ASX 200 Live Today - Tuesday, 21st July

Welcome to our live ASX coverage for Tuesday, July 21. 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 200 ekes out a small gain as miners bounce, tech stocks rally

[2:00 pm] That's a wrap. The S&P/ASX 200 is trading 0.08% higher, well-off session lows of (0.66%). A strong day for the tech sector, with names like Catapult, NextDC and Megaport up 8.1%, 5.6% and 4.7% respectively, though the broader tech index continues to trade flat over the past three months. Miners opened the session slightly lower, but broad gains for most commodities (e.g. copper up 1.27% to US$6.45/lb and gold up 0.97% to US$4,048/oz) has propped most large cap names into positive territory.

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

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Goldman says Brent could top US$120 if Hormuz disruptions persist

[1:54 pm] Goldman Sachs said Brent crude could rally above US$120/bbl by the fourth quarter if Strait of Hormuz disruptions continue, though that is not its base case.

• Base case sees Brent at US$80/bbl in Q4 and US$75 next year, predicated on Middle East de-escalation, with risks tilted to the upside

• Persian Gulf flows below 45% of pre-war levels, per analysts including Daan Struyven, pushing prices back up amid renewed US-Iran fighting and the Houthi threat to blockade Saudi Red Sea shipments

• Gains may be limited by a slump in Chinese imports and greater demand elasticity, though lower Q2 global inventories leave the market more exposed to supply shocks

• Suggested hedge is going long the December 2026 to March 2027 European diesel timespread, given tight diesel markets, Ukrainian strikes on Russian refineries and supply risks from weather and maintenance deferrals

Source: Bloomberg

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Iron ore drops as China steel losses deepen and Hormuz risks rise

[1:53 pm] Iron ore fell for a second day as deteriorating Chinese steel mill margins and continued US-Iran hostilities clouded the demand outlook.

• Singapore futures fell as much as 1.6% to a near two-week low, trading 1% lower at US$98.60/t, with the most-active Dalian contract down as much as 2.2%

• Surveyed mill profitability fell around 3ppt from a week earlier to 37.2% as of 17 July, 22.9ppt lower than a year ago, with blast furnace operating rates also declining

• Mounting mill losses and rising finished steel inventories are reinforcing expectations for further production cuts, per Mysteel's Steven Yu

• Global recovery expectations have receded as Hormuz shipping has almost come to a standstill again

Source: Bloomberg

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Revolut launches Australian bank after winning APRA licence

[1:51 pm] Revolut has secured an unrestricted APRA banking licence and opened Revolut Bank Australia, setting up a fresh challenge to the major banks, the AFR reports.

• Unrestricted APRA licence granted, allowing Revolut to operate as a bank and begin transferring balances from stored-value to deposit accounts, now protected under the Financial Claims Scheme up to $250,000

• Almost $400m of investment planned in the Australian market over the next five years, building on an existing one million customers

• Savings accounts paying up to 5.05% with no minimum deposit and a no-fee credit card planned, with revenue driven partly by card subscriptions

• Australian revenue of $71m, up 74% year-on-year, with net profit of $7.4m per accounts published in March

• Global record FY25 profit of US$2.3bn, up 57%, with revenue up 46% to US$6bn, after a raising last year valued Revolut at US$75bn

• Named privately by major bank executives as one of the biggest competitive threats to local lenders, with a US licence application also submitted and a potential public listing reported for 2027 or 2028

Source: AFR

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Morgan Stanley target lift Qantas target to $12.50 on Project Sunrise re-rating case

[12:53 pm] Morgan Stanley reiterated its overweight rating on Qantas and raised its price target to $12.50, arguing Project Sunrise will structurally re-rate the airline's International business.

• Price target lifted to $12.50 per share with an Overweight rating

• FY31E International EBIT forecast of $1.23bn, 26% above consensus, with Group EBIT only 8% above, making International the most underappreciated part of the earnings outlook

• Sunrise seen improving earnings quality, via a higher premium mix, lower-density aircraft, greater fleet flexibility and better network economics for less volatile, more predictable earnings

• Valuation discount seen narrowing, with Qantas trading on around 11x FY1 P/E despite strong Group returns, as International margins improve and execution risk falls

• Conviction increased after the Toulouse Sunrise Showcase, with the broker viewing the project as an extension of Qantas' proven ultra-long-haul strategy

• Fleet renewal to weigh on near-term free cash flow, though Morgan Stanley argues the market's focus on the $400m EBIT figure misses the value of a structurally stronger business

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Copper stocks reverse soft open

[12:50 pm] Copper stocks opened mostly lower on Tuesday, but the strength behind copper prices has propped most names into positive territory. Copper is up 0.75% at the time of writing to a near one-month high of US$6.42/lb, while most copper names have fallen around 5-10% over the past month.

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Black Cat brings Lakewood plant back online after mill bearing repairs

[12:43 pm] Black Cat Syndicate has returned its Lakewood processing plant to normal operations following repairs to the mill bearings that took it offline on 14 July.

Lakewood is back online on schedule, having been flagged on 14 July to resume by the end of that week after a mill bearing failure. Mining operations at the Fingals and Majestic mines continued unaffected throughout the outage.

Company page: Black Cat Syndicate (BC8)

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China broadens market rescue with record inflows into tech ETF

[12:41 pm] China is mobilising state-linked institutions to stem a tech-driven selloff, directing record inflows into a chip-heavy ETF in a shift from earlier blue-chip support.

• ChinaAMC STAR 50 ETF drew a record 13.8bn yuan (US$2bn) on Monday, with the scale suggesting state-backed buying aimed at the hardest-hit tech shares

• Major insurers pledged support, with China Life's unit buying more than 10bn yuan of stocks and funds and PICC and Ping An making similar commitments

• GF Securities raised its margin financing quota by 90bn yuan, a rare move giving investors more liquidity just as leverage is unwound at the fastest pace since the 2015-16 crash

• STAR 50 Index down 21% from its June peak, with the selloff spilling over from memory chips as investors also brace for the imminent mega listing of CXMT

• Regulators stepped in, with the CSRC meeting investors and vowing to prevent risks, improve investor protection and enhance returns

Source: Bloomberg

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US completes 10th day of Iran strikes as oil eases and Houthis threaten Saudi blockade

[12:39 pm] US forces struck Iran for a 10th straight day after Trump vowed Tehran would "pay" for killing three US soldiers, even as mediators floated a fresh truce and the conflict widened.

• CENTCOM completed the latest wave around 11 am AEST, targeting command centres, maritime capabilities, missile and drone sites and air defences to degrade Iran's ability to attack Hormuz shipping

• Brent slipped toward US$88/bbl after surging as much as 7% over the previous two sessions

• Mediators floated a truce, with Iran confirming proposals conveyed via Pakistan and Qatar, though a US official said Trump remains focused on punishing Iran and strikes will continue until he chooses otherwise

• Houthis threatened a Red Sea blockade of Saudi Arabia, adding to oil supply risks, with the kingdom vowing to protect its ships

• Hormuz shipping volumes slumped to roughly the same level as the March-early April peak of the conflict

Source: Bloomberg

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Lithium stocks tumble as Chinese lithium futures dive 6% in early trade

[11:38 am] Lithium stocks have taken another beating as Chinese lithium carbonate futures tumble 6.5% in early trade to 138,140 yuan a tonne. Prices have now tumbled 11% in the past week and down 34% from the mid-May high of 209,880 yuan.

The bellwether PLS Group is currently down 4.4% to $4.01, and down 40% from its 1-Jun high of $6.74.

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Korean traders slash margin loans to lowest since April as chip losses bite

[11:36 am] South Korean investors have cut leveraged stock positions to a three-month low as memory-chip losses halt the market's rally.

• Margin loan balances fell to 33.4 trillion won (US$22.6bn) as of 16 July, the lowest since 15 April and a 13% drop from the end-June peak of 38.6 trillion won

• Kospi down nearly 30% from its June peak on AI rally sustainability concerns, with Samsung shedding around a quarter of its value this month and SK Hynix losing about a third

• JPMorgan flags a self-correcting mechanism, with strategists including Mixo Das noting fundamentals remain solid but intense de-leveraging, elevated volatility and forced foreign selling have driven prices lower

• Regional deleveraging echoes, with Chinese traders cutting margin debt at the fastest pace since the 2015-2016 crash and Taiwanese retail investors trimming leverage at the quickest pace in over a year

• Retail appetite cooling, with investor deposits down to 108.1 trillion won on 16 July from a 4 June peak of 139.7 trillion won

Source: Bloomberg

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Global stocks lift Australian pension funds to 9.5% annual gain

[11:34 am] A rally in international equities drove another strong year for Australia's A$4.4 trillion pension industry, with the median growth fund returning 9.5% for the year to 30 June.

• Median growth fund returned 9.5% for the financial year, with nearly every major asset class positive, per Chant West

• International shares surged 25.5% in hedged terms on AI enthusiasm and robust corporate earnings, with unhedged global shares returning 17% despite a stronger Australian dollar

• Australian shares returned a modest 6.2%, despite making up an average 24% of growth fund assets versus around 31% in international shares

• UniSuper topped the growth funds with 12.3%, followed by NGS Super and Colonial First State at 11.5% each, with Hostplus fourth at 10.8%

• Unlisted asset returns still being collated, with infrastructure estimated at 7-9%, private equity at 8-11% and unlisted property at 5-7%

• Offshore reliance underscored, with roughly half the system's assets invested overseas and about one-fifth in private markets

Source: Bloomberg

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Hub24 gives back early gains

[11:30 am] Hub24 rallied as much as 3.8% ($88.20), now down 4.0% to $81.49.

Here are some of the key numbers from this morning's Q4/full-year update.

• Total FUA up 20% to $164.3bn, comprising Platform FUA of $139.5bn (up 24%) and PARS FUA of $24.8bn (up 5%)

• Platform FUA up 9% over the quarter, driven by $4.2bn net inflows and $7.5bn of positive market movements

• FY26 platform net inflows of a record $18.9bn, up 20% on the $15.8bn in FY25 excluding large migrations

Hub24 intraday chart (Source: TradingView)

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Analysts' take on South32

[10:54 am] South32 reported Q4 production on Monday that met or exceeded guidance across most operations, with Cannington silver output recovering from earlier weather disruption and manganese sales lifting on inventory drawdowns and restored rail access, following the recently agreed sale of the aluminium value chain to Alcoa.

Analysts largely lifted earnings estimates on stronger realised copper pricing and higher silver volumes, though several flagged that much of the uplift was non-recurring and tied to the divested aluminium assets, and debate centred on whether the simplified base and precious metals portfolio warrants a re-rating toward peer multiples

• RBC Capital Markets retained Outperform, raised target from $4.60 to $5.30, framing the aluminium sale as transformational and pointing to Sierra Gorda's fourth grinding line and a base metals weighted portfolio backed by a strengthened balance sheet.

• JPMorgan retained Overweight, lowered target from $4.60 to $4.50, highlighting the Cannington open pit study and completed Hermosa federal permitting, though Sierra Gorda cost pressures offset Cannington savings.

• Macquarie retained Neutral, target unchanged at $4.30, pointing to an extended Cannington production profile and a strong silver recovery, while Australian manganese guidance was withdrawn pending water management.

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ASX 200 slips as banks and miners weigh

[10:51 am] The S&P/ASX 200 is down 0.26% in early trade, but already off session lows of (0.66%). Solid gains from Tech and a third straight day of advances for Energy have not been enough to offset declines in the heavyweight bank and mining sectors, which are dragging the index lower.

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

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Alkane management flags disciplined M&A and mine-life extension push at Q4 call

[10:17 am] Alkane's 4Q26 results call detailed a dual-track growth strategy underpinned by a $454 million cash and investments position, with management outlining exploration priorities and dividend intentions.

• On the year: CEO Nick Earner said all three mines operated well, generating record cash flows of $567m in operating cash flow for the year and $174m in Q4, with the group meeting the top end of production guidance and site-level cost guidance

• On the dividend: management intends to hold the payout around the 2c fully franked level going forward, wanting shareholders to see value returned during this period of high cash flow, though a formal policy is still to be set

• On True Blue: Earner was candid on disappointment, noting the drilling did not lift the resource to the hoped-for 200,000-300,000oz and it sits in the 50,000-100,000oz range, but development will still proceed as it is considered economic

• On Brunswick South: described as closer to the original True Blue target size, still unbounded at depth with a possible repeat lens further west, though Earner cautioned against reading it as a 300koz-plus resource yet

• On Tomingley: the Newell Highway realignment is due for completion early CY27 with open cut production targeted for the September 2027 quarter, though Earner intends to hold production at current levels rather than expand the mill absent a major new discovery

• On inorganic growth: Alkane is typically in active discussions with two to three companies across Australia, New Zealand, the US and Scandinavia, with an ideal target being a single-mine producer with further growth potential; a Canadian opportunity fell away in March

Company page: Alkane Resources (ALK)

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ASX emerges as haven from volatile AI trade

[10:16 am] Australia's limited chip exposure has turned a former weakness into a source of resilience as semiconductor-driven volatility roils Asian equities.

• ASX 200 on track to outperform MSCI Asia Pacific for a second straight month, the longest such streak since November 2024, as the regional benchmark extends its June decline

• Limited chipmaker exposure now a strength, with the market offering indirect AI beneficiaries such as data centre operators and miners leveraged to copper and aluminium demand rather than direct semiconductor risk

• Safe-haven flows into banks, per IG's Tony Sycamore, though he cautioned some flows may be "overdone" given Australia's weakening domestic backdrop

Source: Bloomberg

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Top ASX 200 gainers and losers

[10:03 am] Yancoal rallies on its Q4 update, South32 continues to trend higher after yesterday's quarterly and NextDC catches a bid on another contracted utilisation upgrade. Meanwhile, Alcoa hits a fresh seven month low, and Mesoblast and lithium names continue to pull back.

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QuickFee lifts Australian finance TTV 40% on expanded debt facility

[9:41 am] A very interesting result from a $25 million market microcap lender. The company says it intends to issue a FY26 final dividend of 0.5 cents per share plus a 1 cent special dividend. At a current share price of 6.7 cents, this implies a final dividend yield of 7.4% plus a 14.9% yield on the special dividend.

• Q4 revenue of $4.4m, in line with normalised pcp, with AU Finance revenue up 14% to $3.3m and US Finance revenue down 29% to US$0.5m

• Australian loan origination (TTV) up 40% to $25.1m, with legal disbursement funding up 134% to $7.5m

• AUD debt facility limit increased to $60m from $45m

• FY26 normalised revenue of $16.8m, stable on pcp, with AU Finance up 11% to $12.1m and US Finance down 30% to US$2.1m

• FY26 EBTDA guidance confirmed at $3.75m-4.25m, with a NIM of 15.3% for the year

• Expected FY26 final dividend of 0.5 cps unfranked, with a further special dividend of around 1 cps expected in the last quarter of 2026 following receipt of escrowed Aiwyn funds

Company page: QuickFee (QFE)

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Hub24 lifts total FUA to record $164.3bn

[9:29 am] Hub24 closed FY26 with record annual platform net inflows of $18.9 billion and total funds under administration of $164.3 billion.

• Total FUA up 20% to $164.3bn, comprising Platform FUA of $139.5bn (up 24%) and PARS FUA of $24.8bn (up 5%)

• Platform FUA up 9% over the quarter, driven by $4.2bn net inflows and $7.5bn of positive market movements

• FY26 platform net inflows of a record $18.9bn, up 20% on the $15.8bn in FY25 excluding large migrations

• Q4 platform net inflows of $4.2bn, stable on pcp excluding large migrations, with super growth offsetting lower IDPS flows

• Active advisers up 11% to 5,649, with 36 new licensee agreements signed during the quarter

• Market share gain to 9.9% as at 31 March 2026, up from 8.6% in pcp, ranking first for quarterly and annual net inflows for a tenth consecutive quarter

Company page: HUB24 (HUB)

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Alkane delivers record FY26 production

[9:23 am] Alkane reported Q4 gold equivalent production of 42,491oz, in line with its preliminary figures, capping a record year and prompting a proposed maiden dividend.

• Q4 gold equivalent production of 42,491oz, down from 45,776oz in Q3 on planned grade variation, at an AISC of $3,011/oz

• Q4 revenue of $257m, down from $275m in Q3 on a lower realised gold price of $5,442/oz, with sales of 47,411oz

• FY26 production of 168,337oz in line with preliminary, at an AISC of $2,925/oz, which pushed just above the top end of guidance

• FY26 revenue of $962.7m, with cash, bullion and listed investments of $454m

• Proposed maiden dividend of 2c/share fully franked, subject to audit and final Board confirmation

• FY27 guidance of 163-177koz at an AISC of $2,900-3,200/oz, with growth capital of $160-190m

I've got some slightly dated numbers from Bell Potter (Apr-26) which expected FY26 production of 160,329oz (5% beat) though AISC ran 8% ahead of A$2,700/oz forecasts. The dividend comes as a surprise vs. expectations of nil, while the FY27 guidance is tracking 7% ahead of Bell Potter forecasts at the midpoint, though costs are 15% above their expectations of A$2,652/oz. Overall, a very mixed outcome given the better-than-expected production outcome/guidance and surprise dividend, offset by a sizeable increase in costs.

Company page: Alkane Resources (ALK)

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Plenti posts record quarterly originations of $536m in 1Q27

[9:11 am] Plenti delivered record loan originations across all three verticals to open FY27, with the loan book growing to $3.3 billion and credit quality holding steady.

• Loan originations up 22% to a record $536m, up 13% on the prior quarter, with June a record month at $221m, up 39% on PCP

• Loan portfolio up 23% to $3.3bn, up 6% on the prior quarter, spread across automotive, renewable energy and personal lending

• Revenue up 16% to $84.6m

• Cash PBT of $10.7m, including $2.2m of net proceeds from a debt sale, with statutory PBT of $6.6m

• Annualised net credit losses of 98bps, or 68bps net of the debt sale impact, with 90+ day arrears low at 46bps

• On track for FY27 objectives, targeting a $600m/quarter origination run-rate exit and a cost-to-net-margin ratio below 55%

Company page: Plenti Group (PLT)

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NextDC contracted utilisation up 11% on further customer wins

[9:07 am] NextDC's pro forma contracted utilisation rose to 740MW as at 30 June 2026, with FY26 guidance unchanged.

• Contracted utilisation up 11% to 740MW since the 20 April 2026 update, an increase of 73MW on further customer contract wins

• Forward order book lifts to 565MW, expected to progressively convert to billings, revenue and EBITDA across FY26 to FY30

• FY26 guidance unchanged for net revenue, underlying EBITDA and capex

Company page: NEXTDC (NXT)

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Gold, silver and critical minerals explorers report fresh drilling and resource results

[9:03 am] A batch of ASX explorers has released exploration and resource updates spanning gold, silver, copper, lithium and rubidium.

• Waratah Minerals returned further Spur Project drill hits including 38.3m @ 1.09 g/t Au from 59.4m and 52m @ 0.84 g/t Au from 84m, with the mineralised envelope open along strike and at depth.

• PC Gold lifted its Global Spring Hill resource 84% to 43.6Mt at 1.1 g/t Au for 1.51Moz Au, with a maiden high-grade Link Zone domain of 1.12Mt at 5.37 g/t Au for 193.5koz and a PFS on track for late Q4.

• Aeris Resources grew Tritton Mineral Resources 70% to 33Mt for approximately 540kt contained copper and lifted Ore Reserves more than fourfold to 10Mt for approximately 180kt copper, aided by the Peel Mining acquisition adding Mallee Bull and Wirlong.

• Aeris Resources declared maiden underground Reserves at Constellation (3.8Mt) and Mallee Bull (2.7Mt), giving more than five years of mill feed at current plant capacity.

• Kali Metals identified new high-grade gold prospects at Marble Bar with rock-chip results up to 53.1 g/t Au at Stug, with final DD and RC drilling results expected in three to four weeks.

• Andean Silver identified the new Juanita prospect, sitting outside its 136Moz AgEq resource, with surface sampling up to 62,663 g/t AgEq over a 2km strike length ahead of drill testing.

• Berkeley Energia delivered a maiden Conchas resource of 11.8Mt at 0.41% Li2O and 0.21% Rb2O, containing approximately 49,000t Li2O and 25,200t Rb2O, open at depth and amenable to open-pit mining.

Company pages: Waratah Minerals (WTM), Aeris Resources (AIS), Kali Metals (KM1), Andean Silver (ASL), Berkeley Energia (BKY)

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China ends battery and solar tax exemption to force overcapacity shakeout

[8:57 am] Beijing will levy a consumption tax on lithium-ion batteries and solar cells for the first time in over a decade, aiming to squeeze out weaker producers amid brutal domestic price wars.

• Lithium-ion batteries taxed at 2% from 1 September 2026, rising to 4% by September 2027, with solar cells taxed at 2% from 1 April 2027 and 4% by April 2028, ending an 11-year exemption

• The levy could add around 1,000 yuan (US$147) per EV once the rate hits 4%, a fresh squeeze on carmakers with industry-wide profitability of just 3.4% in the first five months

• Chinese solar and battery stocks rose on the news, with investors pricing in a consolidation premium as larger, more efficient manufacturers absorb the weaker players' market share

• Battery makers are expected to pass on most costs to carmakers, creating a cost divide that pushes automakers to build their own cells rather than rely on suppliers like CATL (47% share) and BYD (20%)

• Next-generation technologies stay exempt through end-2028, including sodium-ion, solid-state and perovskite solar cells, signalling where Beijing wants to build dominance

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Trump's temporary global tariffs set to expire Friday, with more permanent levies expected

[8:49 am] The 150-day authority behind Trump's 10% global tariff runs out on 24 July, and the administration looks set to replace it with more durable duties under a different legal basis.

• The Section 122 authority expires Friday 24 July, with Congress highly unlikely to extend it, leaving the White House expected to reverse-engineer its global reciprocal tariffs

• Section 301 is the likely replacement, allowing retaliation against unfair trade practices and offering a more durable legal footing already used under Biden and in Trump's first term

• A forced-labour investigation has recommended a 10% tariff on goods from 14 nations and the EU and 12.5% on another 45 countries including China, meaning rates could hold or rise moderately

• The February Section 122 move set an effective US tariff rate of 11.8%, per the Yale Budget Lab, with the new forced-labour duties expected to nudge it higher

• Import front-loading is set to subside, with volumes estimated to drop nearly 5% in August and 6% in September versus 2025 as businesses finish stocking up ahead of new tariffs

• A separate excess-capacity probe could further lift rates on China, the EU and 16 other partners when it concludes later this year

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Houthis declare Saudi naval blockade as US-Iran war escalates on ninth night of strikes

[8:47 am] Yemen's Houthis have opened a potential new front by threatening Saudi shipping, deepening the threat to global energy supplies even as mediators push a fresh ceasefire proposal.

• Houthis declared a "maritime embargo" on Saudi Arabia, prompting the Saudi-led coalition to vow a forceful response and begin protecting ships through the Bab el-Mandeb Strait, a key route after the effective closure of Hormuz

• A full Bab el-Mandeb closure would cut around 7% of global oil supply, on top of the roughly 10% already lost to the Gulf war

• US completed a ninth straight night of strikes on Iranian command centres, air defences and missile sites, with explosions reported across Tabriz, Chabahar and several Persian Gulf ports and one person killed near Tabriz

• US military death toll reached 17, after two troops killed in Jordan, one in northern Iraq detonating a downed drone, and unidentified remains being investigated

• Diplomacy remains live despite the escalation, with a Reuters source citing a proposed 10-day ceasefire and Iran confirming mediators have tabled proposals

Brent settled the overnight session 0.6% higher to US$88.80 a barrel. It was a rather volatile session, with prices rallying as much as 3.5% (US$91.42) and down as much as 2.4% (US$86.12).

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South Korean retail traders nurse heavy losses as leveraged chip bets unwind

[8:47 am] Single-stock leveraged ETFs tied to Samsung and SK Hynix have collapsed after the AI-driven semiconductor rally reversed, hitting domestic retail investors hardest.

• KODEX SK Hynix Single Stock Leverage ETF down around 70% from its June record high and roughly 50% below its debut, per LSEG data

• Korean retail bought a net 14 trillion won (US$9.4bn) of single-stock leveraged ETFs since their 27 May launch, versus about 2 trillion won by foreign investors

• Leveraged funds have ballooned to around 30% of the 25 largest Korea-focused ETFs by June, up from about 15% at the start of 2026, prompting Oxford Economics to cut Korean equities to neutral

• Regulators tightened the rules Thursday, lifting the minimum cash to trade the products to 30 million won from an effective 3 million won

• Bank of Korea flagged record retail leverage driven by margin borrowing and concentrated semiconductor positions, warning it could magnify volatility in a correction

Source: CNBC

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Citi says Magnificent Seven tag is obsolete for the AI trade

[8:45 am] Citi strategists argue investors should ditch the Mag 7 label in favour of a broader "growth cluster" as correlations within the group break down.

• The Mag 7 construct is "dead" for assessing large-cap growth dynamics, per the Scott Chronert-led team, who point to a broader growth cluster as the real driver of S&P 500 earnings and share-price gains

• The growth cluster spans big tech plus AI infrastructure names, making up more than half of S&P 500 market cap and contributing nearly 48% of its earnings

• Mag 7 correlations have broken down, with Microsoft and Meta falling on capex payoff scepticism while Apple has surged 23% on relief it sat out the data centre arms race

• Semiconductors led the first-half rally but have started to underperform recently amid concerns over stretched valuations

• Cluster valuations still look reasonable, with the 12-month forward P/E in the 66th percentile versus the past 30 years and supported by strong earnings expectations through 2027

• Chronert had called the 2026 rotation from AI enablers to adopters back in December, likening the shift to the fading relevance of the FAANG label

Source: Bloomberg

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Short bets against US stocks hit record as AI worries mount

[8:45 am] Bearish positioning has surged to all-time highs across major US indices even as equities have rallied, reflecting anxiety over the durability of the run.

• S&P 500 short interest near a record 3.79% of free float, the highest in S3 Partners data going back to 2010, while the Russell 3000 figure has climbed to a record 6.3%

• NYSE short interest reached a record 9% of shares outstanding in late June, versus 5% during the GFC and around 6% during Covid

• Shorting has stayed a losing trade overall this year, with the most-shorted Russell 3000 names down 15% on average against a near-21% gain for the rest of the index

• Standout profitable shorts include Hertz, down 65% year to date with about 79% of shares sold short, and SpaceX, up nearly 28% or US$4.8bn in mark-to-market gains

• Largest dollar-value shorts sit in the Magnificent Seven and chipmakers Micron and Broadcom, driven by AI spending and semiconductor volatility concerns

• Hedge funds are diverging, covering single-stock shorts at the fastest pace in three months, with buying and shorting offsetting to leave the market drifting sideways

Source: Bloomberg

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Hedge funds dump US tech at record pace, Goldman says

[8:45 am] Goldman's Prime Services desk flags the largest two-month retreat from the tech sector on record as AI valuation scepticism builds.

• Cumulative selling of around 10% in market value over the past two months marks the biggest tech sector reduction since the data series began more than a decade ago

• Net seller in six of the past eight weeks, with the pace and scale pointing to significant length reduction and early signs of capitulation

• S&P 500 Information Technology Index down around 10% since early June as investors take profits and question AI-driven valuations

• Tech was the worst performer and most net-sold US sector last week, led by hardware, storage and peripherals plus IT services, with semis and software sold to a lesser degree

• Rotation into other sectors such as consumer names as concerns grow that mega-caps could rein in AI spending

• Goldman strategists see continued near-term pressure on the AI infrastructure momentum trade given positioning and the lack of a favourable catalyst, despite solid fundamentals

Source: Bloomberg

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Good morning!

[8:26 am] ASX 200 futures are down 36 pts (-0.41%).

The overnight session in a nutshell:

• Major US benchmarks struggled to hold onto early gains, as the semiconductor rebound faded and defensive sectors like Healthcare, Industrials and Staples trended lower

• S&P 500 (-0.19%) up as much as 0.74% in early trade, Nasdaq (-0.05%) finished breakeven despite intraday highs of 1.16%, Dow (-0.59%) briefly gained 0.51% but finished down by the same amount

• Brent whipsawed after briefly topping US$90 a barrel on a ninth straight night of US strikes on Iran, then eased as Tehran signalled diplomatic channels stayed open

• A relatively uneventful session with no major earnings, commodity prices mostly lower, though copper bounced 1.2% to US$6.36/lb, Trump's 10% global Section 122 tariffs are set to expire this Friday