Good morning. Brent crude is trading at US$116.91 a barrel this morning, up 3.5 per cent, after a Houthi drone killed two people at Saudi Aramco's Shaybah oilfield and a tanker was struck as it left the Strait of Hormuz on Friday. The US 10-year Treasury yield rose 4 bps to 5.0 per cent as investors priced the inflation a further loss of Gulf supply would bring, recovering part of Thursday's fall. S&P 500 futures fell 0.6 per cent to 7,662, leaving the index lower for a second consecutive week.
The day's US data pointed the same way. Business surveys showed demand holding up while prices kept rising, and money markets went into next Wednesday's Federal Reserve meeting pricing a December rate increase as more likely than not. Gold, which usually draws demand when shares fall, declined with equities as that pricing firmed. In Tokyo, core inflation moved above the Bank of Japan's 2 per cent target for the first time this year, and in Europe every major index closed lower.
Closer to home, Treasurer Jim Chalmers released draft legislation that would let banks fund more of their lending through covered bonds, and he said Treasury's December forecasts would show softer growth. Wednesday's September-quarter consumer price index is the next test for the Reserve Bank's 3 November meeting, after a week in which money markets lifted the chance of a fifth increase. The ASX 200 finished Friday flat as gains in the banks offset a fall in the miners. Zip lost almost a third of its value after a US fraud loss cut its quarterly earnings, and Rio Tinto approved a new bauxite mine at Weipa in Queensland.
Dow Jones futures fell 1.3 per cent to 52,410 overnight while Nasdaq 100 futures slipped only 0.1 per cent to 29,130, because the losses fell on the broad market rather than on technology: about three in four S&P 500 stocks declined. Chipmakers recovered part of Thursday's sell-off, with Micron up 3.4 per cent and AMD up 1.9 per cent, and energy producers rose with crude, Chevron by 2.4 per cent and ConocoPhillips by 3.8 per cent. The US dollar index rose 0.2 per cent to 101.64.
The Stoxx 600 closed 0.5 per cent lower at 634 on Friday, a 1.6 per cent fall over the week. Germany's DAX fell 0.8 per cent to 25,177 and the FTSE 100 fell 0.5 per cent to 10,671, while French government bond yields eased a little, the AFR reported. The UK flash composite purchasing managers' index rose to 53.1 in October from 52.0 in September, FX Street reported; it did not report a consensus figure.
In the prior session, the Nikkei 225 closed 0.3 per cent lower at 62,693, leaving it down 4.0 per cent over five sessions. At yesterday's close the Hang Seng had risen 0.7 per cent to 23,093 and the Shanghai Composite 0.9 per cent to 3,690. The yen touched its strongest level against the US dollar in about a month after Japan's inflation figures, as investors sought assets regarded as safe during the global equity sell-off; it is trading at 156.85 to the US dollar this morning.
The ASX 200 finished yesterday's session up 2 points at 8,795, a 0.6 per cent fall for the week. The banks rose 3.2 per cent and offset a 3.9 per cent fall in materials, where South32 lost 5.4 per cent and BHP 3.8 per cent as copper, gold, silver and lithium prices fell, and gold miners as a group fell 5.6 per cent. The 10-year government bond yield fell 8 bps to 5.2 per cent, following Thursday's fall in US Treasury yields, and the Australian dollar is at US70.36 cents this morning, up 0.3 per cent.
Each reading remains well above 50, the line between expansion and contraction, and Reuters reported that strong demand is adding to price pressures. Markets expect another Federal Reserve increase in December, FX Street reported.
The attacks extend the supply risk from Iranian exports to Saudi production. US crude rose 4.3 per cent to US$103.49 a barrel on Friday. Kpler expects the US blockade of Iran's ports to cut Iran's crude revenue to zero by mid-December. US Ambassador to the United Nations Mike Waltz told the Financial Times the Navy can hold the blockade for the foreseeable future, which leaves no end date on that loss of supply.
The measure that also excludes energy, which the Bank of Japan watches as its gauge of underlying inflation, rose 2.4 per cent, and headline inflation was 2.1 per cent. The figures support expectations of a further Bank of Japan increase in December, after it raised rates in September for the second time in three months, the AFR reported.
Households expected inflation of 4.7 per cent over the next 12 months and 3.5 per cent over five years, FX Street reported, and the Financial Times reported that the rise in energy prices pushed US inflation expectations higher. FX Street did not report a consensus figure.
The fall came as higher oil prices reinforced expectations of a December Fed increase, which raises the return on cash and bonds against a metal that pays no income. The Financial Times reported that gold had joined the broader market sell-off rather than attracting buyers as a safe haven.
Covered bonds are secured on both the bank and a pool of mortgages, so they cost less to issue than unsecured debt. A Council of Financial Regulators review in August 2025 found a higher cap would mainly help mid-sized banks raise cheaper, longer-term funding, and Bank of Queensland chief executive Rod Finch said it would give banks like BOQ more capacity to compete and lend. The measure is part of a package the government says will cut financial-sector compliance costs by $780 million a year.
AMP put the composite index at 47.7, down from 51.3, with both output prices and input prices rising, which it described as a concern for inflation. FX Street did not report a consensus figure. The Reserve Bank's Deputy Governor Andrew Hauser said this week that monetary policy is working but the inflation outlook has worsened, FX Street reported.
AMP deputy chief economist Diana Mousina forecasts headline inflation of 1.2 per cent over the quarter, up from 0.6 per cent, and 3.9 per cent over the year, from 4.0 per cent, with fuel up about 8 per cent after the fuel excise was reinstated. AMP noted markets priced nearly a 70 per cent chance of a November increase after Hauser's speech, from 30 per cent beforehand, and about 80 per cent by December, though it said the November pricing had since fallen well back. AMP's own view is that the Reserve Bank is done at 4.6 per cent, with the risk of a further increase in December or early 2027 if inflation stays firm.
The share of business invoices paid on time fell to 48 per cent from 58 per cent a year earlier, and small businesses owe the Australian Taxation Office a record $36 billion in overdue tax and interest. Total insolvencies remain around normal levels apart from an August spike linked to the Bathla Group collapse, according to ASIC data, so the strain is showing first in late payments rather than failures.
Initium marketed loans as single-asset private credit funds, including lending tied to the Edgewater mansion at Point Piper, which carries at least $166 million in mortgages against a 2020 sale price of $95 million. Liquidator Vincent Pirina said he expects the amount owed to unit holders to increase significantly as more claims are lodged. The case adds to scrutiny of private credit sold to wealthy investors.
Cash flow from operations before working capital was €4.3 billion, up 30 per cent on a year earlier, and exploration and production output grew 4.2 per cent, with chief financial officer Francesco Gattei saying net debt is at its lowest level ever. The result is an early read on how much of the oil price rise the European majors are converting into cash. No consensus figure or share-price reaction could be confirmed.
Stockhead reported cash earnings were about 15 per cent below analysts' forecasts and bad debts rose to 2.0 per cent. Excluding the fraud, cash earnings were $75.1 million, up 19.5 per cent, on transaction volume of $4.6 billion, up 18 per cent, with US volume up 34.1 per cent in US dollars. Zip reaffirmed its FY27 target of $340 million in cash earnings, subject to market conditions.
Kangwinan replaces the Andoom mine, which reaches the end of its life this decade, and lifts Weipa's capacity to about 44 million tonnes a year from current production of about 38 million tonnes. Rio expects an internal rate of return of about 22 per cent. Its shares fell 2.4 per cent on Friday as metals prices fell across the sector.
The meeting followed the delay to NextDC's M3 data centre in Melbourne, which had to wait for a grid connection and sent the shares down about 40 per cent earlier in the week. Some of the bondholders bought $1.1 billion of convertible bonds only last month. Borrowing costs also rose for CDC Data Centres, and the cost of insuring Meta's debt against default has risen 40 per cent over the month, so the higher cost of funding is not confined to NextDC.
Woodside said it does not comment on market speculation. The talks follow QatarEnergy's agreement on Thursday to buy up to 4 million tonnes a year from Cheniere through 2054, its first US supply contract, after Iranian strikes on Ras Laffan in March cut about 17 per cent of Qatar's export capacity, Bloomberg reported. A contract would give Woodside a long-term buyer for a project that has been seeking offtake partners.
The deal lifts Beach's Taroom Trough position to about 1,481 square kilometres net, near the Wallumbilla gas hub that supplies the east coast market, with completion expected in H2 FY27 and an initial contingent resource booking planned in the FY27 reserves process. Beach shares slipped about 1 per cent on Friday, Stockhead reported.
Independent expert Kroll valued Steadfast at $5.44 to $6.09 a share on a control basis, found the scheme consideration falls within that range and concluded the scheme is in shareholders' best interests in the absence of a superior proposal. The board unanimously recommends shareholders vote in favour, and the scheme booklet will be released to the ASX once it is registered with ASIC.
Entertainment earnings rose $20.2 million to $32.0 million on a 19 per cent increase in admissions, which offset Thredbo, where earnings fell $9.0 million to $20.0 million after the worst snow season in more than 40 years. EVT expects full-year Thredbo earnings of $16 million to $20 million, and a Rothschild-run review of the group's structure is due to finish within FY27.
Iron ore shipments fell 6 per cent to 7.8 million tonnes. The company kept its full-year targets, and its shares were down 3 per cent at midday on Friday, Stockhead reported.
“Tighter monetary policy is weighing on domestic activity, and we can see that in softening in the labour market.”
“Monetary policy is working, but the inflation outlook has worsened.”
“Our sensible proposals will reduce unnecessary costs in the financial sector without compromising on standards.”
“Investors appear increasingly focused on the economics of AI, particularly the substantial upfront costs required to build AI infrastructure and the uncertainty around the timing of returns on those investments.”
“Strong execution of our strategy has enabled us to raise our full-year underlying production guidance to 6-7%.”
“The growth primarily comes from Congo, Libya, Côte d'Ivoire, Mexico, Ghana ... and comes despite the complex operating environment in the Middle East and constraints on Kazakh export.”
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Sources: Yahoo Finance, FRED, RBA, company filings.