Morning Wrap: ASX 200 futures flat, S&P 500 retreats on hotter-than-expected CPI

ASX 200 futures are trading 3 points lower, down -0.03%, as of 8:30 am AEDT.

Major US benchmarks finished lower after inflation data topped market expectations for a second consecutive month, oil prices spiked 3% on growing Middle East concerns and Chinese stocks rallied on stimulus headlines.

Let's dive in.

S&P 500 SESSION CHART

S&P 500 finished lower but off worst levels(Source: TradingView)

OVERNIGHT MARKETS

• Major US benchmarks finished lower but off worst levels amid fairly choppy trade

• Today’s big story – US CPI print was slightly hotter-than-expected but analysts and Fed officials downplayed the report, noting it represents a single month of data and shelter inflation was decelerating 

• S&P 500 and Nasdaq still on pace for weekly gains amid growing soft-landing expectations, seasonality tailwinds, modest optimism into Q3 earnings and Fed cutting rates into an earnings recovery

• Oil prices spike 3% after Israel’s security cabinet was reportedly convening on Friday to authorise response to Iran for last week’s missile barrage (NYT)

• Goldman Sachs says hedge funds sold a record amount of Chinese shares on Tuesday (BBG)

• China stocks swing higher amid fiscal stimulus anticipation ahead of MoF press conference Saturday (FT)

• China kicks off 500bn yuan swap facility to aid stock market (BBG)

• Swaps market pricing in less than 50 bp of Fed rate cuts over final two meetings of 2024 (BBG)

STOCKS

• Delta warns of hit to Q4 revenue as Americans want to be home for presidential election, holding off on spending (RT)

• AMD says new AI chip to ship in Q4, says it offers industry-leading performance vs Nvidia's current H200 chips (FT)

• Google claims regulators seeking its break-up are overreaching just as its rivals are gaining ground (FT)

• German carmakers BMW and Mercedes quarterly sales drop on weak China – BMW and Mini cars recorded steepest drop in Chinese sales in  more than four years, down 30% in Q3 (RT)

• Survey shows a third of Japan firms expect to miss H1 guidance (RT)

CENTRAL BANKS

• September FOMC minutes show substantial majority supported 50 bp rate cut (BBG)

• Boston Fed's Collins reiterates expectation of further rate cuts with pace dependent on data (BBG)

• San Francisco Fed's Daly says 1-2 more rate cuts in 2024 likely if economy evolves as expected (RT)

• BOJ's Himino says central bank will continue to raise its benchmark rate if the economy performs in line with projections (BBG)

US CPI

• September core CPI up 0.3% MoM, above consensus 0.2%

• Annualised core CPI up 3.3%, also slightly ahead of 3.2%

• Headline CPI up 0.2% MoM vs. consensus for 0.1%

• Annualised headline CPI up 2.4% vs. consensus 2.3%

• Shelter and food contributed over 75% of the monthly increase, up 0.2% and 0.4% respectively

• Shelter decelerated after last month’s outsized 0.5% rise

• Gasoline eased some of the headline CPI rise, down 4.1% month-on-month

ECONOMY

• US jobless claims surge to highest level since Aug-23 due to impact by Hurricane Helene and Boeing strikes (YH)

• Japan wholesale inflation unexpectedly accelerates (Reuters)

ASX TODAY

• Not a whole lot of company announcements so far this morning

• Tower expects FY24 NPAT to be around $83m, up from previous guidance of $45m due to 'no large events being recorded in the financial year' (TWR)

WHAT TO WATCH TODAY

• Energy: Oil prices rallied on fears of a potential Israeli retaliation against Iran. Energy was the best performing S&P 500 sector, up 0.79% (All Sectors: -0.21%). This could see some positive flow for local names, most of which have dipped over the past ~3 sessions.

• Gold: Gold prices managed to tick higher overnight despite the hotter-than-expected CPI print as well as higher bond yields and US dollar. This drew a strong response from the VanEck Gold Miners ETF, which rallied 2.7% overnight.

• Real Estate: The yield-sensitive real estate sector has held up relatively well despite soaring bond yields. The US 10-year yield is up around 33 bps this month whereas a name like Charter Hall is relatively unchanged. It will be interesting to see if this sector can continue to hold despite soaring yields.

BROKER MOVES

• Arcadium Lithium downgraded to Hold from Buy; target up to US$5.85 from US$4.25 (HSBC)

• Arcadium Lithium downgraded to Hold from Add; target up to $8.60 from $5.40 (MORG)

• Netwealth Group downgraded to Neutral from Buy; target up to $28 from $24 (UBS)

• Siteminder upgraded to Buy from Overweight; target up to $7.48 from $5.89 (JARD)

• Woodside downgraded to Neutral from Outperform; target cut to $27 from $33 (MQG)

Stocks trading ex-dividend: 

• Fri 11 Oct: Turners Automotive Group (TRA) – 1.28%, Wam Research (WAX) – 4.24%

• Mon 14 Oct: Civmec (CVL) – 2.72%, Clime Capital (CAM) – 1.67%, Star Combo Pharma (S66) – 2.64%

• Tue 15 Oct: Cadence Capital (CDM) – 3.97%, Cadence Opportunities Fund (CDO) – 3.94%, Harvey Norman (HVN) – 2.46%, United Overseas Australia (UOS) – 0.91%, Wam Microcap (WMI) – 3.34%, Washington H Soul Pattinson (SOL) – 1.58%

• Wed 16 Oct: Future Generation Australia (FGX) – 2.77%, Horizon Oil (HZN) – 6.98%, Wam Alternative Assets (WMA) – 2.49%

• Thu 17 Oct: Cosol (COS) – 1.48%, Future Generation (FGG) – 2.64%, Gowing Bros (GOW) – 1.60%, K & S Corporation (KSC) – 2.21%

Other ASX corporate actions today:

• Dividends paid: Australian Finance Group (AFG), BlackWall (BWF), Cash Converters International (CCV), Coventry Group (CYG), Embelton (EMB), Fonterra Shareholders Fund (FSF), Genesis Energy (GNE), HUB24 (HUB), Lindsay Australia (LAU), Macmahon (MAH), Monash IVF Group (MVF), Solvar (SVR), TPG Telecom (TPG), Westgold Resources (WGX)

• Listing: None

• AGMs: Mader Group (MAD)

Economic calendar (AEDT):

• 4:00 pm: UK GDP (Aug)

• 10:30 pm: US Producer Price Index (Sep)