ASX 200 to fall, S&P 500 claws back early losses + China set to cut rates

ASX 200 futures are trading 23 points lower, down -0.33% as of 8:20 am AEST.

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S&P 500 SESSION CHART

MARKETS

• S&P 500 bounces from session lows of -0.80% to close around breakeven
• S&P 500 and Nasdaq both down for a third consecutive week
• US 10-year yield briefly hits 4.33%, the highest since 2007
• WTI crude down 2% last week, breaking a seven-week win streak
• Resilient economic data and higher yields add more support for the Fed’s higher-for-longer narrative
• Sentiment continues to slip, with Investors Intelligence bulls down 5.1 percentage points to 47.1% (down around 10% in the past two weeks) and CNN’s Fear & Greed Index sliping from Extreme Greed (83) to Neutral (45)
• Bullish focus points for the week: Strong US growth outlook with Atlanta Fed’s GDPNow model forecasting 5.8% expansion in Q3, consumer resilience momentum, disinflation traction and the sentiment decline acting as a potential tailwind
• Bearish focus points for the week: Upward pressure on rates, hawkish July FOMC minutes and scepticism around peak Fed, China growth concerns, US banking sector downgrades, US excess savings depleted and downside risk to forward earnings
• Money-market assets hit record high on Fed uncertainty (Bloomberg)
• Tech stocks suffer as real-yields hit 14-year high (FT)
• BofA warning of a '5% world' sinks in as yields push higher (Bloomberg)
• Bitcoin extends drop below US$26,000 for first time in two months (FT)
• Zero-day options demand sparks fears over heightened market volatility (FT)
• AI trade faces its first major test with Nvidia earnings (WSJ)

STOCKS

• John Deere lifts outlook on profit beat, strong demand but shares skid (Reuters)
• Farfetch shares plunge as weak demand in US, China weighs outlook (Reuters)
• China’s Xpeng falls on weak forecast as EV price war takes toll (Reuters)
• Estee Lauder sees weak annual profit on slow recovery in Asia travel retail (Reuters)

CHINA

• Evergrande files for Chapter 15 bankruptcy in New York (Reuters)
• China's state developers warn of losses as crisis spreads (Bloomberg)
• China's hidden financial dangers erupt with shadow bank crisis (Bloomberg)
• PBOC says it will keep policy "precise, forceful" to aid recovery (FT)
• PBOC extends special loan support for ailing developers (Caixin)
• China urges more loans, debt risk reduction as woes compound (Bloomberg)
• PBoC set to announce biggest cuts this year to two core lending rates on Monday (FT)

ECONOMY

• US housing affordability hits worst point in nearly four decades (Bloomberg)
• US GDP forecasts for 5.8% growth likely to be revised lower (Barrons)
• UK retail sales fall as wet weather depresses spending (FT)
• Japan's core inflation eases, bolstering view BoJ will stand pat (FT)
  
  

DEEPER DIVE

Sectors to Watch

• Uranium: Global X Uranium ETF (+2.05%) continues to kick on. Uranium spot prices rose for a fifth straight week to US$57/lb, not far off a 14-month high. Is it time for local names like Paladin Energy (ASX: PDN), Boss Energy (ASX: BOE) and Deep Yellow (ASX: DYL) to continue trending?
• Energy: WTI crude rose 1.7% to US$81.2 a barrel and the S&P 500 Energy sector was the best performing sector overnight.
• Lithium & Battery Metals: VanEck Rare Earth/Strategic Metals ETF (-0.78%) continues to fall, down to levels not seen since March 2021.

Seasonality Update

September is another heavy month when it comes to seasonality, down an average 1.2%.

 

KEY EVENTS

ASX corporate actions occurring today:

• Trading ex-div: Vicinity Centres (VCX) – $0.06, Bailador Technology (BTI) – $0.03, US Student Housing REIT (USQ) – $0.012, Steadfast Group (SDF) – $0.09, Ryder Capital (RYD) – $0.04
• Dividends paid: Metcash (MTS) – $0.11, Transurban (TCL) – $0.315
• Listing: None

Economic calendar (AEST):

• 11:15 am: China Loan Prime Rate

This Morning Wrap was written by Kerry Sun.