The Overnight Report: RBA Meets Today

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            [7] => ((OML))
            [8] => ((AX1))
            [9] => ((SIQ))
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This story features WESTPAC BANKING CORPORATION, and other companies.
For more info SHARE ANALYSIS: WBC
The company is included in ASX20, ASX50, ASX100, ASX200, ASX300 and ALL-ORDS

US markets were flat to slightly weaker as the US/Iran peace deal stalled, oil prices and US yields headed higher, and markets await the July CPI print on Wednesday (EST).

The Australian market eased on Monday, awaiting today's RBA rates decision at 2.30pm (EST).

The general view among forecasters is there will be no rate change today, with hawkish commentary to follow.

ASX200 futures are pointing to a flat-to-weaker start.

Good Morning,

The Australian market eased on Monday, ahead of today’s RBA rates decision at 2.30pm AEST.

The ASX200 slipped by -31 points ot -0.3% to 9,233.

Telcos led the gains while financials weighed, down -2.3% as banks were sold off post a disappointing quarterly update from Westpac ((WBC)).

August Reporting Season in Full Swing

With the August reporting season starting to ramp up, stay in touch with which companies are due to report with the the FNArena Calendar:

https://fnarena.com/index.php/financial-news/calendar/

Today’s scheduling includes Life360 ((360)), Computershare ((CPU)), JB HiFi ((JBH)), and SGH Ltd ((SGH)), among others.

RBC Capital’s quick response to Life360‘s release:

“The 2Q26 result was a small beat on revenue (1-2%) but well ahead on Adj. EBITDA.

“MAUs growth remains solid, and importantly met consensus expectations for the US (+14%). Conversion rates continue to edge up. CY26 guidance unchanged.”

CLSA on yesterday’s market update by Integral Diagnostics:

“Integral Diagnostics (IDX) released a FY26 trading update and announced a new CFO. As we noted in our preview, concerns that there’s ‘always something’ in the result proved partially correct.

Revenue was a 1% miss (or a 2.3%/1.6% miss vs cons/CLSAe 2H26), Op Ebitda was a 3% miss (albeit margin was largely in-line with IDX guidance of 21.0%), while NPAT was in-line with expectations.

Clarity on the near-term outlook was welcome, as was an update around the new CFO, who provides IDX with a fresh start after new CEO/CFO appointments.

Ideally, this is a clear-the-decks moment for IDX, where industry trends remain favourable. But the FY26 result remains key, especially clarity on the composition of the result and insights into the new CEO’s longer-term strategy.

Our PT falls to A$2.45 (from A$2.60) as we rebase our estimates through FY28CL. O-PF retained, but we concede see cautious sentiment is likely to persist ahead of the FY26 result.”

FNArena corporate results monitor to track the season:

https://fnarena.com/index.php/reporting_season/

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

Nvidia Lined Up $500bn And The Stock Fell

Apollo, Blackstone, BlackRock, Brookfield, Goldman Sachs and KKR agreed to help Nvidia raise US$500bn for the AI buildout, per people familiar with the talks.

Shares extended their losses on the report and closed down.

That same morning, Bank of America called worries about circular AI financing overblown and kept Nvidia as its top sector pick into the August 26 report.

Buyers disagreed today, and the space between those two views is the trade for the rest of the year.

Oil Settled Above US$82 With The Reserve At A 1983 Low

West Texas Intermediate settled at US$82.13 and Brent at US$87.72.

Tehran’s price for reopening the strait is a US troop withdrawal, an end to all sanctions and war reparations, which is not a list you write when you are close to a deal.

US strategic reserves are now at their lowest level since January 1983.

The buffer that absorbed the last two oil scares is thinner this time

Meta Wants To Give The Model Away And Sell The Compute

Zuckerberg published a long essay Monday arguing superintelligence should be spread widely rather than held by a few labs.

Meta released Muse Glimmer alongside it, an open-weight model small enough to run on a single graphics card.

The plan is free AI for billions of people, then an auction for anyone who wants more compute.

That is a pricing model, and it points straight at the subscription revenue every rival runs on.

ANZ Bank, Australian Morning Focus extract

It was a quiet start to the global trading week, with attention focused on July’s crucial US CPI report. 

Equity markets were little changed, while bond yields followed oil prices higher, reflecting impatience over the lack of an announcement of the anticipated deal between Oman and Iran to reopen the Strait of Hormuz and President Trump’s criticism of Iran’s demands for war compensation. 

The S&P500 was largely unchanged. In Europe, the EuroStoxx50 rose 0.2% and FTSE100 fell -0.4%. 

The yield on the US 10y Treasury note rose 6bp to 4.70%. 

In commodities, the active WTI future rose 4.5% to US$81.7/bbl. 

Gold rose 1.1% to US$4,382.8/oz. 

In the Euro zone, the Sentix Investor Confidence Index rose from -3.1 to 0.9 in August, returning to positive territory for the first time since February. It has now risen for four consecutive months from April’s low of -19.1 and is above its long-run average of 0.3. 

We expect the RBA to leave the cash rate at 4.35 today. While we expect the hold decision to be unanimous, the Board is likely to explicitly consider both a rate hike and a hold. 

In the end, the combination of a higher-than-expected unemployment rate and lower-than-expected inflation (both relative to the RBA’s May forecasts) combined with softer activity data support keeping rates on hold. 

On inflation, the RBA will remain hawkish and will want to retain the option to hike further. The characterisation of the activity side of the economy should be consistent with Governor Bullock’s recent speech to the Anika Foundation. 

The trimmed mean inflation forecast will be lower over 2026 than was the case in May.

Over 2027 and 2028 though we expect the lower inflation starting point and a slightly higher near-term unemployment rate will be offset by marginally faster GDP growth, leaving the trimmed mean inflation forecast unchanged. 

We don’t expect any further increases in interest rates and see a mild (two -25bp rate cuts) easing cycle over the second half of 2027.

From the US Market Desk: Earnings Drive the Tape, Franklin Templeton, Chris Galipeau

We are constructive on US equities and have established a year-end target range of 7400-7800 for the S&P500, driven by 15%-plus Y/Y earnings-per-share (EPS) growth.

Second-quarter (Q2) earnings are BOOMING, with blended growth rates about up 47% Y/Y and with EBIT margins approaching 17%. Much of this EPS power is Magnificent Seven-driven in Q2.

Consensus expectations (Bloomberg) for 2026 now sit at US$359.44, up about 17% Y/Y. For 2027, the consensus earnings estimate stands at US$404.66, representing a 13% Y/Y growth rate versus 2026.

Earnings estimates have ticked up virtually every week this year. 

If we assume the consensus earnings estimates are reasonably correct, that puts the tape at 21.46x this year’s earnings and 19.01x 2027 estimates. The long-term historical forward multiple is about 17x.

Portfolio managers are now focusing their efforts on corporate earnings power for calendar year 2027. I can’t make a strong argument that the tape is “cheap” here, but I also can’t make the argument that a 19.01x forward multiple is crazy rich either, unless bond yields move significantly higher.

We don’t expect that, but it is a risk.

Consider this: The S&P500 is up 13% year-to-date (YTD) and S&P500 earnings estimates are up 16% from January 1. Coincidence? I think not. Stocks follow earnings over time.

All 11 S&P GICs sectors have positive earnings YTD. The top-three performers are energy up 29%, information technology up 22%, and industrials up 19%. In January, our top-three favourite sectors for the year were energy, tech, and industrials.

It’s working.

There was a flurry of new all-time highs last week, including, but not limited to, the S&P500 Index, the S&P500 Equal Weight Index, the Russell1000 Value Index, the Russell2000 Index, the S&P MidCap400 index, and the S&P500 Financials Index.

New highs are bullish, as is the breadth of participation.

The “Get ready for a broader market” theme we published in our paper from January of 2025 has been spot on, and we expect this to continue amid broad earnings growth.

Bottom line:

We think it’s prudent to have a diversified equity playbook that includes US large-, mid- and small-cap exposure with a balance of growth and value. Large-cap growth is on sale here.

The same can be said for ex-US equity exposure; emerging markets and Japanese stocks look attractive.

That involves reducing concentration and spread one’s bets. We favour buying on pullbacks.

Corporate news in Australia:

• Tabcorp Holdings ((TAH)) has entered a binding scheme implementation deed to acquire BetMakers Technology Group ((BET)) for around $276m
• oOh!media ((OML)) has agreed to an $898m takeover by I Squared Capital following a competitive bidding process
• Frasers Group is continuing its hostile takeover push for Accent Group ((AX1)), criticising the company’s disclosures and calling for chair Lawrence Myers to resign
• Three bidders are competing for Livingbridge’s $1bn-plus sale of Everlight
• Barrenjoey co-founder Guy Fowler is reportedly working on a potential Smartgroup ((SIQ)) bid for FleetPartners Group ((FPR))
• Barrenjoey is advancing talks to acquire New Zealand stockbroker Craigs as part of its trans-Tasman expansion
• Janus Henderson is considering a rival bid for Perpetual ((PPT)), potentially challenging EQT’s long-running takeover pursuit
• EQT has joined the bidding for Apax-owned Pickles, alongside Ritchie Brothers and Copart, with Blackstone also a potential bidder for the Australian auction house
• Bank of Queensland ((BOQ)) has announced a $295m capital return through a special dividend and share buyback following the sale of its loan portfolio
• Privately owned defence supplier NIOA is considering an ASX IPO, with the company valued at around $1bn
• Regal-backed WIA Gold ((WIA)) is seeking $100m from institutional investors to fund development of its Kokoseb gold project
• Sunrise Energy Metals ((SRL)) has secured a conditional $566.38m, 25-year US government-backed loan for its Syerston scandium project and is planning a US stock exchange listing
• Elixir Energy ((EXR)) is seeking a $7m equity raising as prospects for its Taroom Trough gas project weaken
• Macquarie Asset Management ((MQG)) and GIC are partnering with Anthropic to establish and fund data centre platform Theseus Infrastructure

On the calendar today:

-AU July Business Survey

-AU RBA rate decision

-AU RBA Statement on Monetary Policy

-US July existing home sales

-US July NFIB

-LIFE360 INC ((360)) earnings report

-AMOTIV LIMITED ((AOV)) FY26 earnings report

-CENTURIA INDUSTRIAL REIT ((CIP)) FY26 earnings report

-COMPUTERSHARE LIMITED ((CPU)) FY26 earnings report

-CORONADO GLOBAL RESOURCES INC ((CRN)) FY26 earnings report

-HELIA GROUP LIMITED ((HLI)) 1H26 earnings report

-JB HI-FI LIMITED ((JBH)) FY26 earnings report

-SGH LIMITED ((SGH)) FY26 earnings report

-SOUTHERN CROSS MEDIA GROUP LIMITED ((SXL)) FY26 earnings report

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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