Morning Wrap: ASX 200 futures flat, US stocks ease as Middle East tensions escalate

Markets are off to a rocky start of the month amid a growing wall of worries including rising Middle East tensions, a US port strike driving global supply chain concerns and uncertainty over China's stimulus effectiveness. This pulled major US benchmarks lower overnight and drove up safe-haven assets like gold, US dollar and yen.

Let's dive in.

S&P 500 SESSION CHART

S&P 500 dips in early trade, ended off worst levels (Source: TradingView)

OVERNIGHT MARKETS

• US benchmarks finished lower but off worst levels

• Big Tech led to the downside, with Microsoft (-2.2%), Apple (-2.9%) and Nvidia (-3.6%) the worst performers

• Energy stocks outperformed after a ~3.5% spike in oil prices on latest political headlines

• Soft start to October – Market trading risk off to start the month amid ramp in Middle East tensions, supply chains complications from US ports strike and uncertainty around effectiveness of China stimulus

• China equity rally a non-factor for US traders focused on Fed, US growth trajectory and labor market (BBG)

• China’s stock market rally forces margin calls on short-heavy quant hedge funds (BBG)

• Global funds preparing to bet on China again after government steps up efforts to stabilise growth, revive market sentiment (RT)

• Safe havens gold, yen, and Swiss Franc, along with oil, seeing sharp gains amid Middle East tensions (RT)

STOCKS

• Apple shares ease as Barclays note channel checks pointing to weaker-than-expected iPhone demand (FORB)

• Samsung to lay off thousands in Southeast Asia, Australia and New Zealand as part of a plan to reduce global headcount (BBG)

• GM reports 2.2% decrease in Q3 sales, but EVs make gains (CNBC)

• PepsiCo is buying Mexican-American food company Siete Foods for US$1.2bn (CNBC)

• Boeing considering raising at least US$10bn through share sale to replenish cash reserves amid strike (BBG)

CENTRAL BANKS

• Fed Chair Powell sees no hurry to cut rates, flags two more 25 bp reductions in 2024 if economy evolves as expected (FT)

• Developed market central banks to push on with rate cuts over remainder of 2024, but 2025 outlook uncertain (BBG)

• ECB's Rehn says there are more grounds for cutting rates at the October meeting (RT)

• BoE's Greene warns risk of inflation rebound, but sees more rate cuts likely with prices moving in right direction (BBG)

POLITICS & GEOPOLITICS

• Iranian Revolutionary Guard warns of 'crushing attacks' if Israel responds to Iranian missile strikes (CNN)

• Israeli launches limited ground invasion of southern Lebanon (FT)

ECONOMY

• US August JOLTs job openings unexpectedly up 4.3% month-on-month to 8.04m after two straight monthly decreases and above 7.68m consensus (RT)

• US September ISM manufacturing unchanged at 47.2, missed 47.6 consensus as New Orders Index remained in contraction territory, employment index fell further into contraction and prices index dipped to 48.3 from 54 in August (RT)

• Strikes begin at East Coast ports, ~45,000 dockworkers mark the largest walkout since 1977 and set to last a few days to a few weeks (NY Times)

• US port strikes could cost the economy US$3.8-4.5bn per day, largely impacting container and auto trade (BBG)

• China new home sales contracted at a steeper pace last month (BBG)

• Eurozone September manufacturing activity declines sharply as demand waned despite factories cutting their prices (RT)

• Eurozone inflation hits ECB's 2% target for the first time since 2021 (BBG)

• South Korea export growth slows, chip shipments maintain strong pace (BBG)

• Australian August retail sales up 0.7% month-on-month, tops expectations of 0.4%, aided by warm weather, tax cuts (BBG)

ASX TODAY

• Collins Foods appoints Xavier Simonet as CEO (effective 4-Nov), Simonet is currently the CEO of Austrade and former CEO of Kathmandu (CKF)

• Growthpoint Properties launches 47.9m block trade (~15.1% of the company) in Dexus Industria REIT at $2.75 per share (DXI)

WHAT TO WATCH TODAY

• Risk off – Stocks are off to a rocky start this month. Tech was the worst performing S&P 500 sector (-2.6% vs. -0.9% all sectors). Another risk barometer like Bitcoin is down 7.2% over the last two sessions. Resource sector is also taking a breather after the China stimulus run (China markets closed until next week for holiday). Some downward pressure on markets is to be expected

• Energy and defensives – Energy was the best performing S&P 500 sector (+2.2% vs. 0.9% all sectors) on worries that Iran is preparing to attack Israel. This could see some positive flow for local names like Woodside, Karoon and Beach Energy

BROKER MOVES

• Alcoa upgraded to Buy from Neutral; US$52 target from US$43 (BofA)

Stocks trading ex-dividend: 

• Wed 2 Oct: None

• Thu 3 Oct: ARB Corporation (ARB) – 0.73%, Myer (MYR) – 0.61%, New Hope Corporation (NHC) – 4.17%, Qualitas Real Estate Income Fund (QRI) – 0.70%

• Fri 4 Oct: None

• Mon 7 Oct: Ridley Corporation (RIC) – 1.82%

• Tue 8 Oct: Clime Capital (CAM) – 1.65%, MFF Capital Investments (MFF) – 1.82%, Perenti (PRN) – 3.77%, Reece (REH) – 0.63%

Other ASX corporate actions today: 

• Dividends paid: COG Financial Services (COG), HMC Capital (HMC), MAAS Group (MGH), Peter Warren Automotive (PWR), Servcorp (SRV), CSL (CSL)

• Listing: None

• AGMs: None 

Economic calendar (AEST):

• 9:00 am: Australia Ai Group Industry Index (Sep)