ASX 200 to snap three-day losing streak, US stocks slump on tech weakness

ASX 200 futures are trading 50 points higher, up 0.65% as of 8:20 am AEST.

S&P 500 SESSION CHART

OVERNIGHT MARKETS

• Major US benchmarks lower and finished around worst levels
• Nasdaq and S&P 500 on track for weekly declines after five straight weeks of gains
• Megacap tech was the notable drag on benchmarks, led by Nvidia (-3.7%), Microsoft (-3.3%), Alphabet (-2.1%) and Meta (-1.5%)
• Tech under scrutiny after weaker-than-expected guidance from Salesforce, sparking concerns of AI competition
• Russell 2000 outperformed – perhaps hedge funds are de-grossing their Russell 2000 shorts and Nasdaq longs
• Bond yields take a breather after the recent bear steepening move that pushed the US 2-year yield to just under 5.0%
• Today's 80-minute glitch in printing Dow, S&P index levels had little overall impact on trading (Bloomberg)
• Record US market riding on questionable AI assumptions (Yahoo)

INTERNATIONAL STOCKS

• Salesforce guides for record low sales growth (Bloomberg)
• Nelson Peltz sells entire Disney stake after losing proxy battle (CNBC)
• Amazon receives FAA regulatory approval for expansion in drone delivery service (CNBC)
• BofA's Moynihan sees investment banking results on track, though net interest margins may be weaker than expected (Bloomberg)

CENTRAL BANKS

• NY Fed President Williams expects inflation to resume moderating in the second half of 2024 (NY Fed)

GEOPOLITICS

• Hamas says it is ready to reach agreement on ceasefire if Israel stops war (Reuters)
• Russia announces tax hikes on corporates and citizens, expected to add extra US$30bn to state budget next year (Reuters)
• EU set to delay decision on China EV tariffs (Reuters)

ECONOMY

• US economy grew at a slower pace in the first quarter than initially reported reflecting softer consumer spending on goods (Bloomberg)
• Spain inflation higher in May but disinflation expected to resume in summer (Bloomberg)
  
  

ASX TODAY

• ASX 200 set to bounce after falling to a four week low on Thursday
• Nothing too interesting on the sector front – most commodity prices were a little weak overnight, megacap tech weakness could follow through for local names and bond yield breather could see some reprieve for yield-sensitive sectors
• Food for thought – Qantas shares rallied 2.7% on Thursday after Goldman Sachs said the company had "structurally improved earnings capacity not reflect in valuation" and slapped on a buy rating with a $8.05 target price. This is interesting because a US peer like American Airlines trades at an even cheaper PE multiple ... and it just downgraded its earnings outlook
• BHP confirms it will not make a firm offer for Anglo American after failing to convince its board (Reuters)
• HMC Capital submits bid to acquire stake in Symphony Infrastructure Partners (AFR)

BROKER MOVES

• Bega Cheese upgraded to Outperform from Underperform; target up to $4.65 from $4.0 (CLSA)
• Lottery Corp upgraded to Add from Hold; target up to $5.60 from $5.40 (Morgans)
• Pro Medicus upgraded to Hold from Sell; target up to $115 from $75 (Bell Potter)
• West African Resources initiated Speculative Buy with $3.10 target (Argonaut)
  
  

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