The higher energy prices are also pushing inflation expectations higher, which could ultimately mean interest rate cuts are delayed.

Market Call, Devil-May-Care by Ed Yardeni & Toby Hearst, Yardeni Research extract

In the autumn of 1956, Egypt’s Gamal Abdel Nasser nationalized the Suez Canal. Britain, France, and Israel invaded. The canal closed for five months. Two-thirds of Western Europe’s oil moved through it, and the price of crude doubled in dollar terms before the year was out.

The Dow Jones Industrial Average fell about -10% from its July high to its October low. Tankers were forced to reroute. By the following spring, with the canal reopened, the DJIA had recovered and reached a new high.

With the exception of the 1970s, geopolitical oil supply shocks have tended to be buying opportunities for stocks.

Investors reached the same conclusion again, this time on March 31. The fact that the Strait of Hormuz remains closed hasn’t stopped the extraordinary stock market rally since then.

Interestingly, the S&P500 Energy and Information Technology sectors are now more overvalued relative to their 200-day moving averages than they were at the market’s January 27 peak.

This suggests that many investors may have a barbell position across these two sectors, in case everything goes right (so IT wins) or wrong (so Energy wins). That makes sense to us since we are recommending a market weight in IT and an overweight in Energy.

President Donald Trump said, “If they want to talk, they can come to us, or they can call us. You know, there is a telephone. We have nice, secure lines.”

For now, the ceasefire is holding, but so are the US blockade of Iranian ports and the Iranian blockade of the Strait of Hormuz. This could be the new status quo for a while.

Our base case from here is that the S&P500 chops around 7,000 while the stalemate holds, then grinds higher in the second half of this year toward our 7,700 year-end target.

That’s assuming a deal by mid-year. Midterm elections drama might make the ride bumpy during the second half of this year. We think the March 30 low was the year’s low.

There’s no shortage of uncertainty, but it is quite certain that Kevin Warsh will be the next Fed chair, now that the Department of Justice has dropped its criminal investigation of Jerome Powell over the Fed headquarters renovation overrun.

Polymarket puts the odds of Kevin Warsh’s confirmation by May 15 at roughly 87%.

MFS Investment Management – April 2026 FOMC preview, by Erik Weisman, and Kish Pathak

The FOMC is all but certain to leave federal funds target range unchanged at the April 29 meeting. The broad message from the FOMC will be that policy is in a good place to “wait and watch” how the growth and inflation outlook evolves.

On March 18th, Chair Powell went out of the way to downplay the Statement of Economic Projections given the uncertainty related to the conflict.

He is likely to reiterate the “conflict dependency of the outlook” as uncertainty related to the Iran war has declined since then but remains very high still. Nonetheless, the market will be keen to detect any changes in nuance regarding the growth and inflation outlook.

The minutes of the March meeting indicated there is an emerging minority view that rate hikes might be required to guard the inflation side of the mandate.

Chair Powell may face questions seeking clarity on what developments may tilt the FOMC in that direction. He will likely assert it is too early to make that judgement, and that policy is in a good place to balance the two-sided risks to the mandate.

That will be in line with the bulk of the Fedspeak since the March meeting.

This will be Chair Powell’s last press conference if Kevin Warsh is confirmed soon.

He will likely be queried again about his decision to stay on as a governor after his term as Chair ends and how that decision might change if the DOJ probe is dropped.

He will likely repeat that he has not made up his mind yet.

Corporate news in Australia

-Danone is the leading, and possibly only, bidder for Made Group

-European Lithium ((EUR)) is poised for a $1.96bn takeover bid from Critical Metals Corp

-Pepper Money ((PPM)) is targeting HSBC’s loan servicing rights, while Blackstone eyes the loan portfolio

-Oracle signed a $2.3bn deal with Australian data centre builder Datapod

-SkinCandy has a non-deal roadshow next week to gauge investor interest for a circa $200m raising

-NZ BlackBull Markets has a non-deal roadshow for its dual listing

-Oceana Metals ((OCN)) is raising $15m at 36c per share to fund the acquisition of rare earths project, Serra Negra in Brazil

-Whyalla steelworks will be closed for at least five weeks for maintenance 

-Fletcher Building ((FBU)) has sold its reinforcing and wire business to United Industries for NZ$15.7m

On the calendar today:

-JP BoJ decision

-JP March Employment

-US Conf Board cons confidence

-AERIS RESOURCES LIMITED ((AIS)) Qtrly Update

-AURELIA METALS LIMITED ((AMI)) Qtrly Update

-BEACH ENERGY LIMITED ((BPT)) Qtrly Update

-CORONADO GLOBAL RESOURCES INC ((CRN)) Qtr Update

-GREATLAND RESOURCES LIMITED ((GGP)) Qtr update

-KAROON ENERGY LIMITED ((KAR)) Qtrly Report

-NRW HOLDINGS LIMITED ((NWH)) AGM

-PREDICTIVE DISCOVERY LIMITED ((PDI)) Qtr Update

-PANTORO GOLD LIMITED ((PNR)) Qtr Update

-STANMORE RESOURCES LIMITED ((SMR)) Qtr Update

-WHITEHAVEN COAL LIMITED ((WHC)) Qtr Update

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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