ASX 200 Live Today - Tuesday, 29th September

Welcome to our live ASX coverage for Tuesday, September 29. Expect a high volume of posts pre-market and more periodic updates throughout the day. We'll be wrapping the blog up around 2:00 pm AEST. Let us know how we can make it even better.

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New updates

ASX flat, RBA hikes as expected, Codan powers tech higher

[2:50 pm] That's a wrap! The ASX 200 is currently down 6 points (-0.07%) after a choppy, rangebound session. The index dipped into the red after the RBA's rate hike, with the Board flagging upside inflation risks from high energy prices and AI-related demand. It warned that "a further tightening in financial conditions is warranted to support a return of inflation to target".

S&P/ASX 200 intraday chart (Source: TradingView)

Tech is having its day in the sun, led by Codan, which surged 21.1% to a record $63.00 on its trading update. Miners are also resilient despite base and precious metals trading broadly lower overnight.

S&P/ASX 200 sectors (Source: Market Index)

Whether it's a bounce or a sympathy move off the Codan result, several other tech names including Iress, Zip, WiseTech and Pro Medicus are also trading higher.

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RBA hikes to 4.60% as inflation risks materialise

[2:30 pm] The RBA has resumed tightening after two holds, saying recent inflation outcomes were stronger than expected and some of the upside risks flagged in August are now materialising.

• Cash rate lifted 25bp to 4.60%, the fourth hike this year, in a unanimous decision

• The Middle East conflict has broadened, with energy prices "much higher than had been assumed in the August forecasts" and higher fuel costs partly passed through to other goods and services

• AI-related demand is driving rapid growth in global technology goods prices, while domestic capacity pressure persists and firms are raising prices or looking to do so

• June quarter growth was slightly stronger than expected, though consumer spending is easing gradually, house prices have fallen in most capitals and new housing loans have declined noticeably

• The labour market has eased broadly as expected, while growth in business investment and debt remains strong

• The door is left open to further hikes, with the Board saying it will do what it considers necessary, "including increasing the cash rate target further if needed"

Source: RBA

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Megaport gives back the bulk of today's rally

[2:17 pm] Megaport opened 14.2% higher ($21.54) and rallied as much as 20.5%. It's now up just 8.2% to $20.43.

Megaport intraday price chart (Source: TradingView)

The company announced three more AI infrastructure contracts this morning, worth almost $1 billion and upgraded its FY27 guidance well ahead of UBS ests (21-Aug).

• Three new AI contracts carry a combined TCV of $978.6m with $322.6m prepaid, lifting strategic TCV since April to about $2.3bn

• Compute ARR up 90% to $201.4m since 30 June as hardware for earlier strategic deals was deployed ahead of schedule

• Network ARR up 29% in constant currency to $302.6m, with NRR up 6ppt to 116% vs 115% ests

• FY27 revenue guidance lifted to $720–810m from $620–730m, with the $765m midpoint 11% above ests

• FY27 EBITDA margin guidance raised to 42–44% from 38–40%, implying EBITDA of $302–356m vs $284.8m ests (16% beat)

• FY27 capex raised to $1.78–1.88bn from $1.28–1.38bn, including $360m to replenish the GPU pool, fully funded with $362.2m in pro forma liquidity

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Copper stocks holding up

[2:14 pm] Copper stocks are holding up relatively well despite a 2.4% overnight drop in the metal, likely supported by the Chile strike threat covered below.

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Copper nears record as Chile strike threat looms

[2:12 pm] Copper is closing in on its record high after workers at Antofagasta's Centinela mine in Chile voted to strike.

• LME three-month copper up 0.2% to US$14,438/t, near the record set earlier this month and on track for a third monthly gain and an ~8% quarterly advance

• Centinela workers overwhelmingly rejected Antofagasta's final wage offer, raising the prospect of a walkout at one of the miner's key operations

• Spot treatment charges fell to minus US$267.40/t, according to Fastmarkets, squeezing smelter margins and signalling a shortage of mined material

• China's Yangshan import premium is near its highest since 2022, while large refined stockpiles sit in US warehouses ahead of an expected Trump tariff on imports

• Deutsche Bank sees prices surging more than 50% to above US$22,000/t within six months as buyers compete for shrinking supplies of available metal

Source: Bloomberg

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UBS lifts long-term iron ore forecast to US$93/t

[1:18 pm] UBS argues the market is underestimating how tight iron ore will get once Simandou is fully ramped up.

• Long-term iron ore forecast raised to US$93/t from US$85/t, 12% above consensus of ~US$83/t, though below or in line with consensus nearer term

• Steel demand is entering a new phase, with China's pivot to manufacturing and exports and the Global South's ~3 billion people more than offsetting China's construction decline

• Simandou's 120Mtpa is offset by ~800Mt of depletion by 2035, and with falling Fe grades and weak capex, UBS sees the market tightening after Simandou reaches nameplate in 2029

• Spot prices of ~US$95/t sit around the 93rd percentile of the cost curve, with the 90th percentile at US$92/t and the 95th at US$106/t, as persistent cost inflation keeps lifting the curve

• BHP and Rio targets edge higher, to $61 from $59 and to $178 from $177, while UBS initiates on Champion Iron (CIA) with a Buy and a $4.15 target

• Fortescue, Mineral Resources and Vale targets cut, to $16.50 from $18.35, $74 from $76 and US$15 from US$16.50, as lower realisations, higher costs and discount rates offset the higher price deck

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Karoon tanks another 9%

[1:08 pm] Karoon downgraded its 2026 production guidance on Monday, with the stock down 12.8% on the day and a further 9.2% today to $1.40. The update noted:

• Baúna 2026 production guidance cut to 5.4–5.7 MMbbl from 6.0–6.7 MMbbl, a 13% reduction at the midpoint

• Total CY26 production guidance cut to 6.6–7.2 MMboe from 7.2–8.2 MMboe, a 10% reduction at the midpoint, with Who Dat guidance unchanged

• Unit production cost guidance raised to US$15–16/boe from US$12–15/boe on lower output against a fixed cost base

Karoon is now down 8.1% year-to-date vs. Brent surging 70.7% and Woodside trading 32.5% higher over the same period.

Karoon daily price chart (Source: TradingView)

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China's LNG imports set for second monthly drop

[1:17 pm] China's LNG imports are on track to fall for a second straight month as Hormuz-driven price spikes push Chinese buyers out of the spot market.

• September deliveries forecast to fall 8% year-on-year to ~5.3Mt, according to Kpler ship-tracking projections

• Global LNG prices are at their highest since late 2022 on the near-closure of the Strait of Hormuz, with softer Chinese demand easing some of the tightness

• Chinese importers have cut spot purchases because landing cargoes in the cheaper domestic market no longer pays, and some are reselling long-term contracted supply overseas

• Beijing is urging state-owned buyers to curb resales to secure supply for peak heating demand, which could see imports recover into winter

• A colder winter could intensify competition between Europe and Asia for cargoes, adding further upside to prices and inflation pressure in gas importers

• The Persian Gulf typically supplies about a third of China's LNG, and China has turned to Russia and Malaysia to replace volumes lost since the war began

Source: Bloomberg

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UBS upgrades Pinnacle to Buy as Metrics hit looks priced in

[12:50 pm] UBS says the 26% sell-off in Pinnacle since Metrics' unaudited report has more than fully discounted its exposure to the credit manager. The stock is up 7.2% to $13.85 at the time of writing.

• UBS upgrades Pinnacle to Buy from Neutral and cuts its target to $17 from $18, adding a 5% risk discount to its valuation but making no earnings changes yet

• Metrics' delayed audit has cut NTA by 2% to 12% across its suspended listed vehicles, after a review of equity fair values and credit loss provisions, though that is less than traded discounts implied

• Metrics accounts for ~10% of Pinnacle's recurring profits and ~13% of effective FUM, and UBS expects some hit to net flows plus risk from ASIC's ongoing sector review

• Pinnacle trades on 14.5x 12-month forward earnings, a PE relative of 0.83x to the ASX 200, which is ~42% below its five-year average against ~26% three-year EPS growth

• UBS expects ~$150m a year in performance fees on average over FY26 to FY28, including material carry realisation in Five V

• Existing affiliate strategies have capacity of ~3x current FUM, and converting half of that over five years would double FUM excluding market moves

Company page: Pinnacle Investment Management (PNI)

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Household spending flat in August, missing forecasts

[12:50 pm] Australian household spending stalled in August, hours before the RBA is expected to lift the cash rate for a fourth time this year, to 4.6%.

• Household spending was flat month-on-month vs 0.4% growth ests

• Annual spending growth of 6.8% vs 7.1% ests

• Fuel spending jumped 8.1% after the fuel excise was fully restored, and excluding fuel, total spending would have fallen 0.3%

• Recreation and culture fell 1.4%, the largest decline of any category, "after months of higher spending associated with major sporting events", according to the ABS

• Transport spending partly offset the weakness, with a notable gain in electric vehicle sales as households responded to rising fuel prices

• The Aussie dollar was little changed just above 70 US cents, while three-year government bond yields held an earlier decline

Source: Bloomberg

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Tech leads a small bounce

[11:36 am] It's a bit of an opposite day compared to yesterday, with Tech stocks trading sharply higher, largely on the back of Codan's 20% surge, while growth and cyclical sectors like Discretionary, Materials and Industrials are also catching a bid. The ASX 200 is up 6 points (+0.07%), edging off three-month lows.

S&P/ASX 200 sectors (Source: Market Index)

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Codan overtakes WiseTech as ASX's largest tech stock

[11:30 am] Today's 17% surge has pushed Codan past WiseTech to become the most valuable company in the ASX tech sector.

• Codan's market cap of $11.09bn now edges out WiseTech's $10.97bn, after shares jumped 17.0% to $60.84 following today's upgrade

• Codan shares are up 106.1% over the past year, while WiseTech has fallen 64.9% over the same period

• Xero ($10bn) and Technology One ($9.63bn) round out the top four, down 62.7% and 23.6% over 12 months respectively

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Look at Codan go

[11:26 am] Codan has rallied 118% year-to-date (including dividends), with each of its last four updates sending the stock sharply higher.

• January trading update flagged 1H26 revenue up 29% to about $394m and underlying NPAT up around 52% to at least $70m, both ahead of ests, with shares up 16.8% to $36.89

• April guidance upgrade put FY26 NPAT at about $170m (11% above ests), with Communications margin hitting 30% a year early, and shares rose 15.4% to $42.00

• August FY26 result delivered NPAT up 69% to $175.2m (3% beat) and a 70% dividend lift to 48.5cps, sending shares up 12.4% to a record $48.88

• Today's update guided to 1H27 NPAT of at least $160m (up at least 125%) and lifted the FY27 Communications growth target to 30% to 40% from about 20%, with shares up as much as 17.9% to $61.30

Company page: Codan (CDA)

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Gold holds near seven-week low as rate-hike bets build

[11:26 am] Gold is struggling to find support after Monday's sharp drop, with the US-Iran standoff keeping energy prices and Fed hike expectations elevated.

• Spot gold up 0.1% to US$4,117.60/oz in early Asian trade after tumbling 4% on Monday to a seven-week low

• Gold is down around 7% in September despite touching US$4,510/oz early in the month, after the Fed delivered its first rate hike since 2023 and flagged the possibility of more

• Markets are pricing a roughly 70% chance of another Fed hike in October, with high energy prices adding to the pressure

• China Zheshang Bank analysts said heavy trading volume near September's highs will cap near-term upside, adding "a return to long-term 'dollar debasement' theme will need a fresh macro catalyst"

• Silver little changed at US$60.64/oz after sliding almost 6% in the previous session

Source: Bloomberg

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Top ASX 200 gainers

[10:14 am] Codan surges to yet another fresh all-time high on a bullish business update, Megaport also up massively after securing A$1 billion in new AI infrastructure contracts and Pinnacle bounces after private credit fears dragged the stock to a fresh six-month low on Monday.

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Top ASX 200 losers

[10:14 am] Karoon dips for a second day after downgrading its CY26 production guidance on Monday, the surging bond yield backdrop is also weighing on a broad list of REITs, including Goodman Group.

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Copper set to power next leg of ASX miners' rally

[10:10 am] Analysts expect copper to drive further gains in Australian mining stocks as AI and electrification lift demand for the metal while iron ore stagnates.

• Mining has been the ASX 200's best-performing sector over the past year

• Copper accounted for more than half of BHP's FY26 revenue for the first time as prices hit a record, while earnings growth was negative at iron ore-heavy Fortescue

• Iron ore prices remain muted as China's property market struggles to recover, despite new policy support

• ETF Shares' David Tuckwell said "the pivot to copper is well and truly under way"

• Global X's Jessica Leung pointed to "a structural deficit in the copper industry as a whole" as AI spending adds to demand

• Terra Capital's Dylan Kelly said investors wanting large, long-life, low-cost copper producers need to look to Canada rather than the ASX

Source: Bloomberg

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Perenti wins more than $200m in drilling and underground contracts

[9:50 am] Perenti has secured new work across all five of its drilling businesses, plus an underground contract with Endeavour Mining in Senegal.

• Drilling contracts across Ausdrill, DDH1, Ranger, Swick and Strike will contribute about $185m of revenue in FY27, spanning Australia, the US and Canada

• AUMS has won a two-phase contract with Endeavour Mining at the Sabodala-Massawa complex in Senegal

• The initial phase is worth about $20m and covers the exploration decline and supporting underground infrastructure

• Full underground production in phase two depends on Endeavour issuing a notice to proceed, with the value to be disclosed at that point

• On drilling demand, Drilling Services president Ben Davis said the wins are "indicative of the growing demand for the specialised capability we can deliver"

Company page: Perenti (PRN)

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Explorer wrap: Solstice hits 169m of copper at Nanadie

[9:45 am] Solstice Minerals led a busy session for explorers with a thick copper-gold hit well outside its Nanadie resource.

• Solstice Minerals (SLS) hit 169.3m at 0.87% Cu and 0.29g/t Au at Nanadie, including 73.3m at 1.07% Cu, well beyond the current MRE boundary

• TG Metals (TG6) outlined a $14.2m capex heap leach at Van Uden, with a pre-tax NPV8 of $26.8m, a 121% IRR and AISC of $2,835/oz over about three years

• Krakatoa Resources (KTA) returned 5.61m at 3.31g/t Au and 4.28% Sb at Zopkhito as it works to convert a foreign resource estimate to a JORC MRE

• Power Minerals (PNN) intersected 39m at 4.42% TREO and 0.95% MREO from 80m in MFSR-056, with results from surface to 80m still pending

• Terrain Minerals (TMX) will start its largest drilling program to date in the second half of October, an 86-hole, 10,905m RC campaign at Smokebush

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Adairs CEO Elle Roseby to step down after two years

[9:43 am] Adairs Group CEO Elle Roseby has resigned, while trading at Focus on Furniture improved through the first quarter.

• Elle Roseby has resigned as Group CEO and MD, and will stay on through a notice period expected to end in March 2027 while the board searches for a successor

• Rachel Taylor will take the newly created role of Executive General Manager Adairs from 5 October, having joined in August 2025 from Cotton On

• Group CFO Matt Edmonds will take on additional functional areas and the title of Group CFO and Operations Director

• Adairs and Mocka year-to-date sales remain in line with the trend reported at the FY26 result

• Focus on Furniture written sales fell 19.5% in Q1, improving to down 2.7% in weeks 9–13 from down 27.6% in weeks 1–8

• The first half is still expected to be challenging for Focus on Furniture, with trading volatile week to week as management tests promotional and margin tactics

Company page: Adairs (ADH)

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Catalyst Metals hits 2Moz Reserve at Plutonic, backing 10-year mine life

[9:40 am] Catalyst Metals has lifted Ore Reserves across the Plutonic Gold Belt to 2Moz, enough to support its target of around 200koz a year for about a decade.

• Ore Reserves across the Plutonic Gold Belt reached 2Moz, supporting production of ±200koz a year for ±10 years

• Reserves have grown by 1.8Moz over three years of Catalyst ownership for about $226m, or $125/oz

• Higher-grade ore sources at Trident, Old Highway, Cinnamon and Keillor account for more than half of that growth

• The new Reserve replaces lower-confidence Resource and exploration material that was previously included in the later years of the plan

• The September 2025 10-year guidance should now be treated only as a general guide after permitting delays, operational delays and processing constraints

• Catalyst will decide in December 2026 whether to change its exploration activities and spending

Company page: Catalyst Metals (CYL)

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Lake Resources wins key environmental permit for Kachi

[9:37 am] Lake Resources has secured the primary environmental permit for its Kachi lithium brine project in Argentina, clearing the way to start front-end engineering design.

• Lake Resources is developing the Kachi lithium brine project in Catamarca, Argentina, targeting 25ktpa of lithium carbonate equivalent using Lilac's DLE technology

• The Catamarca Ministry of Mining issued Kachi's Environmental Impact Declaration, which carries obligations to be met before commercial operations start

• A 200m exclusion zone around the lagoon shoreline requires an updated resource estimate, although Lake expects no impact on the Ore Reserve or wellfield plan

• Kachi moves into FEED, the final engineering step before FID, to support debt, equity and offtake talks led by advisers Citi and J.P. Morgan

• Lake can now submit its application under RIGI, Argentina's incentive regime for large investments

Lake Resources traded at a peak of $2.65 around April 2022 vs. 3.8 cents today. During this time, its roughly doubled its outstanding shares from ~1.2bn to 2.48bn.

Company page: Lake Resources (LKE)

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Tungsten Mining lines up debt terms for up to 70% of Watershed

[9:32 am] Tungsten Mining has received non-binding indicative debt terms that would cover most of the capital cost of its Watershed tungsten project in Far North Queensland.

• Tungsten Mining is developing the 100%-owned Watershed project in Queensland ahead of its Mt Mulgine project in WA

• Non-binding indicative terms from a number of financiers mostly support up to 70% gearing, or about $200m of the $274m pre-production capex

• Debt, strategic investment and offtake-linked funding are being progressed in parallel with government-backed options, advised by Cutfield Freeman and Jefferies

• A proposed US listing aims to broaden access to US investors, customers and critical minerals supply chain initiatives

• Watershed cash flow is intended to help fund the later development of Mt Mulgine

Company page: Tungsten Mining (TGN)

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GR Engineering's SPP more than three times oversubscribed

[9:30 am] GR Engineering's share purchase plan drew more than three times its $10m target, forcing a heavy scale-back.

• Valid applications totalled $32.5m from 1,337 eligible shareholders, a participation rate of 23.6%

• About 1.6m new shares will be issued at $6.10, the same price as the placement

• Applications were scaled back pro rata to holdings with a $2,500 minimum allocation, filling about 31% of total demand

• The SPP follows a $100m institutional placement announced on 24 August, taking the total raised to $110m before costs

• New shares will be issued on 30 September and are expected to start trading on 1 October

GNG shares have surged 70% year-to-date amid some incredible growth from resource-related sectors. Its latest FY26 result (24-Aug) guided to FY27 revenue to be in the range of $825-850m (up 67-72% year-on-year). In parallel with the results announcement, the company announced a $100m placement at $6.10 per share (3.3% discount to last close).

Company page: GR Engineering Services (GNG)

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SRJ enters Middle East offshore LNG market with $1.76m award

[9:24 am] SRJ Technologies has won its first offshore LNG contract in the Middle East, extending its work through contractor CAPSA to another National Oil Company operator.

• SRJ's subsidiary First Avenue has received a US$1.234m ($1.76m) purchase order from CAPSA for an LNG controls upgrade for a National Oil Company

• SRJ provides asset integrity services and technologies for energy infrastructure from its Abu Dhabi platform, and is building credentials to bid for NOC contracts directly

• About US$300k is expected to be recognised in FY26 and the balance in FY27, with the contract running 12–14 months from October 2026

• The scope is mainly procurement engineering, procurement services and equipment supply, with revenue tied to milestones that largely don't depend on site access

• CAPSA pays within seven days of receiving the corresponding payment from the NOC

• Middle East hostilities have slowed progress on SRJ's Phase 2 strategy, particularly for projects that depend on mobilisation and site access

SRJ has a market cap of just ~$7m, so this represents a fairly chunky contract award.

Company page: SRJ Technologies (SRJ)

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Develop Global flags up to $458m growth spend in first guidance

[9:21 am] Develop Global has issued its first annual guidance, with Yitirrti construction making up the bulk of FY27 growth capex.

• Woodlawn is guided to process 775–875kt at 2.7% CuEq for 21–23.5kt of contained CuEq metal, with 55% of tonnes in H2

• Woodlawn operating costs of $180–200m exclude the final $19.9m silver royalty payment due in FY27

• Pioneer Dome is guided to mine 650–750kt at 1.2% Li₂O, containing 7.8–9kt of Li₂O, with first DSO sales in the December quarter

• Pioneer Dome operating costs of $88–97m, with DSO converter recoveries of 70–85%

• Group growth capex of $411–458m includes $367–406m at Yitirrti, which remains on track for first concentrate in the June 2028 quarter

• Develop Mining Services revenue of $100–110m, rising towards year end as the BP33 and Waihi contracts ramp up

Company page: Develop Global (DVP)

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Navigator Global sells Invictus stake to New York Life

[9:19 am] Navigator Global will realise its investment in US residential credit manager Invictus Capital Partners over time, after New York Life Investment Management agreed to buy a 60% stake in the business.

• New York Life Investment Management will acquire 60% of Invictus from NGI and other shareholders, and will buy the remaining 40% in 2031

• Net upfront proceeds of about US$40–43m are expected at initial closing in Q1 2027 and will fund new growth initiatives

• An earn-out of up to about US$32m is payable if Invictus hits revenue, capital raising and deployment targets through to the end of 2029

• Deferred consideration in 2031 will be set by performance outcomes including fee-related earnings, and may be a meaningful part of total proceeds

• Distributions from Invictus are not expected to be materially reduced in FY27, with material profit distributions expected until 2031

• The deal values Invictus materially above NGI's 2022 entry price, although neither valuation was disclosed

Company page: Navigator Global Investments (NGI)

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Megaport signs $1bn in AI contracts and lifts FY27 guidance

[9:10 am] Megaport has secured three more AI infrastructure contracts worth almost $1bn and upgraded FY27 guidance ahead of UBS ests (21-Aug).

• Three new AI contracts carry a combined TCV of $978.6m with $322.6m prepaid, lifting strategic TCV since April to about $2.3bn

• Compute ARR up 90% to $201.4m since 30 June as hardware for earlier strategic deals was deployed ahead of schedule

• Network ARR up 29% in constant currency to $302.6m, with NRR up 6ppt to 116% vs 115% ests

• FY27 revenue guidance lifted to $720–810m from $620–730m, with the $765m midpoint 11% above ests

• FY27 EBITDA margin guidance raised to 42–44% from 38–40%, implying EBITDA of $302–356m vs $284.8m ests (16% beat)

• FY27 capex raised to $1.78–1.88bn from $1.28–1.38bn, including $360m to replenish the GPU pool, fully funded with $362.2m in pro forma liquidity

Company page: Megaport (MP1)

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Codan flags H1 profit surge on conflict region demand

[8:53 am] Codan has upgraded its FY27 outlook on exceptional demand for its unmanned systems communications technology, with H1 NPAT set to more than double.

• Communications H1 FY27 revenue guided to $400–410m, up 80–85% on $221.8m in the pcp

• Conflict regions are expected to make up about 50% of Communications revenue in H1 vs about 20% in the pcp, with growth outside those regions in the order of 20%

• Minelab's H1 revenue run-rate is now slightly above H2 FY26 levels, helped by the new GPZ8000 and Gold Monster 2000 detectors and a favourable gold price

• Communications EBIT margin expected in the order of 40% vs 26% in the pcp and 31% in FY26

• Group H1 NPAT of not less than $160m, up at least 125% on $71.2m in the pcp and already 91% of FY26's $175.2m

• FY27 Communications revenue growth target lifted to 30–40% from about 20%, implying $658–709m and an H2 of $248–309m vs $284.4m in H2 FY26

Codan is trading near record highs and is up 83% year-to-date, making it one of the ASX 200's best performers. Guidance upgrades on 9 January and 29 April each sent the stock around 15-16% higher on the day to fresh all-time highs. Despite broader market volatility, its pullbacks have stayed relatively shallow, and it hasn't traded below its 200-day moving average since April 2025. Incredible stuff.

Company page: Codan (CDA)

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Oil climbs as Iran deal hopes fade before midterms

[8:49 am] Crude rose for a second session as the US-Iran standoff outweighed the partial restart of Saudi Arabia's key bypass pipeline.

• Brent crude settled up 0.78% at US$102.6

• Trump rejected Tehran's offer to reopen the Strait of Hormuz within seven days, which was conditional on lifting the US naval blockade and releasing Iranian assets

• Iranian officials are privately pessimistic about a deal before the 3 November midterms and see a high chance of escalation after the vote

• Trump is willing to offer sanctions relief and release frozen funds in exchange for "concrete progress" on the nuclear issue, according to a US official

• Saudi Arabia has restored East-West pipeline flows to about 3.5m barrels a day, roughly half its 7m capacity, after drone strikes shut it earlier this month

• Brent's prompt spread has widened to more than US$7 a barrel from under US$1 at the end of August, while VLCC shipping rates are at record highs

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JPMorgan's trading desk turns bullish on US stocks

[8:46 am] JPMorgan's trading desk has upgraded its view on US equities to bullish from tactically neutral ahead of Friday's payrolls report.

• Andrew Tyler's team cited stronger-than-expected activity, consumer resilience, robust profit growth and signs that bond yields may stabilise

• Tyler expects bond yields to find a level and oil prices to trend lower, "albeit in a choppy fashion"

• Tech remains a core long, with a likely broadening into semiconductors and scope for the Magnificent Seven to outperform

• Banks are preferred outside AI plays given the growth reboot, a potentially steeper yield curve and a favourable capital markets outlook

• Near-term catalysts include Friday's jobs data, CPI on 14 October and the Fed decision on 28 October

Source: Bloomberg

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Bond veteran Bianco turns bullish as Treasury rout deepens

[8:46 am] The US 10-year yield hit its highest level since 2007 overnight, prompting Bianco Research's Jim Bianco to turn bullish on Treasuries for the first time in six years.

• The 10-year yield rose 7bp to 5.23% after touching 5.27% intraday, and is up 86bp in three months

• Swaps are pricing almost four quarter-point Fed hikes over the next 12 months, which would lift the policy rate to around 5% from just under 4%

• Bianco called it "a value play" and has lifted duration in his index to more than six years vs 5.7 years for the Bloomberg US Aggregate

• A 10-year buyer at current levels would need yields to rise to about 6% over the next year before price losses wipe out the bond's income

• A one percentage point rise in yields would produce a loss of less than 2%, while an equivalent fall would return about 13%

• The 10-year has averaged about 5.3% since its 1981 peak, with Bianco calling the 2010-2020 zero rates era "the ridiculous outlier"

Source: Bloomberg

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Fed's Cook says AI productivity gains won't arrive in time to curb inflation

[8:45 am] Fed Governor Lisa Cook backed this month's rate hike and warned that AI-driven investment is adding to near-term price pressures.

• Cook expects AI productivity gains to deliver "modest disinflation within the next few years" but not in time to offset broadening inflation pressure later this year

• Data centre investment is driving competition for energy and construction labour, reflected in a roughly 5% rise in electricity and water costs over the past year

• Only a fraction of the US$2tn in pledged AI capex has been spent so far, while AI-driven stock gains are fuelling consumer spending

• The labour market is "roughly in balance and gradually improving" and well positioned to absorb higher rates, Cook said

• Fed funds futures imply about a 70% chance of an October hike after policymakers unanimously lifted rates by 25bp and pencilled in at least one more by year end

Source: Bloomberg

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US and China detail tariff cuts on US$60bn of trade

[8:45 am] The US and China have outlined plans to cut tariffs on about US$30bn of imports each, one of the most tangible outcomes of last week's Trump-Xi summit.

• The US list covers 77 product entries including toys, fireworks, household goods and sporting equipment

• China's list spans 1,619 items including meat, seafood, dairy, grains, coal, timber and medical equipment, with soybeans notably excluded

• About 90% of covered products will receive most-favoured-nation treatment once both sides complete domestic legal procedures

• US coal is included in the relief, supporting China's pledge to import at least 10Mt from the US next year and again in 2028

• The US$60bn in relief is a fraction of the US$415bn in goods traded between the two economies last year

• Bloomberg Economics' Chang Shu said the macroeconomic scale of the deal is "negligible"

Source: Bloomberg

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Paramount's record junk bond sale draws strong demand at 9% yields

[8:44 am] Paramount Skydance has drawn enough demand to cover a roughly US$44bn bond sale funding its Warner Bros Discovery takeover, despite surging borrowing costs.

• The US$12.4bn junk portion is the largest high-yield offering on record and has attracted more than US$23bn in orders

• A 10-year US dollar note is being pitched at about 9% vs a 6.9% average for similarly rated bonds

• The investment-grade tranche of about US$32bn has drawn more than US$51bn in indicative demand

• Moody's said the deal lifts leverage to about seven times earnings, with credit metrics resembling "very low single-B" issuers

• Paramount must pay Warner Bros shareholders US$7m a day if the US$110bn takeover doesn't close before October

• SoftBank's record US$11.1bn junk bond deal, which Paramount is set to top, offered yields of up to 9.75% to fund its OpenAI bet

Source: Bloomberg

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AMD buys Fei-Fei Li's World Labs for US$8.2bn

[8:44 am] AMD has agreed to acquire World Labs, the AI startup founded by Stanford researcher Fei-Fei Li, in an all-stock deal expected to close by year end.

• World Labs builds world models that generate and reconstruct 3D environments for robotics, scientific discovery and factory equipment

• Li will join AMD as executive vice president and chief scientist, reporting directly to CEO Lisa Su

• The startup launched in 2024 and has about 70 employees

• Su said the ambition is to "define the future of AI compute" by pairing models with AMD's hardware, software and systems

• The deal follows Nvidia's roughly US$13bn acquisition of Hugging Face as chipmakers bundle models and services with hardware

Source: Bloomberg

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Lagarde signals measured ECB response to energy-driven inflation

[8:40 am] ECB President Christine Lagarde pushed back on aggressive market pricing, saying the euro zone inflation surge is yet to generate second-round effects.

• Eurozone inflation has topped 3% and may approach 4% by year end, double the ECB's target

• Markets are pricing up to four more hikes over the next year on top of two over the summer

• Lagarde said there are "no signs yet that it is becoming embedded" and no evidence of energy prices feeding into wages

• Fiscal support has risen to about 0.1ppt of GDP and is less temporary or targeted than hoped, adding roughly 0.1% to inflation

• Economists expect the ECB to sit out its 29 October meeting and hike in December when new projections are released

Source: Reuters

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China pledges more support as industrial profit growth slows

[8:38 am] Beijing has flagged new measures to stabilise property and lift domestic demand after industrial profit growth slowed to its weakest since November.

• Industrial profits rose just 4.2% year-on-year last month, with gains driven by elevated oil costs and AI-linked sectors

• The State Council will study new measures to stabilise the property market, boost domestic demand and promote employment

• Consumption growth missed expectations again and softened to near zero

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Good morning!

[8:20 am] ASX 200 futures are up 6 pts (+0.06%). Here's what happened overnight:

• Major US benchmarks finished broadly lower, but off worst levels as a US-Iran stalemate revived oil-driven inflation fears

  • S&P 500 (-0.77%), Nasdaq (-0.92%), Dow (-0.67%) and Russell 2000 (-0.69%)

  • S&P 500 still within 1.5% of its 13 August record close, while the Russell 2000 has tumbled 8.1% from its 14 August record

• US 10-year yield hit 5.24%, its highest since 2007, and gold tumbled below US$4,150 as traders ramped up bets on an October Fed hike, with odds now sitting at 70.9% for another 25 bp hike

• Nvidia lifted its buyback by a record $150bn to $235bn while AI build-out stocks fell after OpenAI paused training of its newest models