Morning Wrap: ASX 200 on pace to give back all of May's gains, rising yields push US stocks lower

ASX 200 futures are trading 52 points lower, down -0.68% as of 8:30 am AEST.

US stocks fell under the weight of higher yields and uncertainty about the Fed's rate path. All eleven S&P 500 sectors finished in negative territory, with resources leading to the downside.

Let's dive in.

S&P 500 SESSION CHART

S&P 500 gaps down and trades within a relatively narrow range through to close (Source: TradingView)

OVERNIGHT MARKETS

• Heavy overnight session with major US benchmarks lower and closing near worst levels

• Bond yield backup remains the latest overhang driven by hawkish Fedspeak, firm economic data, soaring commodity prices and supply pressures

• Market now only pricing in just 30 bps worth of Fed rate cuts this year, with the probability of a September rate cut down to less than  50%

• Nvidia's market cap surges closer to Apple in a major reshuffle of Wall Street's biggest player (Reuters)

• Wall Street's favourite recession indicator, the inverted yield curve, is in a slump of its own (WSJ)

INTERNATIONAL STOCKS

• ConocoPhillips in advanced talks to buy Marathon Oil in all-stock deal (FT)

• American Airlines cuts Q2 guidance, shares crater 13% (Bloomberg)

• OpenAI begins training next AI model amid ongoing safety concerns (Axios)

• Tesla tells suppliers to start building parts outside of China and Taiwan (FT)

GEOPOLITICS

• Israel estimates Gaza war to last another 7 months (Reuters)

• Israel steps up Rafah offensive as tanks enter city's centre (FT)

• Second set of congressional US lawmakers meeting with Taiwan's president as China tensions mount (Axios)

• China's top chipmakers push hard to localise supply of key materials and chemicals to counter US export controls (FT)

ECONOMY

• IMF raises China growth forecasts on strong Q1 GDP and policy support (Reuters)

• German consumer sentiment recovers further heading into June to reach highest since April 2022 (Reuters)

• Australia's hotter than expected April inflation reinforces RBA's higher for longer stance (Bloomberg)

• New Zealand business confidence softens further but inflation metrics ease (Interest co)

ASX TODAY

• ASX 200 futures suggest another heavy session following Wednesday's hot CPI-driven selloff

• Fairly bearish lead-in with all US sectors red, most commodities ticked lower overnight and VIX spiked to a near one-month high

• Travel and leisure sector could come under pressure after a downbeat American Airlines earnings result weighed on peers

• Australian beef exporters have had their suspensions from exporting to China removed, a potential tailwind for names like Australian Agriculture Co, Elders (ABC)

• BHP abandons US$49bn bid after Anglo holds firm rejection, saying the miner had failed to address its concerns over the “highly complex and unattractive structure (Bloomberg)

• Dalrymple Bay Infrastructure major shareholder QIC seeking to offload its entire 10.1% stake in the company (AFR)

• Generation Development to raise $60-70m to help fund full acquisition of Lonsec (AFR)

• Ramelius Resources approached Westgold Resources to discuss merger (AFR)

• Tietto Minerals holder Mitsubishi UFJ decreases holding from 10.3% to 5.6% (TIE)

BROKER MOVES

• Bendigo Bank upgraded to Buy from Neutral; target up to $12 from $10.40 (BofA)

• Fisher & Paykel upgraded to Overweight from Market-weight; target up to $30 from $23.25 (Wilsons)

• Lynas initiated Buy with $8.00 target (Ord Minnett)

• Northern Minerals initiated Hold with $0.03 target (Ord Minnett)

• NRW Holdings upgraded to Buy from Overweight; target up to $3.25 from $2.95 (Jarden)

• Qoria initiated Buy with $0.60 target (Jefferies) 

Companies trading ex-dividend: 

• Thu 30 May: Technology One (TNE) – $0.05, KKR Credit Income Fund (KKC) – $0.017, Gryphon Capital (GCI) – $0.015, 360 Capital Mortgage REIT (TCF) – $0.035, Pengana International (PIA) – $).014, Metrics Income Opportunities (MOT) – $0.013, Metrics Master Income Trust (MXT) – $0.014

• Fri 31 May: None

• Mon 3 June: Newmont (NEM) – $0.268

• Tue 4 June: None

• Wed 5 June: Hancock & Gore (HNG) – $0.01, Infratil (IFT) – $0.017

Other ASX corporate actions today: 

• Dividends paid: Unibail-Rodamco-Westfield (URW) – $0.147

• Listing: None

Economic calendar (AEST):

• 11:30 am: Australia Building Permits (Apr)

• 10:30 pm: US GDP (Q2)