Morning Wrap: ASX 200 set for a record open, S&P 500 hits another all-time high

ASX 200 futures are trading 37 points higher, up 0.44%, as of 8:30 am AEDT.

Major US benchmarks continued to climb overnight amid tailwinds from positive bank earnings, soft-landing momentum and the reopening of corporate buybacks. Oil prices nosedived on OPEC demand cuts, China's trade data misses market expectations amid weak domestic demand, Hub24 reports another quarter of massive growth and Webjet is looking for a bounce after yesterday's 35% selloff.

Let's dive in.

S&P 500 SESSION CHART

S&P 500 higher, finished near best levels (Source: TradingView)

OVERNIGHT MARKETS

• Major US benchmarks finished higher, with the S&P 500 closing at its 46th record close of the year while Nasdaq is within 1% of its 11-Jul high

• Relatively quiet overnight session given the bond-market holiday (Columbus Day), latest upside continues to focus on factors including soft-landing momentum, better-than-expected bank earnings, favourable end-of-year seasonality and reopening of buyback window

• Mixed market positioning – JPMorgan’s Tactical Positioning Monitor remains elevated, around the 92nd percentile, similar to levels in mid-July and early April

• Valuation concerns – S&P 500 trading at 21x 12-month forward EPS, well-above the 5-year average of 19.4x and 10-year average of 17.9x, also trading ~20% above average sell-side analyst year-end price target

• Chinese stocks rebounded on Monday from last week's big selloff as Beijing reinforces commitment to shoring up economy (BBG)

• Bond traders on the defence as Fed outlook for rate cutting path turns more uncertain (BBG)

• OPEC lowers oil demand growth forecast by 106,000 bpd, a third-straight month-on-month cut (BBG)

STOCKS

• Under new CEO, Starbucks scales back discounts, aims to improve cafe operations, focus on premium coffee (WSJ)

• TSMC plans more plants in Europe with focus on AI chips as Q3 profit forecast to jump 40% (BBG)

CENTRAL BANKS

• Fed Governor Waller says current backdrop means the Fed can move policy towards neutral stance at a deliberate pace but calls for more caution on cuts (RT)

• ECB poised for rate cuts as Eurozone economic concerns mount and labor market shows signs of cooling (BBG)

• SNB expected to cut rates twice more as Swiss inflation eases (BBG)

POLITICS & GEOPOLITICS

• Russian missile hit a fourth cargo ship in Ukraine this month, as attacks on economic infrastructure increase (BBG)

• Cross-border fighting in Israel worsening as Israel says new volley of missiles were fired from Lebanon (BBG)

• China launches sea and air drills around Taiwan days after Taiwan president reaffirmed island's sovereignty (FT)

ECONOMY

• China’s exports misses forecasts, grows at slowest pace in 5 months, imports undershoot amid weak domestic demand (RT)

ASX TODAY

• Australian Finance Group reports Q1 mortgages lodged of 37,202 vs. year-ago 34,517, lodge volume of $24.1bn vs. $20.8bn (AFG)

• Hub24 reports Q1 total FUA of $112.98bn vs. quarter ago $104.7bn, remains confident in meeting FY26 platform FUA target of $115-123bn (HUB)

• Macmahon subsidiary Decmil awarded $123m road upgrade contract by Covalent Lithium on the Mt Holland Project, work expected to be completed by Apr-25 (MAH)

• Webjet shares crashed 35% yesterday after preliminary first-half results for WebBed business flagged underlying EBITDA margins of 44% (1H24: 52%) reflecting lower revenue and higher operating expenses (WEB)

WHAT TO WATCH TODAY

• Not a whole lot: A rather uneventful overnight session but markets continue to trend higher – So we can't complain. A strong lead in for tech stocks. Most local tech names like XRO, WTC, NXT, TNE etc. are all trading within 1-5% of all-time highs.

• Energy: Oil prices tumbled 5% overnight after reports that Israel will target Iranian military installations, implying it will not attack Iranian oil production and export facilities. It appears too much geopolitical risk was priced in and now prices are dipping towards more 'normal' levels

BROKER MOVES

• A2 Milk Company downgraded to Sell from Hold; target cut to $6.10 from $6.20 (BP)

• Auckland International Airport upgraded to Overweight from Neutral; target up to NZ$8.21 from NZ$8.03 (JARD)

• Mineral Resources downgraded to Neutral from Outperform; but target up to $47 from $40 (MQG)

• Pantoro downgraded to Hold; but target up to $0.125 from $0.10 (BP)

• Sandfire Resources downgraded to Market-weight from Overweight; target remains $9.90 (WILS)

• Web Travel Group downgraded to Neutral from Buy; target cut to $5.55 from $8.25 (CITI)

• Web Travel Group downgraded to Hold from Add; target cut to $5.25 from $8.60 (MORG)

Stocks trading ex-dividend: 

• Tue 15 Oct:  Cadence Capital (CDM) – 3.97%, Cadence Opportunities Fund (CDO) – 3.83%, Harvey Norman (HVN) – 2.44%, United Overseas Australia (UOS) – 0.88%, Wam Microcap (WMI) – 3.38%, Washington H Soul Pattinson (SOL) – 1.57%

• Wed 16 Oct: Future Generation Australia (FGX) – 2.70%, Horizon Oil (HZN) – 6.98%, Wam Alternative Assets (WMA) – 2.52%

• Thu 17 Oct: Cosol (COS) – 1.52%, Future Generation Global (FGG) – 2.65%, Gowing Bros (GOW) – 1.59%, K & S Corporation (KSC) – 2.25%, Latitude Group (LFSPA) – 1.70%

• Fri 18 Oct: None

Other ASX corporate actions today: 

• Dividends paid: BlueScope Steel (BSL), Downer EDI (DOW), Garda Property Group (GDF), Integrated Research (IRI), Qube (QUB), Saunders International (SND), WT Financial Group (WTL)

• Listing: None

• AGMs: Telstra (TLS), Meridian Energy (MEZ), Region Group (RGN)

Economic calendar (AEDT):

• 4:00 pm: UK Unemployment Rate (Aug)

• 7:00 pm: Germany ZEW Economic Sentiment Index (Oct)

• 10:30 pm: Canada Inflation Rate (Sep)