Good morning. Wall Street finished Tuesday higher on strong industrial earnings and a lower oil price, while technology shares made little ground. Dow futures are trading 1.0 per cent higher at 52,726 this morning, against a 0.2 per cent rise for the S&P 500 contract to 7,755 and an unchanged Nasdaq 100 contract, a split that reflects buying in industrials and healthcare rather than in the artificial intelligence names. Brent is trading at US$108.94 a barrel, 0.4 per cent below yesterday morning's print, after reports, not yet confirmed, of progress towards a US-Iran agreement led investors to reassess the risk to Gulf supply, FX Street reported. The US 10-year Treasury yield eased 2 bps to 5.1 per cent and the US dollar index fell 0.2 per cent to 101.54. September's US housing figures showed how far mortgage rates near three-year highs have cut into home buying, ahead of a Fed meeting next week at which economists expect no change before an increase in December.
The financing of the AI data-centre capex cycle stayed in focus outside the US session. Anthropic recorded a net loss of more than US$80 billion in H1 2026, US$72 billion of it accounting charges on convertible notes, on revenue of more than US$16 billion, the Wall Street Journal reported from a draft prospectus for its initial public offering. That followed the collapse in South Korean data-centre builder Elice's share-market debut, which took Seoul's chipmakers lower. In Europe, riots and looting in France kept French equities under pressure as investors weighed the cost to a government already carrying large deficits.
Locally, this year's rise in bond yields is showing up in the federal government's interest bill ahead of December's mid-year budget update, and in the price property developers now pay private credit lenders. On the ASX, BHP's lower copper output and NAB's plan to cut up to 2,500 jobs led the miners and banks lower, while consumer staples rose, and Ingenia Communities moved closer to a Warburg Pincus takeover after saying it intends to walk away from its bid for Peet.
In Tuesday's cash session 3M gained more than 5 per cent on a better-than-expected result and a raised full-year outlook and Northrop Grumman rose more than 4 per cent on its own earnings beat, CNBC reported. The Nasdaq Composite finished little changed as chip stocks recovered intraday losses, after the Philadelphia semiconductor index fell almost 16 per cent over the previous eight sessions. The VIX volatility index fell 5.1 per cent to 17.55. Netflix and SpaceX reported after the close.
France's CAC 40 fell 0.38 per cent on Tuesday as violent protests in Paris and other cities added to pressure on a country already dealing with weak growth and rising government debt, the AFR reported. London's FTSE 100 fell 0.3 per cent to 10,732. Sterling rose after UK unemployment fell more than expected, and the euro rose 0.2 per cent to US$1.1239.
In the prior session, the Nikkei 225 closed 1.3 per cent lower at 64,075 and the Hang Seng 1.3 per cent lower at 23,868, while the Shanghai Composite edged up 0.1 per cent to 3,735. South Korea's KOSPI fell as much as 4.8 per cent, led by SK Hynix and Samsung Electronics, as foreign investors cut exposure after a rise in US Treasury yields and a 32 per cent fall in data-centre builder Elice on its trading debut. The KOSPI is now down nearly 40 per cent from its June record.
The ASX 200 finished yesterday's session down 28.8 points, or 0.3 per cent, at 8,817, after falling as much as 1 per cent earlier in the day. Consumer staples rose 1.2 per cent and healthcare 0.9 per cent, while energy fell 1.6 per cent, materials 1.2 per cent and financials 0.6 per cent. The 10-year Australian government bond yield rose 4 bps to 5.3 per cent, so Australian 10-year debt now pays 16 bps more than its US equivalent, up from 8 bps a week ago. The Australian dollar is at US70.01 cents, up 0.3 per cent.
Sales contracts were 11.3 per cent lower than a year earlier and fell in all four regions, and housing starts fell 4.6 per cent to an annualised 859,000. The NAR attributed the fall to mortgage rates at their highest in almost three years, and the data came as the Fed weighs a further increase in its policy rate.
BNY's John Velis sees December as the last increase of this cycle and noted that market-implied policy rates out to December 2027 have eased from their highest levels, FX Street reported.
Scotiabank strategists Shaun Osborne and Eric Theoret said the figures reinforced expectations of tighter Bank of England policy. In a separate FX Street report the same day, Bank of England policymaker Megan Greene said wage disinflation has stalled. September inflation figures are due on Wednesday.
The Jakarta Composite rose as much as 3.2 per cent on Tuesday, after a two-day fall of about 15 per cent, its steepest since 1989, the AFR reported. A downgrade to standalone status would take Indonesia out of the MSCI emerging-markets index, and every global fund that tracks that index would have to sell all of its Indonesian holdings.
Japanese factories that depend on yttrium could be forced to shut once supplies run out, the FT reported, and the shortage adds to pressure on manufacturers that source critical minerals from outside China.
Treasury had already projected a $64.1 billion deficit this financial year before the 10-year government bond yield rose to 5.3 per cent from 4.8 per cent at the start of the year, a rise the AFR has estimated could add $6 billion in interest costs over four years. HSBC's Paul Bloxham said that without slower public spending or higher taxes, the Reserve Bank will be left to do the work of bringing inflation down.
The repricing follows the collapse of developer Bathla, the gating of major private credit funds and a dispute between Metrics and its auditor over valuations, the AFR reported. Cbus said it still funds only top-tier developers on large projects and has not changed its approach, but does less of it because opportunities are hard to find, and the AFR reported that banks and super funds are unlikely to fill the gap left by private credit in housing construction.
Chief executive Scott Gregson and enforcement head Chris Savundra told the Joint Select Committee on Artificial Intelligence that ASIC assesses transactions after the event, including those that do not proceed, the ABC reported.
AMP's Weekly Market Update of 16 October, by economist My Bui, expects home prices to fall 10 to 15 per cent from peak to trough by the June quarter of 2027, with about 5.2 per cent of that fall already recorded, citing poor affordability, this year's rate increases and weak confidence.
The RBA has estimated the ban will add a one-off 0.1 percentage point to inflation as merchants recover costs through prices. It cut the cap on consumer credit card interchange fees to 0.3 per cent from 0.8 per cent, and will require card networks and large acquirers to publish their fees from the end of October, the AFR reported.
Revenue rose 18 per cent and commercial engine and services orders rose 58 per cent, but FCF fell 14 per cent to US$2.0 billion. The shares fell about 2 per cent on Tuesday despite results CNBC reported as ahead of estimates.
The order backlog reached a record US$340 billion, up 36 per cent on a year earlier and 18 per cent on the June quarter, with double-digit growth in defence as well as commercial aircraft parts and servicing. The quarter includes 25 US cents a share of cost recovery under the International Emergency Economic Powers Act. A confirmed close for the shares was not available at the time of writing.
Diluted earnings were 87 US cents a share, up from 59 cents a year earlier, which CNBC reported as ahead of forecasts, and the operating margin rose to 34.6 per cent from 28.2 per cent. Full-year revenue guidance of US$51.1 billion sits 0.2 per cent below the midpoint of the prior range, and free cash flow guidance fell to about US$12.0 billion from US$12.5 billion. The shares are down more than 25 per cent in 2026, the AFR reported; the after-hours move was not confirmed at the time of writing.
Growth came from its AI business and Starlink, whose subscribers rose to 13.6 million from 12 million in the prior quarter, and the quarter included the closing of its US$60 billion purchase of AI coding company Cursor. The shares rose slightly in extended trading, CNBC reported.
Chinese orders for the card have exceeded 6 million units, against Nvidia's capacity to make no more than 3 million in 2027, and Nvidia has told customers it may fill only part of their orders, with samples in December and commercial deliveries from the March quarter of 2027, Reuters reported.
BHP kept its full-year copper guidance of 1.65 to 1.8 million tonnes. Iron ore output was 71.9 million tonnes and the average realised iron ore price fell 9 per cent to US$76.27 a wet tonne. The shares were down 1.8 per cent in Tuesday afternoon trade, and BHP also committed the first $1.1 billion to a program to double its Australian copper output by 2040, the AFR reported.
The cuts fall mainly in corporate functions and senior management, with no material impact on customer-facing roles, and NAB will also materially reduce its use of consultants and contractors. The shares were down 1.7 per cent at $39.23 by mid-morning, ahead of full-year results due on 5 November.
Walking away from Peet carries a break fee of about $10 million. Ingenia shares rose 9.7 per cent to $4.65, still 11.4 per cent below the $5.25 proposal, and Peet fell 7.1 per cent.
Attributable saleable production fell 13 per cent on the June quarter to 9.4 million tonnes on a longwall relocation at Moolarben, but is 4 per cent ahead of last year to date and tracking to the upper half of 36.5 to 40.5 million tonne guidance. The company expects higher diesel prices to push costs to the upper end of the $90 to $98 a tonne range, and the Kestrel acquisition completed on 1 October.
The raising follows PLS's approval late last week of the P2000 expansion at its Pilgangoora lithium operation, and comes after lithium futures fell about 12 per cent in a single day last week. PLS shares were up 2.9 per cent on Tuesday afternoon, the AFR reported.
“Inflation expectations are anchored above norms.”
“You're seeing a shift from a period in the market, where you saw a lot of capital chasing probably not enough deals, to a pull-back.”
“We're really trying to put downward pressure on merchants' payment costs.”
“The construction industry has suffered, and it's hard to find a good builder.”
“Demand continues to be solid across the business, even in a dynamic environment.”
“We also continue to see robust global demand for our products and services and are very well positioned to meet our growing customer needs across commercial aerospace and defense.”
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Sources: Yahoo Finance, FRED, RBA, company filings.