Good morning. US equities fell on Friday as selling in semiconductor and AI-infrastructure shares continued, with investors questioning whether the debt-funded AI data-centre capex cycle will earn an adequate return, and higher oil prices added to concern about inflation. S&P 500 futures are trading at 7,702 this morning, 1.1 per cent below yesterday's level, and the US 10-year Treasury yield is 5.1 per cent, up 1 basis point. Fed Chair Kevin Warsh declined to signal a rate move in Bangkok, and futures cut the implied chance of an October increase, but Treasury yields still rose as oil climbed.
Policymakers at the IMF and World Bank meetings in Bangkok linked the AI data-centre capex cycle to the cost of borrowing. ECB and Bank of England officials said demand for capital to fund AI investment may keep interest rates higher than they would otherwise be, the same financing pressure investors were pricing into AI-related equities and bonds. In emerging markets, Indonesia's benchmark fell 8 per cent soon after the open and trading was halted for 30 minutes after MSCI proposed reclassifying the market, a move that would remove it from the MSCI Emerging Markets index that passive emerging-market funds track.
Locally, fund managers holding pre-IPO stakes in Firmus, valued at US$10.5 billion in its August funding round, are deciding how to value them now the float has been withdrawn, and La Trobe Financial recovered its full exposure by selling its loan on a collapsed Bathla project for $31.2 million. On the ASX, PLS approved the next expansion of its Pilgangoora lithium operation before Friday's open, Cleanaway expects to update the market on EQT's takeover proposal before Monday's open, and Tabcorp has held preliminary talks to buy Foxtel, the AFR reported after the close.
Nasdaq 100 futures are trading at 29,378, down 2.5 per cent, and Dow futures at 52,194, down 0.4 per cent, with Friday's selling concentrated in technology. Chipmakers fell for an eighth consecutive session, the longest losing run since 2008, and CoreWeave, whose bonds trade at yields that typically signal distress, fell 11 per cent, the AFR reported. The US dollar index eased 0.2 per cent to 101.60.
The Stoxx 600 closed Friday's session 0.8 per cent higher at 645 and the FTSE 100 rose 0.4 per cent to 10,880, taking the London index's gain over five sessions to 3.1 per cent. Reuters reported investors moving into defensive sectors through the week as US technology shares fell.
At Friday's Asian close, the Nikkei 225 rose 1.4 per cent to 65,324, leaving it 5.4 per cent lower over five sessions, and South Korea's KOSPI rose 3.6 per cent after Thursday's six-month low, the AFR reported. The Hang Seng gained 0.5 per cent to 24,187 and the Shanghai Composite 0.2 per cent to 3,716.
The ASX 200 finished Friday's session 1.0 per cent higher at 8,807, led by the materials sector, up 3.2 per cent. BHP rose 3.5 per cent to $60.03 and Rio Tinto 1.5 per cent to $154.93 after both were sold on Thursday with AI-linked stocks, because of their copper exposure, while consumer staples and banks closed lower. The ACGB 10-year yield was 5.24 per cent, up 1 basis point.
A December increase remains priced at about 90 per cent. Warsh said the Fed had made clear it would deliver price stability but that he does not prejudge meetings, his last public remarks before the pre-meeting quiet period.
US crude also topped US$100 during Friday's session after a group of US lawmakers introduced a bill to block President Trump's deal to release more Russian diesel into global markets, and higher energy costs added to inflation concerns that pushed Treasury prices lower, the AFR reported.
Imported fuel prices rose 4.8 per cent in the month and non-fuel prices 0.7 per cent, taking the non-fuel annual rate to 6.0 per cent. The release follows consumer and producer price reports earlier in the week that also exceeded forecasts, which Reuters said left economists convinced inflation is broadening beyond energy.
MSCI cited opaque shareholding structures, suspected coordinated trading and weak enforcement, and expects to make a final decision in June after consulting until 30 April. A move to standalone status would remove Indonesia from the MSCI Emerging Markets index that passive emerging-market funds track.
Reuters reported factory production lost momentum over Q3 as the Middle East conflict disrupted supply chains and raised energy costs, with Brent trading at US$109.59 this morning.
No consensus forecast is published for the annual outturn. The government is financing that deficit with the 10-year Treasury yield above 5 per cent, which raises its interest bill as maturing debt is refinanced.
Shearing estimates the renminbi is about 25 per cent undervalued in real terms and expects the imbalances to keep building, cutting euro-zone growth by 0.1 to 0.2 percentage points a year, with Germany likely to be hit harder and Vietnam and Malaysia gaining as supply chains move.
That round raised US$2 billion at a valuation of US$10.5 billion; Firmus had been valued at $44 billion before the float was pulled and at $2 billion in September 2025. Fund Monitors chief executive Chris Gosselin said funds must choose between writing the stakes back towards cost and holding the August price.
Private credit lenders are striking deals to recover money from Bathla's $3.4 billion collapse, which in August led Centuria Bass and CVS Lane to suspend some fund withdrawals. Investors in funds holding no Bathla loans are now locked in too: MA Financial has limited withdrawals and Metrics has suspended withdrawals from some unlisted funds, and both say they have no Bathla exposure. About half of the project's 72 apartments are pre-sold under contracts worth $25.8 million.
AMP attributes the decline to poor affordability, the RBA's rate increases, changes to negative gearing and the capital gains tax discount, and weak confidence, and notes asking rent growth slowed to 0.5 per cent in the September quarter.
Revenue fell 7 per cent from the June quarter to US$3.7 billion on lower metal prices, while alumina output rose 11 per cent to 2.5 million tonnes as its Pinjarra refinery in Western Australia ran more reliably. Alcoa reaffirmed its 2026 production guidance, and its US$3.1 billion purchase of South32's bauxite, alumina and aluminium interests is due to close in H1 2027.
US lenders are concerned that chatbots acting for customers could move billions of dollars of deposits into higher-yielding accounts, which would raise banks' funding costs, the FT reported.
The feasibility study puts the project's post-tax net present value at $2.7 billion and its internal rate of return at 29.5 per cent, at a long-term price of US$1,620 a tonne. PLS will fund it from $2.3 billion of cash held at 30 June and operating cash flow, and lifted Pilgangoora's Ore Reserve 31 per cent in contained lithium; the shares opened 3 per cent higher, Market Index reported.
Dazn bought Foxtel from News Corp in April 2025 in a deal with a headline price of $3.4 billion, much of it assumed debt, and is not expected to sell parts of the business alone. Tabcorp had $305.8 million of cash and an undrawn $980 million debt facility at 30 June and declined to comment; the shares have not yet traded on the report.
The shares were down about 4 per cent at $2.53 in late-morning trade on Friday, about 19 per cent below EQT's indicative $3.13 a share, Proactive reported.
Independent expert Deloitte Corporate Finance concluded that, absent a superior proposal, the demerger is in shareholders' best interests, the directors unanimously recommend it, and the demerger booklet is due to be despatched on or before 23 October.
“I believe optimistically, you might think naively, at least in the US, we're going to come out of this stronger with a more durable economy, more capable of leading the world on economic growth.”
“Inflation is not unique to the United States.”
“Investment in AI is one of the key factors driving up the cost of money.”
“We know that R-star is higher, but we do not know how high.”
“There are particular circumstances that lead to some countries being more affected, France being a case in point.”
“There is no short cut to a lower cost of living. There is only the long way round: an economy that produces more, competes harder and grows faster than its costs.”
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Sources: Yahoo Finance, FRED, RBA, company filings.