The Overnight Report: Chips Soar With AI Trade

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            [1] => ((AMC))
            [2] => ((LNW))
            [3] => ((RIO))
            [4] => ((IFT))
            [5] => ((CDA))
            [6] => ((BSL))
            [7] => ((GTK))
            [8] => ((ALQ))
            [9] => ((MFG))
            [10] => ((NXT))
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            [12] => ((WES))
            [13] => ((DAI))
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            [3] => RIO
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            [6] => BSL
            [7] => GTK
            [8] => ALQ
            [9] => MFG
            [10] => NXT
            [11] => ANZ
            [12] => WES
            [13] => DAI
            [14] => WTM
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            [20] => ASX
            [21] => LNW
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This story features AMCOR PLC, and other companies.
For more info SHARE ANALYSIS: AMC
The company is included in ASX100, ASX200, ASX300 and ALL-ORDS

Lower oil prices and ongoing positive news for the AI trade with only demand for chip memory stocks took the S&P500 to a new record close.

In Australia, the ASX200 breathed a sigh of relief after the 25bps hike and the RBA signaling it was not quite so hawkish as some had feared.  

ASX200 futures are pointing to a positive start –hurraj!– after nine days of declines.

Good Morning,

Buy the rumour, Sell the fact.

Is that what happened on Tuesday after the RBA delivered an, as expected 25bps cash rate hike to 4.35%, and the ASX200 moved off its intraday low?

The ASX200 closed lower but pared losses to finish near intraday highs after comments from the RBA Governor.

The index still lost -17pts or -0.2% to 8,681. Seven of 11 sectors rose, led by energy, while miners and banks weighed (Westpac ((WBC)) failed to surprise positively).

On the calendar today: Quarterly updates by Amcor ((AMC)) and Light & Wonder ((LNW)) while the board at Rio Tinto ((RIO)) addresses shareholders.

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

Corporate Results Monitor: https://fnarena.com/index.php/reporting_season/

The Chip Rally spread Today

Apple is in early talks to have Intel make iPhone chips in America instead of Taiwan, and Intel closed at a record.

Micron, the boring memory-chip maker nobody cared about for two years, has added US$360 billion in market value since March on AI server demand.

The story is no longer just Nvidia selling shovels. The whole chip aisle is open.

The IMF Says Forget Their Last Forecast

Three weeks ago the IMF said the global economy would grow 3.1% this year.

Today they said scrap that, it’s 2.5%, and inflation is going to run hotter than they thought.

The reason is the Iran war is now expected to drag on.

Their managing director told governments to stop subsidizing consumers because it keeps oil demand high.

The IMF does not flip in three weeks. They are telling us this war isn’t ending soon.

AI Is Now Eating White-Collar Jobs

PayPal said it’s firing one in five workers to redirect that money into AI.

Coinbase fired 700 people the same day.

Anthropic’s CEO told a room of customers that some software companies are going to go bankrupt completely.

If you own legacy enterprise software like Workday or Salesforce, the question is no longer whether AI hurts you. It’s when.

Staying long as tech and memory lead the 2026 winners, Chris Weston Pepperstone

It’s been a largely constructive night for risk markets, with the NAS100 closing up 1.3% and above the 28,000 mark, while new all-time highs emerged in the Russell2000, with small-cap equities outperforming.

Investors bought and continue to add to positioning in the 2026 winners. There has been some buying in S&P500 materials stocks, but it’s tech that continues to attract the bulk of flows, notably in Apple and the memory plays, which have been key drivers of alpha in 2025 and 2026.

If the collective loves the theme and mechanical flows aid price persistence, then it pays to align and not fight that tape.

Within the US equity universe, 63% of S&P500 stocks closed higher, so breadth and participation were solid, although on an 80bp rise in the equity benchmark, breadth could have been a touch more compelling.

What’s important here is that S&P500 one-month realised correlations have eased to a lowly 4%, and that tells you this regime is one for the stock picker. The theme of “if the market likes it, so do I” holds true.

A falling oil price has also been helpful for risk. That was underpinned by a positive tone from the White House around Iran not breaching ceasefire rules, and we saw Brent crude settle below US$110/bbl.

Traders have been taking off some crude hedges in volatility markets.

The lower oil price, combined with robust US economic data. ISM services came in at 53.6 and the JOLTS job openings report a touch hotter than expected, has underpinned the move. With lower volatility across asset classes, the trend in equities has been notable.

The key theme remains in the memory space, which was set off yesterday with SK Hynix gaining 11%. There is further focus on the expected strike from Samsung workers between 21 May and 7 June, which, if it goes ahead, could see 30,000 to 40,000 workers take action. That could impact DRAM supply by about -4%.

Given what we’ve seen from hyperscaler capex intentions, announced to the tune of US$700 billion, the data centre rollout and build-out require an incredible amount of memory capacity and demand.

An expected -4% impact to DRAM supply is meaningful, and you can see the effects flowing into Micron, SanDisk, and notably Intel, which is also benefiting from speculation around partnering with Apple to include its processors in future devices.

AI winners have also been a solid trade of late, and buying what’s working continues to be the right call.

AMD has been a strong performer in 2026, and the demand it is seeing was reinforced in its after-market earnings update. Management detailed meaningful growth in demand, allowing them to raise revenue guidance, with investors pushing the share price up 6.5% after hours and into new all-time highs.

Risk assets have also benefited from moderating US short-term inflation expectations, with one-year inflation swaps lower by nine basis points to 3.48% and two-year inflation swaps down seven basis points to 3.05%.

FX markets have been fairly contained, with limited percentage changes on the day. Traders remain torn between a risk-on backdrop in equities and credit, amid the USD-positive effects of US exceptionalism in its capital markets, which is keeping the US dollar supported for now.

We’ve seen meaningful flows in crypto, largely taking tailwinds from the strength in the NAS100 and S&P500 futures.

After breaking the April highs of US$79,500 on Monday, Bitcoin ($BTC) has not looked back, with solid range expansion on the breakout and buyers dominating, pushing price higher from that level. A move into US$84,000 to US$85,000, and the 61% retracement of the January to February drawdown, now seems probable.

What’s interesting in crypto is that the 26% rally from the March to April lows has largely been driven by its relationship to the NASDAQ and S&P futures, with traders treating it as a high-beta risk proxy.

However, while leveraged shorts have been forced to cover, we’ve also seen increased inflows into spot BTC ETFs, while BTC treasury firms such as Strategy have been active buyers throughout April and on the way up.

Retail still doesn’t fully trust the move. While some are chasing this higher, many remain cautious and quick to cut longs rather than hold. That scepticism could change quickly, as continued price strength may compel retail to chase, both in spot and derivatives markets.

Open interest in high options strikes remains elevated, suggesting further hedging activity by crypto options market makers, which could help perpetuate the move higher into $84,000 to $85,000.

We’re seeing good two-way flow in gold, with XAU holding recent range lows of US$4,500 to US$4,505. The moderation in US inflation swaps has been supportive, but risks remain balanced in the short term.

It’s difficult to hold strong conviction until price action becomes cleaner and starts to show trending qualities, so for now a range of US$4,500 to US$4,650 looks plausible as we move through ongoing geopolitical headlines and Friday’s non-farm payrolls.

RBA Rate Decision, NAB Markets Today extract

Locally, the RBA met yesterday and raised rates to 4.35%, as expected, in an 8-1 decision. The 75bp of tightening this year has delivered a reasonable recalibration and policy is now less obviously out of line with the domestic conditions.

The decision showed a clear preference to prioritise price stability, amid growing anxiety about the future path of inflation and inflation expectations.

NAB now expect an additional interest rate increase to 4.6%, which we pencil in for June.

The SoMP forecast update showed higher near term inflation and slower growth, but an unemployment rate track only 1 tenth higher than their February forecast at 4.7% in mid 2028 based on a cash rate path reaching 4.7%.

Markets continue to price a terminal rate of around 4.7%, down a couple of bp from a day prior. 3yr yields were heading lower ahead of the meeting, and slipped -6bp over the day to around 4.64%.

MFS, Market Insights, Benoit Anne extract

Price vs. quantity. To date, the clearest macro fallout from the geopolitical crisis has been on inflation, not growth.

On activity, we still see little evidence of an outright shock — and the data is consistent and plentiful. For a start, US Q1-2026 GDP was robust, and both the Atlanta Fed and New York Fed GDP nowcasts continue to point to vigorous momentum ahead.

Meanwhile, the Fed is also telling us that domestic financial conditions still look like a meaningful tailwind for growth.

Likewise, our internal Market Insights’ Business Cycle Indicator flags notable resilience, while our quant multi-asset team reaches the same conclusion: the probability based cycle model assigns a
99% likelihood that the US is in an expansion phase, not a slowdown.

Survey data corroborates this picture, with the ISM composite remaining comfortably in expansion territory. That said, a strong topline growth backdrop does not remove the need for vigilance. Two considerations stand out.

First, the balance of risks is skewed to the downside if supply disruptions and bottlenecks intensify.

Second, the headline macro strength may be masking narrow, sector level support — raising the risk of micro fragility beneath the surface. Given a complex global macro and market backdrop, we
continue to favor a disciplined process grounded in both macro and micro research.

Central bankers agree to disagree. Last week, four major central banks —the Fed, the ECB, the Bank of England and the Bank of Japan– met and left policy rates unchanged.

But the decisions were far from unanimous: dissent is rising and the center of gravity is shifting more hawkish.

At the Fed, there were four dissents — an unusually high number last seen in 1992. One member pushed for a cut, while three objected to language that kept the door open to easing, a signal markets read as less dovish than expected.

The Bank of England and the Bank of Japan also saw members argue for a hike, citing energy-related inflation risks. The ECB held together in the vote, but President Lagarde flagged a “healthy debate” on raising rates — keeping June firmly in play, contingent on geopolitics and incoming data.

The message is clear: internal divisions are widening across major central banks, and the bias is tilting toward tighter policy. That combination is fertile ground for further macro volatility, in our view. At the Fed in particular, the incoming Chair may face a difficult task rebuilding consensus. 

New highs, narrow support. Markets still look resilient on the surface, but the sources of strength remain tight. Recent gains reflect less broad economic acceleration and more a small set of themes investors feel comfortable underwriting — most notably energy, materials, and AI investment plus the infrastructure around it.

The data is mixed. We believe capital is concentrating where demand feels most visible and near-dated, while cyclical and policy sensitive areas are being priced with more caution. That is how indices can print new highs even as dispersion, volatility, and client unease stay elevated.

Importantly, this is not a classic bubble setup. Valuations are full in places, but leadership is supported by real investment, real revenues, and tangible cash flows.

As we have said before, one company’s capex is another’s revenue, and AI-related spending is now large enough to move meaningful parts of global industry.

We believe the issue is not the existence of growth, but its concentration. Concentration brings two portfolio implications for advisers. First, benchmarks are changing quickly; being structurally under or overexposed to a handful of dominant themes can increasingly drive relative outcomes.

Second, narrow leadership raises sensitivity to disappointment — not necessarily a recession signal, but the risk that parts of the market are priced for perfection.

Geopolitics adds another layer. The ongoing conflict in the Middle East keeps supplyside risks and inflation uncertainty in play, and increases the chance of policy trade-offs later in the cycle.

Markets are treating these risks as background noise for now; history suggests that rarely lasts.

In this environment, fundamentals still matter — but the market is rewarding them selectively.

Corporate news in Australia

-CDC Data Centres ((IFT)) has signed the largest data centre contract in Australia’s history; a 55MW deal

-Codan ((CDA)) shares fell nearly -10% after former Codan director and major shareholder Pamela Wall sold around -8m shares worth circa $300m

-Ryan Stokes warns revising a BlueScope Steel ((BSL)) bid could breach M&A laws

-Dredge Robotics exploring a potential sale

-Mars Incorporated investing $200m in Australia to boost profits

-Gentrack Group ((GTK)) cuts earnings outlook and announces buyback

-ALS Ltd ((ALQ)) facing cybersecurity-related disruptions

-Magellan Financial ((MFG)) restructures global equity funds

-NextDC ((NXT)) secures $1.8b in new debt funding

-Future Fund delivers 11.7% annual return

-NZ High Court rules against ANZ Bank ((ANZ)), exposing it to potential penalties

-Wesfarmers ((WES)) commits -$100m to Built Group JV

-Decidr AI Industries ((DAI)) seeks $15m funding

-Waratah Minerals ((WTM)) raises $40m

-Mirvac Group ((MGR)) targeting development turnaround and build-to-rent M&A

-SkinKandy IPO tracking toward top of range

-Qantas Airways ((QAN)) expects fuel prices to remain elevated

-Jardine Matheson evaluating $3b bid for I-MED

-Healius ((HLS)) attracts takeover interest tied to budget outcomes

-FleetPartners ((FPP)) sees rising takeover interest post EV tax clarity

On the calendar today:

-NZ 1Q Unemployment

-JP Public Holiday

-CH April PMI

-EZ March PPI

-US April ADP Data

-XX Global PMIs

-XX UK, EU April PMI

-AMCOR PLC ((AMC)) Qtrly update

-ASX LIMITED ((ASX)) April update

-LIGHT & WONDER INC ((LNW)) Qtrly update

-RIO TINTO LIMITED ((RIO)) 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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