The Overnight Report: Copper At 3-Month High

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This story features CSL LIMITED, and other companies.
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The company is included in ASX20, ASX50, ASX100, ASX200, ASX300 and ALL-ORDS

US markets inched higher overnight with the S&P500 eeking out another fresh high. 

After another weak day on the ASX200 yesterday, futures are pointing to a moderately positive start, possibly boosted by the ongoing rally in metal prices.

Good Morning,

The ASX200 fell -43 points or -0.49% which was the high of the day, the low was down -101 points.

CSL ((CSL)) took -30.5 points off the ASX200 falling -15.96% after a third earnings downgrade.

Today’s the day Treasurer Jim Chalmers will release the government’s reform agenda for the year(s) ahead. Let the public debate erupt!

RBC Capital’s response to Life360’s ((360)) quarterly update:

“A mixed but mostly positive update from 360. 1Q26 financials beat and were not as bad as management commentary/guidance provided at their CY25 results.

“Net paying circles adds hit a quarterly record with ARPPC also ahead of expectations. Guidance for CY26 Revenue and EBITDA were upgraded. MAU’s missed with the company highlighting some since resolved issues identified during the quarter.

“Nevertheless, MAU guidance for CY26 has been downgraded.”

Others releasing market updates today include Coronado Global Resources ((CRN)), GQG Partners ((GQG)), and NexGen Energy ((NXG)), while Denmark’s DSV, customer of WiseTech Global ((WTC)) talks to investors today.

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

SPI futures are suggesting a cautiously positive opening is on the cards for Tuesday morning.

Today’s Big Picture, J.L.Berstein 

The AI boom is overpowering everything else 

Infrastructure Capital’s Jay Hatfield: “The tech boom is just too powerful to let energy prices affect the US stock market. Everybody’s tuning out the Middle East.”

S&P500 semiconductor companies have added roughly US$3.8 trillion in market cap over the past six weeks.

The Roundhill Memory ETF $DRAM hit US$6.5bn in assets in 36 days, beating the record set by BlackRock’s $BLK bitcoin ETF in early 2024.

South Korea’s Kospi gained 4.3 today, led by SK Hynix.

The oil supply crisis is getting worse, not better

Saudi Aramco’s CEO said the market has lost about one billion barrels of supply during the crisis.

If reopening is delayed several more weeks, Aramco says oil markets may not normalize until 2027.

The IEA calls this the biggest supply shock in history.

Commercial traffic through the Strait of Hormuz remains at a near-complete standstill per JPMorgan, with more than -10 million barrels per day of supply lost per Goldman Sachs.

The market’s internals don’t match the headline

The S&P500 is 7.7 above its 50-day moving average, but only 52 of its components are above their own 50-day.

BTIG’s Jonathan Krinsky says that’s never happened in the past 30 years when the index was this extended.

Friday was just the third time since 1990 the S&P had more new lows than new highs on a record-setting day.

On Monday, 34 stocks hit 52-week highs and 35 hit 52-week lows. BTIG’s question: why can’t anything else rally?

NAB Markets Today Research

President Trump said the ceasefire with Iran is on “massive life support” after dismissing Tehran’s response to a US proposal as unserious. Iran countered that its proposal was “generous and responsible”, focusing on lifting the blockade of the Strait of Hormuz, while deferring broader nuclear decisions. 

The US administration is also considering measures to limit the domestic impact of higher fuel prices, including a gas tax holiday, underscoring the political sensitivity of elevated energy costs.

One could argue the fact President Trump has not taken a military option to the Iran proposal is a positive, suggesting willingness to continue to talk, yet at the same time after weeks of back and forth the two parties seem widely apart on key issues.

Opening the Straight of Hormuz and how to deal with Iran’s enriched uranium, without an agreement or road map on these two issues it’s hard to see a resolution.

Reacting to the news oil prices oil prices rose around 3%, with Brent trading near US$105/bbl and WTI close to US$98/bbl, reflecting concerns that the Strait of Hormuz may not reopen soon. 

Beyond energy, industrial metals remained strong: copper surged to fresh record highs, supported by structural demand, tight supply and resilience to geopolitical shocks. Gold edged higher, balancing geopolitical hedging demand against rising real yields. Silver also rallied 7% higher.

The transmission of the oil shock to the global economy has been limited to date due to the buffering effect of high inventories that were in place ahead of the conflict. But the CEO of Saudi Aramco warns that inventories have been materially depleted, and the world’s stocks of gasoline and jet fuel could soon reach critically low levels. 

JP Morgan estimates commercial oil inventories in the developed world could approach operational stress levels by early June.

Meanwhile in the UK, political risk intensified as more than 50 Labour MPs reportedly called on Prime Minister Keir Starmer to either resign or set out a departure timetable after severe local election losses. 

While Starmer vowed to fight any leadership challenge, markets are increasingly concerned a leadership change could usher in a less fiscally restrained government.

Global sovereign yields moved higher, led by the UK. 10-year gilts rose around 9bps to around 5.00%, underperforming peers as political risk priced in. US Treasuries sold off -5bps to –6bps, with the 10-year yield close to 4.40%, up 5bps relative to Friday’s closing level. 

German Bunds also moved higher, with the 10-year yield up around 3bps–4bps to circa 3.04%, largely tracking global rate moves rather than domestic drivers. Similarly Australian bond futures fell around -2bps overnight, essentially tracking the move in UST yields.

US equities posted modest gains on Monday. The S&P500 rose 0.19%, the Nasdaq gained 0.10% and the Dow Jones edged up 0.19%. Sector performance within the S&P500 was mixed, with technology and communication services outperforming, while some consumer discretionary and healthcare names lagged.

Notable stock moves included sharp gains in select tech hardware and communications stocks, while Intuitive Surgical fell sharply after disappointing updates.

Outside the US, Europe was mixed, with UK equities resilient despite domestic political turmoil. In Asia, performance diverged sharply: South Korea’s KOSPI surged over 4%, while Indian equities were the weakest performers.

PM Modi appealed to citizens to reduce the use of petrol-diesel, postpone the purchase of gold, and adopt local products instead of foreign goods to minimize the impact of the crisis on the country.

Currency moves were relatively contained. The US dollar edged higher during our trading session yesterday but gave back the modest gains to be little changed over the past 24 hours. AUD/USD traded to an overnight high of 0.7259 and now starts the new day at 0.7548, up 0.2% since Sydney’s close yesterday.

In China, CPI (1.2% y/y) and PPI (2.8% y/y) both surprised to the upside, driven almost entirely by higher energy and commodity prices. The stronger inflation data, combined with expectations around the upcoming Trump–Xi summit, saw USD/CNY break below 6.80, extending the yuan’s strengthening trend.

In separate US policy developments, the administration is reportedly planning to temporarily reduce tariffs on beef imports by suspending the annual quota, aiming to ease short-term supply constraints and consumer price pressures.

Copper rising on resilient Chinese demand and supply risks, RBC Capital extract

Copper hit a 3-month high on Monday at around US$6.20/lb following a 4.3% gain last week as risk sentiment improved on a potential US/Iran ceasefire.

Supply concerns are growing on rising sulphuric acid costs with Ivanhoe signing its most recent contracts at US$725/tonne, which it expects could grow to over $1,000/tonne should the Strait of Hormuz remain closed.

In such a scenario, we could see incremental production cuts from African Sx-EW producers which could risk circa -10% of the global copper supply creating a significant right tail for prices in our view.

On the demand front, the extent of Chinese willingness to absorb higher prices remains a key question with recent data indicating strong fundamental demand. Chinese power grid investments in Q1 rose 37% y/y and refined copper intake rose 9% m/m in April (Mining.com).

Concurrently, refining charges hit a new all-time low of circa US$100/tonne last week, while Shanghai inventories fell -6% w/w to the lowest point since January.

We think refining charges could still grind lower as smelters may be able to compensate through the sale of acid, however, given the recently enacted Chinese export ban, their ability to realize credits may be limited.

Oxford Economics: The economic slowdown driven by the Middle East conflict looks mangeable

The duration of disruption to shipping traffic in the Strait of Hormuz is the critical known unknown for the global economic outlook, along with how quickly energy production can recover.

If traffic picks up gradually, in line with our baseline assumption, then recessions around the globe would be unlikely. However, the Middle East conflict is expected to push world GDP growth down to 2.4% this year, below the tight 2.8%-3% range of the past few years.

Recent data suggest the world economy grew at a solid pace in Q1. Since then, survey data provide some evidence that the negative impact of the US/Israel war with Iran has been manageable.

The JP Morgan global composite PMI remained below the pre-conflict level in April, but it rose on the month and lays only a touch below the 2025 average.

We assume Q2 will mark the low point for global growth and that a decline in oil prices will trigger an H2 rebound.

The lack of a marked tightening in financial conditions to date supports our view that a major and more sustained downturn will be avoided. Meanwhile, factors such as the AI investment boom act as a counterweight to the oil price shock.

Due to upward revisions to both US GDP growth and inflation, along with a stable labour market, we’ve pushed back the timing of the next cut by the Federal Reserve from June to December.

Nonetheless, we still think that the Fed and other major central banks will be less hawkish than markets expect.

Corporate news in Australia

-Australia’s Takeovers Panel rejects Atlas Arteria’s ((ALX)) request for an interim order related to the IFM bid dispute

-Morgan Stanley Infrastructure Partners puts New Zealand energy retailer StraitNZ on the market in a deal worth about NZ$1bn

-Humankind acquires Mintable in a portfolio exit for Blackbird Ventures

-Regal Partners ((RPL)) and Thorney Investment Group back an Israeli drone supplier ahead of its ASX listing

– Fund managers including Firetrail, backed by Pinnacle Investment Managers  ((PNI)),  prepare for major block trades as UniSuper moves to sell billions in assets

-Carlyle’s subdued Australian deal activity is linked to a smaller-than-expected Asia fund

– Elicia McDonald says AI has transformed nearly every aspect of Airtree Ventures operations

-Xero ((XRO)) CEO Sukhinder Singh Cassidy apologises for five days of service disruptions

-Grant Thornton Australia is valued at about $1bn, with partners set for multimillion-dollar payouts

-ASIC reportedly investigated Hudson Global before its collapse

-Former Fortescue executives move to take control of struggling gas producer Strike Energy ((STX))

-Sixth Street brings its $2.8bn sports investment fund strategy to Australia

-SkinKandy plans to build a network of more than 500 stores ahead of its ASX listing

-oOh!media ((OML)) receives a $766m takeover offer from I Squared Capital

On the calendar today:

-AU Federal Budget

-AU May Westpac Consumer Confidence

-AU NAB April Business Survey

-EZ May ZEW

-US April CPI

-US April NFIB

-LIFE360 INC ((360)) Qtr Update

-CORONADO GLOBAL RESOURCES INC ((CRN)) 1Q26 Qtrly update

-GQG PARTNERS INC ((GQG)) April update

-NEWMONT CORPORATION REGISTERED ((NEM)) AGM

-NEXGEN ENERGY LIMITED ((NXG)) Qtrly update

-WESTGOLD RESOURCES LIMITED ((WGX)) earnings report

-WISETECH GLOBAL LIMITED ((WTC)) DSV Capital Markets Day

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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