The COB: Art of the Slow Deal

Why It Matters

Elevated real yields and uncertain Middle East negotiations could quickly reverse the current rally, forcing investors to reassess exposure to cyclical versus tech‑heavy assets.

Key Takeaways

• Asian markets rally as oil prices plunge 5% amid optimism
• US futures surge, Nasdaq up 1.4%, boosting global risk appetite
• Slow‑deal narrative dominates, with Middle East peace talks influencing sentiment
• Real yields near 2.2% pressure risk assets, could curb rally
• Fortescue leadership change highlights capex strain and green energy focus

Summary

The COB episode opened with a market‑wide upbeat tone, noting that the Australian S&P/ASX 200 held near 8,600 while US futures, especially Nasdaq, jumped about 1.4%. Positive headlines from the United States about potential diplomatic moves in the Strait of Hormuz helped lift sentiment, and Asian equities, led by Tokyo’s record high, rode the wave as oil prices tumbled roughly 5%.

Sector‑level data showed a mixed picture: coal miners surged, gold miners lifted materials to the top‑performing sector, while energy lagged and healthcare felt pressure. Corporate moves included Coronado Global Resources divesting a West Virginia mining complex, Beach Energy selling a majority stake in an Otway Basin permit, and Fortescue Metals announcing the resignation of former CEO Elizabeth Gaines, underscoring ongoing capex and green‑energy challenges.

Guest analyst David Scutt of StoneX emphasized the “art of the slow deal,” warning that markets have already priced in a peace‑deal scenario, which could create sharp reversals if negotiations stall. He highlighted second‑round inflationary effects, elevated real yields around 2.2%, and a Fed outlook that is shifting away from a dovish stance after comments from Governor Waller, suggesting tighter policy could bite cyclical stocks.

The takeaway for investors is clear: while tech‑driven momentum fuels the rally, rising real yields and lingering geopolitical risk may pressure risk assets. Monitoring yield movements, the trajectory of Middle East talks, and the performance of capital‑intensive cyclicals will be crucial for positioning ahead of potential market corrections.

Original Description

The S&P/ASX 200 gained 0.4% to 8,692 points on Monday, as US-Iran talks continued, even after US President Trump told his representatives not to rush into any deal.

Oil fell while gold bounced over the session, leaving the mining sector in the green while the energy sector dropped 2.4%.

Northern Star posted a solid 5.4% gain, contrasting with Karoon's 5.7% drop.

Coal miners were higher after an incident at a mine in China. Coronado Global Resources gaining 20.5%. It will sell a mining complex in West Virginia as it moves to cut costs and shed future liabilities.

In other corporate news, Fortescue said former chief executive Elizabeth Gaines has resigned from the board, where she remained as an executive director. And Beach Energy will sell its 60% stake in an Otway Basin permit, in a deal valued at about $130 million after tax.

Meanwhile, Guzman y Gomez added a further 2.03% as Morningstar said its US exit sharpened its focus on Australia while Singapore and Japan offer longer-term prospects.

Overnight, US and most European markets will stay closed for public holidays. And tomorrow, results are due locally from Champion Iron and Infratil.