Morning Wrap: ASX 200 futures flat, S&P 500 and Dow rise to fresh record close, RBA set to hold

ASX 200 futures are trading 9 points lower, down 0.10%, as of 8:30 am AEST.

Major US benchmarks continued to push higher overnight following last week's jumbo rate cut, hedge funds have added more shorts than longs over the past four weeks, China has rolled out yet another minor rate cut that will likely have little impact on its sluggish economy, the Middle East's regional crisis continues to escalate and the RBA is widely expected to keep rates on hold at 2:30 pm AEST today.

Let's dive in.

S&P 500 SESSION CHART

S&P 500 higher in mostly range bound trading (Source: TradingView)

OVERNIGHT MARKETS

• Major US benchmarks were mostly higher, in a relatively range-bound session

• S&P 500 and Dow both closed at fresh record highs while the Nasdaq is ~4% off its 10-July high

• Today’s big story – No major directional drivers in play. Plenty of smaller headlines including Intel investment interest, yield curve steepening trend, mixed US PMIs, softer Eurozone PMIs, China’s rate cut and ramp up in Middle East tensions

• Market positioning is no longer a headwind for further upside – JPMorgan says hedge funds have added shorts much more than longs over the past four weeks while BofA says positioning in US equities is currently unstretched despite the recent move into new all-time highs

• Market is looking for S&P 500 Q3 earnings growth of 4.6%, down from 7.8% expected at the start of Q3 – eight of eleven sectors expected to report year-on-year growth, led by Tech, Healthcare and Telcos 

• Debt markets see sharp inflow of corporate borrowers after Fed cut (BBG)

STOCKS

• Apollo Global said to offer multibillion-dollar equity-like investment in Intel (BBG)

• TSMC and Samsung in talks with UAE to build chip megafactories (CNBC )

• Boeing increases wage offer to 30% for striking workers in the US west coast (RT)

• GM and Ford would need to stop exporting cars form China under proposed US crackdown on Chinese software (RT)

• Tesla shares rally 4.9% after Barclays reiterated its Equal-weight rating, with expectations of better-than-expected third quarter delivery numbers (CNBC)

CENTRAL BANKS

• China cuts 14-day reverse repo rate amid tight banking liquidity, fueling hopes of forthcoming stimulus (BBG)

• Asian central banks likely to move gradually and in no hurry to follow Fed (Nikkei)

• ECB's Kazaks says danger of persistent services inflation currently outweighs concerns over the economy (BBG)

POLITICS & GEOPOLITICS

• Congressional leaders announce deal to avert government shutdown (BBG)

• Israel steps up bombardment of Lebanon, deadliest single day in country for decades, warns civilians to move away from Hezbollah sites (FT)

• Crude oil prices sink as Iran's new president says he is prepared to ease tensions with Israel (BBG)

• US to send additional forces to Middle East amid uptick in fighting (RT)

• Russia plans to raise defense spending by US$142bn in 2025, or 6.2% of GDP (BBG)

ECONOMY

• Germany manufacturing PMI downturn accelerates in August, with an even steeper drop in new orders and employment contracted at a rate not seen since the pandemic (RT)

• US manufacturing and services PMI steady in August, suggesting that the economy maintained solid growth momentum in Q3 (RT)

• UK manufacturing and services PMI eased in August, but remained in expansion territory, waning price pressures (RT)

• Eurozone business activity falls back into contraction in September (BBG)

ASX TODAY

• Aspen Group holder MA Financial increases holding to 10.26% from 7.96% (APZ)

• Breville CEO James Clayton discloses sale of 115,000 shares, beneficially owns 278,000 shares (plus 224,000 performance writes) following the transaction (BRG)

• Silver-producer Adriatic Metals lowers 2024 production guidance to 180kt from prior 240-300 kt, retains 2025 guidance of 750-800kt (ADT)

• REA Group could be willing to again increase bid for Rightmove in order to get the deal over the line, may increase its offer up by 20 cents (The Aus)

• Tuas reports full-year net loss of SG$4.4m (vs. -SG$6.9m expected). Revenue and adjusted EBITDA both slightly ahead of market expectations (TUA)

WHAT TO WATCH TODAY

• Healius: I've been following the Healius story for quite some time (in short: sold their radiology business for $965m vs. analyst expectations of around $580-670m and set to become debt free for the first time in over a decade). A few brokers upgraded the stock overnight. It'll be interesting to see if this new Healius can capture some upside.

• RBA decision: While most other central banks have commenced their cutting cycles, the RBA is not expected to cut at this month's meeting. The consensus is that the RBA keeps rate on hold for the rest of the year, unless there is an unexpected change in economic data.

• Uranium: Global X Uranium ETF rallied another 3% overnight after major financial institutions including Bank of America, Citi, Morgan Stanley, Goldman Sachs and Barclays pledged support for nuclear power and the goal to tripe the world's nuclear capacity by 2050. You can check out the full article from the Financial Times here. This should drive some positive flow for local names, extending yesterday's gains.

BROKER MOVES

• Coles downgraded to Hold from Outperform; target cut to $17.60 from $20.20 (CLSA)

• Healius upgraded to Neutral from Underweight; target up to $1.65 from $1 (JPM)

• Healius upgraded to Neutral from Underweight; target up to $1.67 from $1.41 (JARD)

• Jumbo Interactive upgraded to Buy from Overweight; $15.50 target from $114.70 (JARD)

• Select Harvests downgraded to Neutral from Buy; target cut to $4 from $4.25 (UBS)

• Spark New Zealand upgraded to Overweight from Neutral but target cut to NZ$3.98 from N$4.28 (JARD)

Stocks trading ex-dividend: 

• Tue 24 Sep: Pacific Smiles (PSQ) – $0.033, WT Financial (WTL) – $0.005, Briscoe (BGP) – $0.115, Southern Cross Electrical (SXE) – $0.05 

• Wed 25 Sep: H&H High Conviction (HCF) – $0.02, Stealth Group (SGI) – $0.008, Genesis Energy (GNE) – $0.064, Nick Scali (NCK) – $0.33, Imdex (IMD) – $0.013, Cedar Woods (CWP) – $0.17, Teaminvest (TIP) – $0.015

• Thu 26 Sep: Vulcan Steel (VSL) – $0.118, Shine Justice (SHJ) – $0.04, PRL Global (PRG) – $0.03, Garda Property Group (GDF) – $0.018

• Fri 27 Sep: Tasmea (TEA) – $0.04, Dexus Industria REIT (DXI) – $0.041, Dexus Convenience Retail REIT (DXC) – $0.051, Rural Funds (RFF) – $0.029, Arena REIT (ARF) – $0.046, 360 Capital Mortgage (TCF) – $0.05, Charter Hall Social Infrastructure REIT (CQE) – $0.037, Charter Hall Long Wale REIT (CLW) – $0.063, Centuria Office REIT (COF) – $0.025, Centuria Industrial REIT (CIP) – $0.041, Comms Group (CCG) – $0.003, Coventry Group (CYG) – $0.003, Lindsay Australia (LAU) – $0.028

Other ASX corporate actions today: 

• Dividends paid: AGL Energy (AGL), Steadfast Group (SDF), and Deterra Royalties (DRR)

• Earnings: Tuas (TUA)

• Listing: None

• AGMs: None

Economic calendar (AEST):

• 2:30 pm: RBA Interest Rate Decision (Consensus: Hold)