Morning Wrap: ASX 200 to bounce, S&P 500 rallies on Microsoft and Alphabet earnings

Major US benchmarks were higher for the week, driven by solid earnings from Alphabet and Microsoft, Fed rate cut expectations have bow been pushed out to December and the Yen is trading at levels not seen since the 1990s.

BHP is set to make a revised offer for Anglo American, copper stocks are set to climb again as prices for the underlying commodity tick higher and Tasmea is set to list at 11:00 am.

Let's dive in.

S&P 500 SESSION CHART

S&P 500 gaps up, finishes a little off best levels (Source: TradingView)

OVERNIGHT MARKETS

• S&P 500 higher in Friday trading, finished off best levels

• S&P 500 and Nasdaq snap a respective three and four week losing streak, marking their biggest weekly gain since early November

• Big tech was the main driver of upside, with well-received earnings from Tesla (+14.4%), Alphabet (+11.6%) and Microsoft (+1.8%)

• Bullish talking points for the week – More momentum behind AI growth theme, Microsoft and Alphabet cleared a high bar for earnings, US March core PCE inflation printed in-line with estimates, no meaningful escalation in the Middle East and China tech rally

• Bearish talking points for the week – Further hawkish repricing of Fed pivot expectations (first rate cut not priced in until December), sticky inflation, stagflation concerns and AI capex investment concerns

• Markets brace for 10-year Treasury yield to breach 16-year high of 5.0% on US inflation worries (Reuters)

• Latest EPFR flow data shows investors pile into bonds and stock for the week ending 25 April (Reuters)

INTERNATIONAL STOCKS

• Microsoft delivered against a high bar for Q3 – Azure revenue growth accelerated to 31% from 28% in Q2, three percentage points above guidance and at the higher end of analyst expectations (Bloomberg)

• Alphabet rallying on big earnings and revenue beat, growth accelerated across Search, Youtube and Cloud as well as a new US$70bn buyback and maiden dividend (Reuters)

• Intel revenue guidance underwhelms, reinforcing concerns over pace of turnaround strategy (Bloomberg)

• Snap shares jump ~30% after Q1 revenue beat (CNBC)

CENTRAL BANKS

• Fed rate cut hopes slip away following latest strong US economic activity data (WSJ)

• BOJ leaves policy settings unchanged as expected, yen falls to fresh 34-year low (FT)

• BOJ Governor Ueda sees limited impact from yen weakness on trend inflation (Reuters)

• ECB Panetta says no Fed rate cuts mean extra ECB rate cuts will be needed (FT)

GEOPOLITICS

• Blinken meets China's Xi in Beijing amid ongoing tensions (FT)

• China's investment overseas tracking for highest in eight years (Bloomberg)

ECONOMY

• US core PCE rose modestly in March, up 0.3% month-on-month and 2.8% year-on-year, largely in-line with consensus (Reuters)

• UK consumer confidence rises as inflation eases, tax cuts support spending but still far from pre-Brexit levels (Bloomberg)

• German unemployment rises to highest level in a decade due to weak economy (Reuters)

• Tokyo core inflation slows to weakest since March 2022 but partly due to education subsidies (Bloomberg)

ASX TODAY

• ASX 200 set for a small bounce after a 1.4% selloff on Friday, which was the largest single session decline of the year

• Copper and Tech set to extend gains on M&A activity, higher commodity prices and robust US earnings

• BHP considering improved proposal for Anglo American after its US$39bn was rejected by the London-listed miner (Reuters)

• CBA to lift bonus limits from 50% of base pay to 80% as it opens a new front in the mortgage war with Macquarie (AFR)

• CSR independent expert concludes Saint-Gobain scheme as fair and reasonable, within the best interest of shareholders (CSR)

• Experience Co to unveil E&P Corporate-led strategic review (AFR)

• HMC Capital discloses 5.1% stake in GrainCorp (HMC)

• PEXA and Iress back on radar for private equity (The Aus)

• Ramelius MD Mark Zeptner sold ~691,000 shares at $1.9-2.11 per share (RMS)

BROKER MOVES

• Arena REIT initiated Buy with $3.97 target (UBS)

• Alkane Resources downgraded to Hold from Accumulate; target cut to $0.65 from $0.75 (Ord Minnett)

• Car Group upgraded to Overweight from Neutral; target increased to $39 from $36 (Barrenjoey)

Companies trading ex-dividend: 

• Mon 29 April: Acrow (ACF) – $0.029, 360 Capital Mortgage REIT (TCF) – $0.035

• Tue 30 April: None

• Wed 1 May: DRA Global (DRA) – $0.11

• Thu 2 May: WAM Strategic Value (WAR) – $0.022, Waterco (WAT) – $0.07, Acorn Capital (ACQ) – $0.028, Bank of Queensland (BOQ) – $0.17

• Fri 3 May: None

Other ASX corporate actions today: 

• Dividends paid: Cardno (CDD) – $0.27, Eureka Group (EGH) – $0.007

• Listing: Tasmea (TEA) – a skilled services provider for mining, industrial and commercial sectors – is set to list at 11:00 am 

Economic calendar (AEST):

• 10:00 pm: Germany Inflation (Apr)