Morning Wrap: ASX 200 to edge higher, S&P 500 logs first back-to-back gains since February

ASX 200 futures are up 12 pts (+0.13%) as of 8:30 am AEDT.

In a nutshell:

• Major US benchmarks mostly higher but off best levels, S&P 500 struggled to hold onto session highs but still managed to record its first back-to-back gain since 25-Feb

• Bank of America's monthly fund manager survey observed a sharp spike in cash levels, jumping 0.2 points to 3.5% (largest rise since March 2020)

• Iran set a massive natural gas field in the UAE ablaze, which likely offsets ongoing talks of further IEA reserve releases and certain vessels passing the Strait of Hormuz

Let's dive in.

Overnight Summary

Wed 18 Mar 26, 8:24am (AEST)

Name	Value	% Chg
Major Indices
S&P 500	6,716	+0.25%
Dow Jones	46,993	+0.10%
NASDAQ Comp	22,480	+0.47%
Russell 2000	2,520	+0.67%
Country Indices
Canada	32,929	+0.16%
China	4,050	-0.85%
Germany	23,731	+0.71%
Hong Kong	25,869	+0.13%
India	76,071	+0.75%
Japan	53,700	-0.09%
United Kingdom	10,404	+0.83%

Name	Value	% Chg
Commodities (USD)
Gold	5,006.44	-0.01%
Copper	5.72	-1.17%
WTI Oil	96.02	+2.70%
Currency
AUD/USD	0.7101	-0.05%
Cryptocurrency
Bitcoin (USD)	74,558	+0.37%
Ethereum (AUD)	3,279	-0.88%
Miscellaneous
US 10 Yr T-bond	4.202	-0.43%
VIX	22.37	-4.85%

S&P 500 SESSION CHART

S&P 500 higher, closed slightly off best levels (Source: TradingView)

OVERNIGHT MARKETS

• Major US benchmarks higher but closed off best levels

• S&P 500 (+0.25%) slipped from session highs of 0.82%, though logged its first back-to-back gain since 25-Feb

• A relatively uneventful session that continues to build on recent Middle East instability, with Iran again targeting energy infrastructure in the Gulf while Israel seeks to attack senior Iranian leadership

• Oil prices modestly higher against some positive headlines, notably Iran allowing select vessels to transit through the Strait and hints of more IEA reserve releases

• Morgan Stanley warns private credit defaults to accelerate, default rates could rise to approach pandemic levels as AI disruption weighs on software company revenues (CNBC)

BOFA FMS SURVEY

Here are some of the key takeaways from Bank of America’s latest fund manager survey.

• FMS sentiment indicator fell 2.6 points to 5.6, a six-month low, though still above the Liberation Day trough of 1.8

• Cash levels jumped 0.2 points to 3.5%, the biggest rise since March 2020 

• Bull & Bear indicator slipped to 8.5, continuing to decline after triggering a contrarian sell signal in December

• Net 7% expect a stronger global economy, down sharply from 39% in February

• Just 17% see lower short-term rates ahead, the lowest since February 2023

• Private credit/equity seen as the most likely source of a systemic credit event for the eighth straight month, jumping to 63%.

• Long gold and long global semis tied as the most crowded trade

• Geopolitical conflict overtook the AI bubble as the biggest tail risk

ENERGY

• US diesel prices soar above US$5 a gallon for second time ever as Iran conflict squeezes supplies (BBG)

• US turns to Iranian-linked ships for oil assistance amid rising prices (NYT)

• Iraq in talks with Iran to permit oil tankers through Strait of Hormuz amid output reduction (Bloomberg)

• Middle East war's oil shock affects jet fuel and diesel more than crude, says Goldman Sachs (BBG)

IRAN

• Iran ignites UAE gas field with drone attack, marking first damage to energy facilities (BBG)

• Trump says US doesn't need help after asking global allies for help securing Strait of Hormuz (POL)

• Strait of Hormuz reopening likely not achievable without ceasefire (BBG)

• Gulf countries seeking additional help from other nations due to the limitations of US protection against Iranian attacks (NYT)

• Tanker anchored near port in UAE hit by projectile, marking first strike on ship in Strait of Hormuz in five days (NYT)

• Israel kills Iranian leaders, including Ali Larijani, in major targeted operations (RT)

STOCKS

• Delta CEO Ed Bastian said the airline had seen "eight of the top 10 sales days in its history" this quarter, with bookings up 25% year-on-year despite the war, lifts Q1 revenue guidance to high single digit growth vs. prior range of 5-7% (CNBC)

• Amazon CEO Andy Jassy told an internal all-hands meeting he expects AI to help AWS reach $600 billion in annual sales, doubling his prior estimate of $300 billion (RT)

• Nvidia CEO Jensen Huang, at the company's GTC conference, said orders for Blackwell and Vera Rubin chips are on track to reach $1 trillion through 2027, double the $500 billion projected last year (CNBC)

• Bank of America reiterated a buy rating on German software giant SAP with a $308 price target, calling its business "defensive" and saying concerns over AI disruption were "overstated." (CNBC)

• Victory Capital raises cash portion for Janus Henderson to $40 a share (FT)

• Mastercard to acquire stablecoin infrastructure company BVNK for up to $1.8bn (CNBC)

• Samsung Electronics shares up 2.7pc as it reveals advancements in next-gen high-bandwidth memory for AI chips (IC)

• Tesla and LG Energy Solution to construct a $4.3bn battery plant in Michigan (BBG)

• Rio Tinto gains control of Arizona land for Resolution Copper mine after legal battles (RT)

• Alibaba launches enterprise AI platform named Wukong, able to handle ​complex business tasks (RT)

CENTRAL BANKS

• Fed faces new shocks in inflation battle as supply setbacks keep prices elevated (WSJ)

• Morgan Stanley expects Fed rate cuts in June and September, citing rising energy prices and 20% recession odds (BBG)

• RBA hikes rate by 25 bp in a 5-4 split decision, its first non-unanimous result since last July, warns material risk of inflation overshooting target for longer than anticipated (BBG)

• Governor Bullock at the post-meeting press conference said the board's discussion was about "timing, not direction" of policy, that all members agreed inflation was too high, and that the "Middle East uncertainty was a big thing in discussion." She added risks are "more on the upside for inflation than downside for employment."(FX)

• Oil surge poses dilemma for BOJ as it balances upside inflation risks against potential growth impact (BBG)

ECONOMY

• Farmers worried fertiliser, fuel costs driven higher by Iran war, while GOP lawmakers calling for more federal aid for farmers (BBG)

ASX TODAY

• BHP CEO Mike Henry to step down, Brandon Craig named as incoming CEO (BHP)

• Electro Optic Systems notes exercise of share options and planned divestment of shares by CEO and CFO, exercised combined 3.1m shares, CEO granted approval to sell up to 2.5m shares near term (EOS)

WHAT TO WATCH TODAY

• New Hope: NHC reported its 1H26 result yesterday, which was pretty much pre-reported since prior quarterly updates provided visibility on not only production but also EBITDA and cash balance. The only thing that may have come as a surprise was the 10 cent interim dividend (down 47 pc year-on-year).

• Energy: Best performing S&P 500 sector overnight (+1.02%), now up for a fifth straight session. Energy stocks rarely rally off of geopolitically driven price rallies – but as the conflict shows no signs of slowing and energy security remains a focal point for major economies, share prices are slowly grinding higher.

• It’s choppy out there: A few small bounces here and there, but most overnight ETFs continue to trade around recent lows. Gold traded flat overnight, copper continues to slip and oil continues its dicey move upwards. I'm sure we can all agree that it's very hard to build conviction (in both directions) right now.

BROKER MOVES

• ANZ downgraded to Neutral from Buy; target cut to $38.14 from $40.56 (GS)

• New Hope upgraded to Hold from Sell; target up to $4.50 from $4.10 (BP)

• New Hope upgraded to Neutral from Underperform; target up to $4.80 from $4.40 (MQG)

Stocks trading ex-dividend: 

• Wed 18 Mar: Adrad (AHL) – $0.014, Auckland International Airport (AIA) – $0.055, Brisbane Broncos (BBL) – $0.03, Cti Logistics (CLX) – $0.06, LGI (LGI) – $0.013, Supply Network (SNL) – $0.36

• Thu 19 Mar: The a2 Milk Company (A2M) – $0.083, Briscoe Group Australasia (BGP) – $0.084, Cochlear (COH) – $2.15, Enero Group (EGG) – $0.01, K & S Corporation (KSC) – $0.05, Kelsian Group (KLS) – $0.08, Macmahon (MAH) – $0.01, PM Capital Global Opportunities Fund (PGF) – $0.07, Spark New Zealand (SPK) – $0.063, Yancoal Australia (YAL) – $0.122

• Fri 20 Mar: Latitude Group (LFS) – $0.05

Other ASX corporate actions today:       

• Dividends paid: Accent Group (AX1), APA Group (APA), Computershare (CPU), Jumbo Interactive (JIN), Lendlease Group (LLC), Maxiparts (MXI), Medibank Private (MPL), NZME (NZM), QuickFee (QFE), REA Group (REA), Sims (SGM)

• Earnings: None

• IPOs: None

• AGMs: None

Economic calendar (AEDT):

• 10:50 am: Japan Balance of Trade (Feb)

• 11:30 pm: US PPI

• 12:45 am: Bank of Canada Interest Rate Decision (Ests: Hold at 2.25%)