Morning Wrap: ASX 200 to ease from record high, S&P 500 retreats on chipmaker and oil weakness

ASX 200 futures are trading 32 points lower, down -0.38%, as of 8:30 am AEDT.

Major US benchmarks finished lower as global markets faced a series of challenges overnight – a continued pullback in oil prices, a weak Chinese stock market amid growth and stimulus skepticism, chipmaker selloff after poor guidance from semis-supplier ASML and ongoing geopolitical concerns.

Let's dive in.

S&P 500 SESSION CHART

S&P 500 trended lower to close near worst levels (Source: TradingView)

OVERNIGHT MARKETS

• Major US benchmarks finished mostly lower and near worst levels

• Today’s big story – Wall of worries emerge in the form of tumbling oil prices, China market selloff and stimulus scepticism, tech under pressure after weak ASML guidance 

• BofA’s latest Global Fund Manager Survey – Sentiment rise by most since 2-Jun and fifth largest jump in global growth expectations since 1994, cash levels fell 0.3 pp to 3.9% which triggered first contrarian sell signal since June and lowest since 21-Feb, geopolitics took over as top tail risk as US recession faded and long Mag 7 seen as most crowded trade for 19th straight month 

• Chinese stocks tumble as stimulus sentiment swings back to scepticism, reports that Beijing may issue 6tn yuan in ultra-long special treasury bonds over three years (BBG)

• Base metals slide on doubts over how much impact China's pro-growth push will have on demand (BBG)

• IEA trims its forecast for this year's oil-demand growth for the third month in a row on slowing China demand (WSJ)

STOCKS

• Chip stocks fall on ASML forecast cut, CEO warns “while there continues to be strong developments and upside potential in AI, other market segments are taking longer to recover” (RT)

• LVMH shares dip 7% to near two-year low as quarterly sales decline on cooling demand for luxury goods (BBG)

• Goldman Sachs, Bank of America, Citi, JPMorgan each post best trading performance on record (BBG)

• Google orders 6-7 small modular nuclear reactors to power its data centres (FT)

CENTRAL BANKS

• Fed Governor Waller says recent data suggests rate cuts should proceed with caution (BBG)

• Minneapolis Fed's Kashkari says inflation almost back to 2%, flags further modest rate cuts (BBG)

POLITICS & GEOPOLITICS

• Israel's retaliation will avoid oil facilities (WP)

• Biden administration discussing capping sales of AI chips from Nvidia and AMD to certain countries (BBG)

• US warns Iran attempt on Trump's life will be considered act of war (RT)

• China warns of ramped up pressure on Taiwan following intense military drills Monday (BBG)

• EU ministers convene to address Russian gas dependence as Ukraine transit deal nears expiry (BBG)

ECONOMY

• IMF forecasts global public debt reaching US$100tn in 2024 and 100% of global GDP by 2030, amid higher govt spending (RT)

• UK wages grew at the slowest pace in more than two years, unemployment rate ticks down to 4.0% from 4.1% (BBG)

• South Korea chip export prices rise at slower pace for a second month, signalling possible peak (BBG)

ASX TODAY

• Evolution Mining reports 1Q25 update, Q1 gold production of 193,600 ounces vs. 187,400 consensus, AISC of A$1,569/oz vs. $1,643/oz forecasts (EVN)

• Redox anticipates strong volume growth at or above historical average in FY25, AGM notes gross profit margins to ease towards longer-term average amid US expansion, continue to review strategic M&A opportunities, no guidance due to geopolitical and macro conditions (RDX)

• Rio Tinto reports Q3 production, says full-year iron ore cash costs to be towards upper end of prior guidance (RIO)

• Super Retail Group investigated by ASIC over whistleblower dispute claiming it as a highly dysfunctional workplace (AFR)

• Kiwi insurer Tower joins NZX50 Index (TWR)

WHAT TO WATCH TODAY

• Bank of Queensland: Reports 2H24 results today. Market will be focused on areas like margin drivers, mortgage growth and cost management. Morgan Stanley forecasts (as at 2 Oct) include 15 cent final dividend, NIM of 1.53% and full-year cash profit of $322m.

• Energy: Energy was the worst performing S&P 500 sector overnight as oil prices continued to slip, down 0.5% (but off session lows of -2.2%).

• Miners: Commodity prices experienced broad-based weakness overnight, with copper down 1.5% and nickel down 1.3% amid China growth and stimulus skepticism. NYSE-listed BHP and Rio Tinto finished the overnight session down 2.1% and 1.8% respectively. Most of our resource-related overnight ETFs also down 1-3%.

BROKER MOVES

• Breville Group initiated Neutral with $36.51 target (CITI)

• Core Lithium downgraded to Underperform from Neutral; target remains $0.09 (MQG)

• Global Lithium downgraded to Underperform from Neutral; target remains $0.21 (MQG)

• Hub24 downgraded to Underperform from Hold; however target up to $52.65 from $46.50 (JEF)

• Liontown Resources downgraded to Underperform from Neutral; target remains $0.70 (MQG)

• Piedmont Lithium downgraded to Underperform from Neutral; target remains $0.11 (MQG)

Stocks trading ex-dividend: 

• Wed 16 Oct: Future Generation Australia (FGX) – 2.69%, Horizon Oil (HZN) – 6.98%, Wam Alternative Assets (WMA) – 2.51%

• Thu 17 Oct: Cosol (COS) – 1.49%, Future Generation Global (FGG) – 2.61%, Gowing Bros (GOW) – 1.59%, K & S Corporation (KSC) – 2.22%, Latitude Group (LFSPA) – 1.70%

• Fri 18 Oct: None

• Mon 21 Oct: Clover Corporation (CLV) – 1.32%, Sandon Capital Investments (SNC) – 3.31%, WAM Capital (WAM) – 4.81%

• Tue: 22 Oct: None

Other ASX corporate actions today: 

• Dividends paid: Comms Group (CCG), IVE Group (IGL), Sims (SGM), Wagners Holding Co (WGN)

• Listing: Metrics Real Estate Multi-Strategy Fund (MRE)

• Earnings: Bank of Queensland (BOQ)

• AGMs: Commonwealth Bank (CBA), Origin Energy (ORG), Orora (ORA), Bapcor (BAP)

Economic calendar (AEDT):

• 4:00 pm: UK Inflation Rate (Sep)

• 4:40 am: ECB President Lagarde Speech