Morning Wrap: ASX 200 to edge higher, S&P 500 flat as chip stocks drag the Nasdaq lower, Oil hits US$105

In a nutshell:

• Wall Street finished mixed and fairly flattish as renewed chipmaker weakness drove a rotation into defensives and value

• China's memory breakthrough hit Micron, SK Hynix and Samsung, adding to the AI hardware wobble

• US Dollar Index climbed 0.3% to 102.58, the highest since April 2025, while US Treasury market was shut for Columbus day

• Brent pushed above US$105 as Houthi attacks on Saudi Arabia outweighed Trump's Russia-Ukraine energy ceasefire

Let's dive in.

• Major US benchmarks mixed, S&P 500 flat as chip losses offset gains in most other constituents, the Equal-weight S&P 500 (+0.07%) and Dow outperformed while the Nasdaq lagged

• Chipmakers sold off again, a Bloomberg gauge of chip giants fell 2.8% as traders positioned for earnings season and Wednesday's US CPI (BBG)

• Memory stocks hit by China's CXMT, Micron and SK Hynix fell more than 3% and Samsung 4% after the Chinese maker unveiled progress on a denser DRAM design (YF)

• Treasury cash market shut for Columbus Day, Treasury futures little changed with elevated energy costs and bond yields still hanging over equities (BBG)

• Bank stocks in correction ahead of earnings, the KBW Nasdaq Bank Index sits more than 14% below its August peak, with Goldman down 12% and Bank of America 13% over the past month (YF)

• Goldman Sachs upgrades global stocks to overweight from neutral on a three-month view, saying the recent valuation de-rating has improved the setup into Q3 reporting season (BBG)

• S&P 500 Q3 profits seen up 25% year-on-year, among the strongest rates of growth on record, according to Bloomberg Intelligence (BBG)

• Firmus IPO collapse rattles Asia's AI deal pipeline, investors turning pickier on AI infrastructure listings after the Nvidia-backed Australian operator pulled its US$5.5bn raise (BBG)

• Microsoft unveiled its Maia 300 AI chip and plans to deploy potentially more than one million next year, claiming about 40% more computing per megawatt than leading GPU systems (RT)

• Salesforce rose about 2% to lead the Dow after a double upgrade from Bank of America analysts (YF)

• eBay jumped 4% after Morgan Stanley named it a Top Pick, estimating live selling drives more than 40% of growth and lifting its price target to $132 (YF)

• Starbucks confirmed it is not buying Chipotle following last week's FT report, sending Chipotle shares down more than 4% (YF)

• Meta Muse AI agent retains 73% of new users the day after install, nearly double ChatGPT's rate, according to Sensor Tower data (YF)

• Brent topped $106 a barrel, near two-week highs, as attacks on Saudi Arabia overshadowed Trump's Russian diesel deal and energy ceasefire (RT)

• Oil reversed early losses after Zelenskiy said Moscow had already breached the energy ceasefire, with both benchmarks lower in the European morning (CNBC)

• Zelenskiy says Russia violated Trump's energy ceasefire, with Moscow attacking a Ukrainian gas-production facility a day after the truce was declared (CNBC)

• Saudi-led coalition fending off fresh Houthi drone and missile attacks, following Saturday's strike on Riyadh's main airport that killed 12 and injured more than 300 (CNBC)

• Iran reaches out to Saudi Arabia after the Houthi attacks on the kingdom, as traders weigh the risk of a wider Gulf escalation (CNBC)

• Growing number of empty supertankers turn away from Persian Gulf as escalating Iranian attacks threaten a critical transfer hub (BBG)

• EU readies December trade defence measures to curb its China trade deficit and single-source reliance for critical supplies, after capping Chinese hybrid imports at 350,000 a year (RT)

• No major overnight headlines

• India CPI up 5.54% year-on-year in September, an almost two-year high, from a revised 4.83% in August and broadly in line with ests, backing the RBI's recent rate hike (BBG)

It's crickets out there (plus a few junior quarterly reports).

• Energy momentum: The S&P 500 energy sector climbed 1.4% to close fractionally above its 15-Sep record high. Brent is trading at US$105.89 a barrel, up just over 10% since 29-Sep, setting up a solid lead for local energy names like Woodside and Karoon. Santos has been one of the strongest large-cap energy names, trading at its highest since January 2020. There’s a lot to like because its realised pricing runs on a three-month JCC lag (Japan Crude Cocktail, the benchmark for term LNG contracts in Asia). That leaves Q3 and Q4 realised LNG largely set around US$15-16/mmBtu, compared with US$10.95 in 1H26.

• Defensives catch a bid: The AI trade struggled overnight, with the KOSPI down 3.6% and the SOX down 2.6%. That drove a rotation into defensive pockets of the market, with S&P 500 consumer staples up 1.2%.

• Lithium bites the dust: Chinese lithium carbonate futures tanked 8.4% to 108,760 yuan a tonne on Monday. It's now down almost 10% over the last four sessions and 48% below the mid-May high of 209,880 yuan. Bellwether PLS Group fell 3.7% to $3.37, its lowest since November 2025 and exactly 50% below its 1-Jun record. Lithium stocks seem to only trade either vertically higher or vertically lower.

• Copper tailwinds vs. the US dollar: Copper advanced another 0.8% overnight to US$6.81/lb, within 2% of its 22-Sep record high. Yet the Global X Copper Miners ETF slipped 0.4% and sits 13% below its 27-Aug record. Copper equities are refusing to price in the metal’s strength, whether that comes down to the US dollar, elevated bond yields or the lack of risk appetite. There’s also a clear split between large and small caps. On Monday, bigger names like Sandfire (+3.5%), BHP (+2.4%), Capstone (+2.2%) and South32 (+2.0%) performed well. Smaller names like Cyprium (-2.3%), Firefly (-2.2%) and Hot Chili (-1.6%) were among those that struggled.

Stocks trading ex-dividend:

• Tue 13 Oct: Katana Capital (KAT) – $0.05, Perenti (PRN) – $0.045, Sandon Capital (SNC) – $0.005, Star Combo Pharma (S66) – $0.003

• Wed 14 Oct: United Overseas Australia (UOS) – $0.02

• Thu 15 Oct: Acorn Capital Investment Fund (ACQ) – $0.035, Australian Foundation Investment Company (AFI) – $0.092, Cobram Estate Olives (CBO) – $0.045, Fat Prophets Global Contrarian Fund (FPC) – $0.03, Horizon Oil (HZN) – $0.01, K&S Corporation (KSC) – $0.06, Rivco Australia (RIV) – $0.018, WAM Research (WAX) – $0.05

• Fri 16 Oct: Gowing Bros (GOW) – $0.03, WAM Microcap (WMI) – $0.053

Other ASX corporate actions today:       

• Dividends paid: BlueScope Steel (BSL), Hub24 (HUB), Ramelius Resources (RMS), Saunders International (SND)

• Earnings: None

• IPOs: Identify Genetics (ID1) at 12:00 am

• AGMs: Bailador Technology Investments (BTI), Telstra (TLS)

Economic calendar (AEDT):

• 11:30 am: NAB Business Confidence

• 11:30 am: RBA Meeting Minutes