Good morning. Iran's Revolutionary Guards said two more oil tankers struck mines in the Strait of Hormuz on Saturday, and on Sunday Iran said it had a new operational plan ready if the United States resumes attacks. The disruption to Gulf shipping lifted Brent 4.9 per cent last week, and through oil it feeds the inflation and interest-rate outlook that took Nasdaq 100 futures down 5.5 per cent over the same week. In Europe, protests in France over high prices turned into the country's worst unrest in years, and in China the commerce ministry proposed export controls on solar-manufacturing technology.
The question of whether AI infrastructure spending will earn an adequate return carries into this week. Microsoft has pulled out of anchoring a UK data centre for Nscale weeks before the developer's planned US listing, and Meta and Tesla report results this week. The Federal Reserve is in its quiet period before the 27-28 October meeting, and the Bank of England's Sarah Breeden said hedge funds' larger role in government bond markets raises the risk of a shock spreading from one market to another.
In Australia, capital gains tax changes legislated in June will double the tax on fund managers' carried interest, which reaches most domestic venture capital and private equity funds, the AFR reported. Consumer confidence fell further over the year to September than in all but two OECD countries, and the major banks asked the ACCC to block Armaguard's interim pricing for cash transport. RBA Assistant Governor Christopher Kent speaks this morning and Deputy Governor Andrew Hauser on Wednesday, the last appearance by a Board member before the 3 November decision, with the September-quarter CPI due next week.
In the week to Friday, S&P 500 futures fell 2.0 per cent to 7,704 and Nasdaq 100 futures 5.5 per cent to 29,392, the Nasdaq 100's largest weekly fall since the April 2025 tariff sell-off, while Dow futures rose 0.6 per cent to 52,214. The US 10-year Treasury yield ended the week 14 bps lower at 5.1 per cent, and the VIX volatility index rose 34.7 per cent over the week to 19.99.
European shares rose last week while US technology shares fell. In the week to Friday, the Stoxx 600 rose 2.1 per cent to 645 and the FTSE 100 3.1 per cent to 10,882, and the DAX closed Friday's session at 25,623. The euro ended the week unchanged at US$1.1211.
At Friday's Asian close, the Nikkei 225 stood at 65,324, down 5.4 per cent over the week, the Hang Seng at 24,187, down 0.1 per cent, and the Shanghai Composite at 3,716, down 2.6 per cent. The yen is at 157.94 to the US dollar. Asian cash markets have not traded since and reopen later this morning AEDT.
The ASX 200 finished Friday's session at 8,807. The 10-year Australian government bond yield ended the week 12 bps lower at 5.2 per cent, the Australian dollar is at US69.72 cents, and iron ore was US$90.90 a tonne on Friday, up 0.2 per cent over the week.
Attacks on shipping around the strait have increased over the past two weeks, and a container ship and a dry bulk carrier sank near the strait last week after being hit by projectiles. Iran says it is stepping up strikes, with two more tankers mined on Saturday, in response to the US blockade of its ports and the sanctions imposed in September, and on Sunday it said it had a new operational plan if the US resumes attacks, CNBC reported; Brent rose 4.9 per cent over the week. In the same week US consumer, producer and import prices all rose more than forecast.
Public comment closes on 15 November, and exporters must register certain overseas technology transfers in the meantime. The ministry cited national security, and Reuters reported the controls could affect US manufacturers such as Tesla that are building solar supply chains outside China; Beijing has already curbed exports of solar-manufacturing technology to India.
The IMF said last week that hedge funds hold about US$13 trillion of gross assets and warned their leverage and crowded trades could amplify market stress. Hedge funds held a record 7 per cent of the US$30 trillion Treasury market at the end of 2025, US Office of Financial Research data show, much of it in leveraged basis trades.
The change could reach about 90 per cent of the domestic venture capital and private equity industry: more than 200 fund partnerships are registered under the two affected incentive programs, including potentially affected funds run by MA Financial, IFM Investors, BGH Capital and Quadrant. The AFR reported the cut-off could encourage funds to sell assets early so performance fees are paid before 1 July 2027, and a spokeswoman for Treasurer Jim Chalmers said the treatment of carried interest is still being considered.
No consensus is published for this series. A reading below 100 indicates pessimism, and Australia now sits at the OECD average. AMP economist My Bui said the slowing is likely to show up in weaker consumption data and, as businesses find it harder to pass on costs, eventually in milder inflation readings.
Armaguard proposes a cost-plus model with a 10 per cent margin on new and expiring contracts for two years; the banks want expiring contracts held to last year's price with increases capped at CPI plus 7.5 per cent. The customers' $100 million of support expired on 30 June, and the Transport Workers Union said Armaguard drivers begin voting today on protected industrial action.
Victoria's net debt is forecast to reach $200 billion within four years, and its interest bill is projected to exceed school spending by the end of the decade. The state votes in November.
Microsoft had agreed to rent about 23,000 Nvidia AI chips at the site, which grid operators do not expect to connect to power until the 2030s, and it accounts for more than 40 per cent of Nscale's $103 billion of contracted revenue. Nscale said grid delays at the site have no impact on its other contracts. The decision follows Australian developer Firmus cancelling its planned $20 billion float this month, and falls in the shares and bonds of the AI computing providers CoreWeave and Nebius.
Technical agreement on the petroleum mining code, the production sharing contract and the fiscal regime was reached in Canberra, and the documents still need approval from both governments and Woodside. Timor-Leste's petroleum minister last month put first production at 2034-35 and is seeking a final investment decision by 2029; Woodside's shares have not traded since the report.
“The question is whether the September rate hike was a bring-forward of the likely November rate hike – given the RBA did not want to wait that long – or still leaves the risk of another hike in November if next week's third-quarter CPI result is hot.”
“Consumers remember news on inflation – recall is particularly high – and that can't be a good thing when inflation has been so high.”
“We think that sustained slowing in momentum will translate into slower consumption data from here.”
“That, of course, means that the likelihood of a shock in one market transmitting to another is greater than what it was.”
“We've exempted a whole range of arrangements, but at the heart of this reform is the need to better align taxation through trusts and labor income.”
“We cannot wait much longer. We have to do it now.”
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Sources: Yahoo Finance, FRED, RBA, company filings.