The Overnight Report: CommBank & US CPI

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This story features AGL ENERGY LIMITED, and other companies.
For more info SHARE ANALYSIS: AGL
The company is included in ASX100, ASX200, ASX300 and ALL-ORDS

US indices fell ahead of Wednesday's July CPI release with Nasdaq down -0.6% as profit taking in technology stocks continued for a second day.

On Tuesday, the Australian market rallied, as the RBA kept its interest rate setting on hold.

ASX200 futures are pointing to a weak start on Wednesday morning, with all eyes on CommBank results (among others).

Good Morning,

The RBA remained in a holding pattern at yesterday’s rates decision. The ASX200 rose 18 points or 0.2% to 9,251, albeit the market came off session highs post comments by Governor Bullock at the press conference.

Energy outperformed and consumer staples fell.

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

Today’s calendar includes some big names and potential markets movers, including AGL Energy ((AGL)), Amcor ((AMC)), CommBank ((CBA)), Computershare ((CPU)), Seek ((SEK)) and Suncorp Group ((SUN)). 

The FNArena corporate results monitor tracks the main earnings reports:

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

Today’s Big Picture

Oil back near US$90

Iran will not reopen the Strait of Hormuz until Washington pays what Tehran says it is owed.

Trump said no, and that he would rather wait for the pressure on Iran’s economy to do the work.

Nothing moved today, so Brent touched US$90 this morning before easing back near US$88.

Expensive oil means expensive gas and shipping, and that walks straight into tomorrow’s inflation report.

Someone else is paying for AI now

Nvidia $NVDA got six investment firms, Blackstone and KKR among them, to line up more than $500 billion for data centers.

Here is why that matters. Nvidia had been helping fund the customers who buy its chips, which made demand look stronger than it really was, and now outside investors carry that weight instead.

Intel $INTC sold $20 billion of stock this week to fund its own buildout.

The chips still sell. The new question is who writes the check.

Housing split in two

Existing home sales fell for a second straight month to an annual pace of 4.06 million, while the median price hit $434,100, near a record.

Mortgage rates keep creeping higher, and that always hits the bottom of the market first.

Ivy Zelman of Zelman & Associates says homes above US$1 million are still moving while first time buyers sit it out.

The one soft spot for buyers is new construction, where builders are handing out real incentives to clear inventory.

ANZ Bank, Australian Morning Focus extract

Equity markets were down, while bond yields declined after comments from Pakistani government officials signalled the US and Iran were close to a deal.

Some of this change reversed later in the morning, and oil prices were up overnight. 

The S&P500 was down -0.3%. In Europe, the EuroStoxx50 rose 0.2%, while the FTSE100 was down -0.2%. 

The yield on the US 10y Treasury note fell -1.2bp to 4.70%. In commodities, the active WTI future rose 0.9% to US$83.2/bbl, paring an earlier gain of around 3%. Gold was down -0.2% to US$4,367.7/oz.

The NFIB Small Business Optimism Index rose 2.4pts to 99.8, the highest since September 2025, and above the long-run average of 98.0. The bulk of improvement reflected a sharp rebound in hiring intentions, contrasting last week’s soft payrolls report.

The net share of firms intending to hire in the next three months rose 9pts to 20, the highest since October 2022. Pricing indicators eased, though remain elevated. The net share of firms raising selling prices declined 7pts to 31%. A net 28% of firms plan to raise prices in the next three months, down 4pts from June.

RBA decision:

As expected, the RBA’s Monetary Policy Board left the cash rate at 4.35%. The decision was unanimous. The tone of the post-meeting statement remains hawkish on the inflation front, as reflected in the final paragraphs.

On balance, we’d judge the overall tone of the statement as similar to Governor Bullock’s Anika Foundation speech. Our expectation remains that the cash rate has peaked, although there is some risk of a final rate hike in November. 

The RBA staff are expecting trimmed mean inflation to average 0.8% q/q over Q3 and Q4, but the trend in monthly trimmed mean suggests there is a risk of a slightly higher Q3 outcome. Given the end-point trimmed mean inflation forecast of 2.4%, there may be some tolerance on the part of the Board for a small inflation miss in Q3.

On the activity side, ongoing soft data will be necessary to prevent higher interest rates –- although this (soft activity data) seems likely in our view.

Elsewhere labour market conditions are still judged to be “a little tight” while the RBA continues to see a lack of spare capacity.

What We Read Last Week: Lori Calvasina, RBC Capital Markets extract

Companies Remain Cautiously Optimistic, With Complicated Consumer Commentary, Evolving Iran War & AI Conversations, & A Greater Focus On Inflation

As usual, our team continued to read through many of last week’s S&P500 earnings call transcripts, hunting for insights into the macro backdrop and other issues in focus for equity investors, with a focus on interesting tidbits. Key takeaways are:

• As has been the case throughout 2Q26 reporting season, the overall tone remained cautiously optimistic. Companies generally raised or reiterated guidance. A number of companies highlighted the strength of demand they were seeing across a number of industries despite what one company called a “turbulent economic and political backdrop.” Positive drivers referenced ranged from AI to the World Cup. There were some exceptions to the positive view of the backdrop, with one company standing out for their comment (regarding their customers) that “executives are scrutinizing expenses, escalating approval processes, and delaying decisions.” Several Health Care companies went out of their way to note they were not seeing any slowdown in volumes, though we also read another that said the opposite. Along with geopolitical uncertainty, cost pressures were also in focus for a variety of companies. Commentary around inflationary pressures stood out to us more this past week than it has in prior weeks.
• Consumer assessments got a bit more complicated. We continued to read a lot about resiliency in consumer discussions, with positive commentary on leisure travel demand and higher-end consumers, and several companies alluded to a continuation of value-seeking behavior. There were some notable exceptions, with one major restaurant chain highlighting “a challenging consumer environment that saw QSR industry traffic in several of our largest markets continue to be flat to negative.” A major beer company also noted the impact of external factors on 2nd-quarter volumes. On leisure travel, one company highlighted longer lengths of stays and booking windows, but another referenced a modest contraction in booking window and length of stay, which they also noted had begun to normalize.
• We got some helpful color on how companies are thinking about the Iran war and geopolitics. Early on in 2Q26 reporting season, it had seemed like companies were clamming up when it came to how they were thinking about the ripple effects of the Iran war, but we’ve found that companies are providing color again in recent weeks. Perhaps not as much as we’d like, but more than we got in the first few weeks of reporting season. Last week, comments included those on positive demand impacts from A&D companies and on how the conflict was creating volatility across energy and commodity markets and supply-chain challenges from those in other industries. We still aren’t getting much in the way of updated or current thoughts on how long the conflict might go before it becomes a problem for companies, but some companies did provide helpful specifics on hedging and oil price assumptions. One consumer company noted they are baking in US$90 oil into their guidance. Another consumer company noted that 80% of their bulk fuel purchases are hedged over the next fiscal year. A separate consumer company noted that they were well-hedged on energy and edible oils throughout most of 2026, with hedges in place on certain resins and metals through mid-Q3 and that, as that latter category rolls off, they expect greater exposure to spot prices in the fourth quarter. Zooming out, it was often in the Iran war discussion that inflation discussions and concerns appeared. Both an oil company and a consumer company observed they’d seen little demand impact from higher commodity prices. Some companies noted a pause in activity in the region. Overall, what we’re reading suggests that companies are still able to manage through the ripple effects of the conflict for now. But as noted earlier, the trajectory of inflation and challenges associated with it seemed much more in focus.
• AI commentary continued to highlight the role of the technology as an efficiency and productivity driver outside of the Tech area, and a driver of demand within it. We’ve been focusing more on what non-Tech companies have to say. Travel names stood out to us last week for highlighting how the technology reduces complexities in trip planning and delivers more value to travelers. We continue to take note of companies that are able to quantify AI impacts in some way, particularly in regard to cost savings. One Financials company noted their fiscal ’27 forecast includes US$25 million in AI-driven productivity gains, while a consumer company noted that their AI initiatives were expected to deliver approximately US$100 million of in-year savings in fiscal 2027. One Health Care company also noted that return impacts were likely to be at the beginning of 2028. Separately, labor comments last week were mixed, with one company discussing how the technology allowed it to moderate headcount, and another noting the technology would not replace its staff. Overall, the cost-savings story from AI still appears early innings to us, but we think it is heading in the right direction.
• Tariff commentary continues to suggest this issue has settled down. In the company comments our team read, tariff discussions focused mostly on refunds. Our sense from what we’ve read is that there has been some modest positive impact, but that this has not been a major issue for many companies.

Quick Hits: What Else Jumps Out

• Refocusing on gold. One of the more interesting questions that came up at the end of our Australia trip was on gold, and why we thought the commodity might be spiking. We defer to Chris Louney and the RBC Commodity Strategy team on this. Chris has discussed the recent stabilization in gold flows as potentially a function of post-consolidation dip-buying and the market pricing in Iran-related uncertainty. We’ve discussed the concept of uncertainty as a driver of gold with Chris in the past, noting that one visual helping illustrate this relationship is the inverse correlation between gold and presidential approval that has been seen over time.
• 2Q26 appears to be the new peak in S&P500 EPS growth. Based on data through August 7th, 2Q26 y/y S&P500 EPS growth is tracking at 32%, overtaking 1Q26’s growth rate of 30%. This is a new development, as 2Q26 was expected to see a bit of a slowdown in the growth rate based on stats in place in the consensus estimates ahead of this reporting season.
• Following flows. The latest updates from EPFR highlighted a number of interesting developments in flows to global developed markets sector funds, including the return of inflows to Consumer funds, outflows from REITs funds, choppy conditions in Telecom/Communication funds, ongoing strength in flows to Tech, Health Care and Financials funds, and continued deterioration in Industrials flows. Energy flows have improved, but we have not seen a return of major inflows.

We remain constructive on the S&P 500 in the year ahead. While we don’t expect the path to be linear, we expect pullbacks to be contained in the 5%-10% range as long as risks of a recession and/or major interest rate shock remain low.

We continue to believe the major rotation trades are caught in a tug of war. Following the burst of US and Growth leadership we’ve seen in August, we continue to have a bias for US over non-US and Growth over Value, but give Growth and US a slight edge over where we did a few weeks ago.

Corporate news in Australia:

• Pemba Capital-backed Rennie has acquired Vysus’ grid-modelling business, expanding its energy infrastructure capabilities
• Hanwha has offered up to US$1.2bn for Austal ((ASB))’s US operations and has received approval to conduct due diligence
• Crescent Capital has joined the bidding for Healius ((HLS))-owned Agilex Biolabs
• Pacific Equity Partners has lifted its bid for FleetPartners Group ((FPR)) to $4 per share, matching Element’s competing offer
• Quadrant Private Equity has appointed Jarden to explore a $500m-$1bn sale of meal-delivery company My Muscle Chef
• Scales has joined the bidding for Washington H. Soul Pattinson ((SOL))’s Redland Fruit portfolio, alongside private equity and agricultural investors, with bids due within two weeks
• Macquarie Cloud Services, part of Macquarie Technology Group ((MAQ)), has signed a three-year $278m agreement with Microsoft to provide Azure services to customers
• Westcoast Renewable Energy is seeking $30m from family offices to help fund development of its Whaleback Ridge wind project in Tasmania
• DigitalBridge and Washington H. Soul Pattinson ((SOL))-backed Leading Edge Data Centres are seeking $80m in growth capital to expand Newcastle data centre operations

On the calendar today:

-AU 2Q Lending

-AU 2Q WPI

-US July CPI

-CA June Bldg permits

-GE July CPI (final)

-GE June Current A/C

-AGL ENERGY LIMITED ((AGL)) FY26 earnings report

-AMCOR PLC ((AMC)) 4Q26 earnings report

-BRAVURA SOLUTIONS LIMITED ((BVS)) FY26 earnings report

-COMMONWEALTH BANK OF AUSTRALIA ((CBA)) FY26 earnings report

-CLOVER CORPORATION LIMITED ((CLV)) FY26 earnings report

-COMPUTERSHARE LIMITED ((CPU)) FY26 earnings report

-DEXUS INDUSTRIA REIT ((DXI)) earnings report

-RECKON LIMITED ((RKN)) ex-div 2.50c (100%)

-SEEK LIMITED ((SEK)) FY26 earnings report

-SUNCORP GROUP LIMITED ((SUN)) 1HFY26 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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