The Overnight Report: Nasdaq Pops, Oil Slips

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

Nasdaq led the US indices higher on Thursday, with a surge in memory stocks ahead of SK Hynix's ADR listing on Friday (EST).

Miners dragged the Australian market lower yesterday, with ASX200 futures pointing to a flat start on Friday.

Good Morning,

The ASX200 closed down -0.26%, or -22 points, at 8,762, with ongoing selling in the miners, which collectively fell -1.5%.

Falls have been contained to less than -1%, while rallies have approached 2%, with three sessions posting gains of more than 1% each.

Over the last 22 sessions, the ASX200 has fallen on 12 occasions, or 54.5% of the time.

Korea’s SK Hynix is launching an ADR on Nasdaq on Friday (EST) under the ticker symbol SKHY, with the offering reportedly seven times oversubscribed.

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

Chips Pop, But Big Tech Owns July so Far

Semis got a one-day lift, led by Micron on its US$3 billion plan and building hype for tomorrow’s SK Hynix debut.

Zoom out though: the real move this month has been money heading back into Big Tech after chips cooled off from June highs.

Apple’s climbing again, and even Nvidia is outrunning the rest of the chip group.

Today was a bounce, not a trend change.

Markets Ignore The Middle East

The US struck 90 targets in Iran, and Iran hit back at US-allied countries. Stocks advanced anyway.

Oil fell after Trump said Iran called wanting a deal.

Traders look more numb to the fighting by the day.

Wall Street Eyes AI Cash Flows 

Apollo’s Torsten Slok flagged the huge spending going into cloud data centers.

His point is simple: this whole AI rally leans on that cash flow showing up on schedule.

It’s the one thing worth watching while the rest of the market keeps climbing.

ANZ Bank Australian Market Focus, extract

Equities rose, bond yields eased and oil prices declined as markets took the view that the latest flare-up of tensions in the Middle East was contained.

Iran launched retaliatory attacks on US military assets in neighbouring countries. Some ships are still transiting through the Strait of Hormuz, though largely limited to the Iran-approved route.

The S&P500 was up 0.8%. In Europe, the EuroStoxx50 rose 1.3%, while the FTSE100 fell -0.2%.

The yield on the US 10-year Treasury note declined -1.2bps to 4.55%. In commodities, the active WTI future fell -1.7% to US$71.90/bbl. Gold rose 1.0% to US$4,124/oz.

Existing home sales fell -2.4% month-on-month to 4.09 million (SAAR) in June, against expectations of a rise. Existing home sales have oscillated around a flat trend for several years, at levels last seen during the GFC.

Persistently high mortgage rates and the “lock-in” effect are suppressing activity. The housing market is one aspect of the US economy signalling monetary policy is restrictive, in contrast to the stock market and the AI investment boom. Residential investment has contracted in every quarter since late 2024 and, in level terms, is at its lowest since mid-2016.

The ECB’s June meeting minutes revealed growing concern among policymakers about the persistence of underlying inflation, suggesting a rate hike in September is likely.

While the Governing Council refrained from giving explicit forward guidance and maintained a data-dependent, meeting-by-meeting approach, the discussion surrounding the inflation outlook was quite hawkish.

Governing Council members see inflation pressures from the energy shock in the pipeline. More broadly, outside the energy shock, the ECB sees underlying inflation proving to be more persistent than previously anticipated: “It was suggested that the evolution of underlying inflation dynamics was indicative of persistent rather than temporary underlying price pressures and therefore a cause for concern.”

Governing Council members have been at pains to downplay the characterisation of the June rate hike as an insurance hike, and the minutes highlight that the decision to hike was squarely driven by the deterioration in the inflation outlook, with core inflation expected to remain above target for an extended period.

Members saw growing evidence of inflationary pressures broadening beyond energy.

Our own analysis of inflation dynamics suggests otherwise. While we continue to pencil in a rate hike from the ECB at its September policy meeting, we do not think further policy tightening is warranted.

Commodities update

Crude oil prices ended the session lower amid expectations of limited military attacks between the US and Iran.

Despite the US ramping up attacks on military sites in Iran, the market drew some reassurance from the Trump administration’s decision to avoid targeting Iranian energy infrastructure. This was aided by comments from President Trump, who said he does not expect a return to a full-scale conflict.

Nevertheless, traffic through the Strait of Hormuz remained severely restricted as the two sides exchanged strikes that were among the heaviest since reaching a ceasefire agreement last month. Observable movements largely occurred along an Iran-approved route nearer to the waterway’s north.

The US-supported Omani corridor was relatively quiet. The shipping industry has shown a reluctance to return to the Persian Gulf. Bloomberg reported that several owners of ships that had recently crossed the strait were still assessing whether it is safe to return. London marine insurers are seeing fewer inquiries for journeys through the strait.

However, media reports suggest Iran has been able to dispatch tankers carrying roughly 11 million barrels of crude oil over the past 24 hours, after fighting with the US resumed.

European natural gas prices pushed higher after reports that Qatar is pausing its efforts to rapidly revive production. This comes after an attack on one of its tankers in Hormuz raised concerns that transits through the key waterway remain too risky.

QatarEnergy said operations at its Ras Laffan plant will instead be kept at a minimum for safety reasons, and the number of vessels scheduled to dock at the plant in the coming days will be reduced. This threatens to further tighten the global gas market just as Europe needs to ramp up refilling of its storage facilities.

They are currently only about 51% full and need to be near 90% by November.

The change of plans in Qatar also raised concerns in the Asian LNG market. North Asian LNG prices have risen almost 10% over the past week and are now more than 80% above pre-conflict levels at US$18.50/MMBtu. Further disruption to supply from the Persian Gulf is likely to see competition for existing cargoes ramp up.

Pakistan has been particularly active, seeking cargoes for July delivery.

Iron ore futures rose amid concerns over tightening supply. Reuters reported that hundreds of workers at BHP’s Port Hedland iron ore operations in Western Australia are threatening to walk off the job next week.

The unions have called for an eight-hour work stoppage on 16 July after six months of negotiations failed to reach agreement on a four-year labour deal.

The base metals sector shrugged off rising geopolitical risk to end the session higher. Copper led the gains amid the broader improvement in risk appetite among traders. It has also been supported by a slew of fundamental drivers.

Inventories in China have recorded significant falls over the past week. There have also been supply headwinds in South America. Zinc rallied more than 3% after reports of a fire at a major zinc smelter in South Korea operated by Young Poong Corporation.

Gold found some support on expectations of limited escalation in the Middle East conflict. This is despite earlier concerns that a rebound in energy prices could see the Federal Reserve keeping interest rates higher for longer to combat stubbornly high inflation.

Semis and Momentum Flash Long Signal as Goldman Sees Cleaner Positioning, Stephen Innes extract

The medium-term question is less about semiconductors and more about the Federal Reserve.

Market leadership will depend heavily on whether the coming policy path is closer to zero rate hikes, which remains the consensus view among many equity investors; two hikes, which is roughly what the market is pricing; or four or more hikes, which is the convex risk many macro investors are still positioning for.

That is the real fork in the road.

A no-hike or mild-hike outcome keeps the AI and momentum leadership trade alive, especially after positioning has been washed out. A more aggressive hiking cycle would force the market to confront a much harder question: whether long-duration growth can continue to drive the index if rising discount rates once again become a headwind.

• Semiconductors and momentum look tactically cleaner. The froth has been washed out, many AI names are trading near their 50-day moving averages, and long positioning no longer appears as mechanically crowded as it did at the peak.
• AI has cooled, not cracked. The April and May exuberance has faded, but investors still view AI as the market’s preferred refuge when macroeconomic or geopolitical uncertainty rises.
• Lower leverage should reduce volatility. Less daily short gamma means less forced-flow amplification, which could make semiconductor stocks less parabolic but more attractive from a portfolio value-at-risk perspective.
• The Federal Reserve remains the key leadership test. Zero hikes would keep equity investors comfortable, two hikes are broadly priced in, but four or more hikes would challenge whether AI and momentum can continue to lead the market against the headwind of higher discount rates.

Semiconductors and Momentum Flash Long Signal

The guiding star for the S&P500 into year-end remains above 8,000. According to Shawn Tuteja, who oversees ETF and custom basket volatility trading within Goldman Sachs’ Global Banking and Markets division, that target is no longer the controversial part of the conversation.

The real debate has shifted beneath the index level, where a drawdown of more than -20% in the momentum factor has left clients less focused on whether the market can reach that level and more focused on what market leadership will look like if it does.

The assumptions are not especially heroic.

Goldman Sachs forecasts 2027 earnings per share of US$385, while consensus sits closer to US$398. Split the difference, apply a multiple of 20.5 times, and the index reaches above 8,000.

That sounds like a bold headline, but from current levels it represents less than 7% upside, which is precisely why factor and thematic leadership matter more than the destination itself.

In other words, the index can continue grinding higher while the leadership beneath it changes. Momentum has been hit hard, semiconductor stocks have been de-risked, leverage has declined, and positioning is cleaner than it was when virtually every investor was heavily exposed to the same trade.

That does not eliminate risk, but it does change its character. The market is no longer simply asking whether the S&P500 can reach new highs.

It is asking which investment themes have enough momentum left to take it there.

Corporate news in Australia:

• Fletcher Building ((FBU)) upgraded FY26 earnings guidance to NZ$400m-NZ$403m, around 6.4% above prior guidance, driven by stronger property sales and improved manufacturing and distribution volumes
• Westgold Resources ((WGX)) completed the sale of the Chalice Project to Corazon Mining ((CZN))
• Steadfast Group ((SDF)) extended due diligence on its proposed $7.7bn takeover bid
• BlueScope Steel ((BSL)) takeover speculation eased as investment banks resumed research coverage on the stock
• Warburg Pincus agreed to acquire credit reporting business CreditorWatch in a deal valued at around $700m
• Chemist Warehouse founders are considering a sell-down of part of their estimated $8bn stake in Sigma Healthcare ((SIG)) 
• Aura Consolidate Group ((AXQ)) listed on the ASX following its $3bn acquisition of Qoria and a $145m capital raising
• Ticketek owner TEG is seeking several hundred million dollars in new funding from its private equity owner and lenders to strengthen liquidity and support operations
• Firmus is seeking US$2bn in private funding at a valuation of around US$15.5bn
• FDC Consolidated Holdings ((FDC)) completed a $400m initial public offering, becoming Australia’s largest IPO of 2026

On the calendar today:

-NZ Public Holiday

-JP June PPI

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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