Morning Wrap: ASX 200 to fall amid the worst month of the year, S&P 500 lower, Gold prices surge

ASX 200 futures are down 37pts (-0.41%) as of 8:30 am AEST.

In a nutshell:

• Major US benchmarks continued to slip amid the seasonally weak month of September

• September is hailed as the worst month of the year, since 1928, S&P 500 has averaged a -1.17% return for this month

• Gold prices are soaring, pushing past US$3,500 with ease

Let's dive in.

S&P 500 SESSION CHART

S&P 500 gapped down but bounced off worst levels (Source: TradingView)

OVERNIGHT MARKETS

• Major US benchmarks lower but closed off worst levels 

• Plenty of overhangs, including weak seasonality, bounce in bond yields, Trump tariff volatility as IEEPA ruled them as illegal but will remain effect for now

• Since 1928, S&P 500 has averaged a -1.17% return in September, making it by far the worst month of the year for stocks, according to Goldman Sachs

• Second half of September represents the worst two-week period of the year since 1928, with an average return of -1.38%  

• Hedge funds reluctant to buy US stocks despite potential rate cuts (RT)

• Evercore sets 2026 S&P 500 target at 7,750 driven by AI (CNBC)

• Nvidia stock slips, set to close below key 50 day moving average amid weak seasonality, market rotation (BBG)

• Morgan Stanley's Wilson predicts continued US stock rally amid rate cuts and strong earnings (BBG)

• UK bond yields hit 1998 highs, pressuring PM Starmer's government amid fiscal concerns (BBG)

• China margin trades hit record high amid liquidity-fueled rally (BBG)

• Japan 10-year bond auction draws strong demand, relieving concerns about demand in wake of soft 2-year sale (BBG)

• US government shutdown risk ratcheting up with just 14 legislative days for Congress and White House to strike a deal (PN)

STOCKS

• Tesla flags steep drop in sales across Europe, reflecting competitive pressures and Musk backlash (RT)

• Elon Musk says 80% of Tesla's value will come from humanoid robots (CNBC)

• Constellation Brands cuts outlook, citing lower demand from Hispanic consumers, Trump's tariffs (FT)

• Klarna, Gemini launch US roadshows as analysts predict strong IPO market through 2026 (RT)

• Starbucks says company experienced record-breaking sales week on the back of its fall product launch, which included return of the pumpkin spice latte (BBG)

• Novo Nordisk says Wegovy reduces heart risk by 57% compared with rival treatments from Eli Lilly (CNBC)

• Amazon revives plan to invest $4.4bn New Zealand data centers (BBG)

TARIFFS

• Federal appellate court upheld ruling that invalidates the majority of Trump's tariffs, arguing reasoning for tariffs did not constitute an emergency and exceeded his authority (AX)

• Bessent says Trump has 'Plan B' if court strikes down tariffs (YF)

• Trump claims India offered to reduce tariffs to "nothing", but says time is running out (BBG)

CENTRAL BANKS

• BOJ's Himino suggests uncertainty should not be overplayed, reaffirms rate hikes to continue if outlook realized (BBG)

• RBA chief Kocher advocates cautious approach on rates (BBG)

ECONOMY

• US August ISM Manufacturing PMI was 48.7 vs. 49.2 consensus but up from 48.0 in July, new orders index higher but production index fell (BBG)

• South Korea inflation falls to lowest since November 2024 (BBG)

ASX TODAY

• Lotus Resources set to raise $70m to ramp up production at its Kayelekera uranium mine (AFR)

• Pinnacle Investment Management increases holding in Coast Entertainment (from 8.34% to 11.50%) and Adore Beauty (from 8.72% to 11.97%) (CEH, ABY)

• Tasmea could see some massive block trades as escrow for co-founders (60.5% ownership) ticks off on 29 September (AFR)

WHAT TO WATCH TODAY

• Gold: Gold is all the rage right now, with prices soaring past US$3,500 with ease (unlike the 22-Apr move where it briefly touched US$3,500, only to closed the session at US$3,380). Prices are now on a five-day win streak, buoyed by a broad range of factors including risk-off mood for equities, rising bond yields, budget deficit concerns, risks of a US government shutdown etc. This should continue to drive a strong response for local gold miners.

• Risk-off: Plenty of reasons to be a little bearish in the near-term. We noted some seasonality data from Goldman Sachs above. This weakness also follows a very strong August, where the market is relatively overbought and extended. Our overnight ETF watchlist shows resources and tech pulling back, while Real Estate and Industrials were the worst performing sectors on the S&P 500.

• Nickel: Interesting to see Nickel Miners ETF (NIKL) push higher overnight. This may have something to do with the violent protests in Indonesia?

BROKER MOVES

• NWH upgraded to Outperform from Neutral; target up to $4.45 from $3.95 (MQG)

• Westpac downgraded to Neutral from Buy but target up to $38 from $36 (UBS)

• Worley upgraded to Outperform from Sector Perform; target up to $18.50 from $18.00 (RBC)

• Xero downgraded to Sector Perform from Outperform; target cut to $187 from $230 (RBC)

Stocks trading ex-dividend: 

• Wed 3 Sep: Australian Ethical Investment (AEF) – $0.09, Downer Edi (DOW) – $0.141, Ebos Group Ltd (EBO) – $0.492, Evolution Mining Ltd (EVN) – $0.13, FENIX Resources (FEX) – $0.01, Hitech Group Australia (HIT) – $0.05, Humm Group (HUM) – $0.007, Integrated Research (IRI) – $0.02, Mercury NZ Ltd (MCY) – $0.131, Monadelphous Group (MND) – $0.39, Netwealth Group (NWL) – $0.21, Newmont Corporation (NEM) – $0.264, Origin Energy (ORG) – $0.30, Pro Medicus (PME) – $0.30, Seek Ltd (SEK) – $0.22

• Thu 4 Sep: Acumentis Group (ACU) – $0.002, Adrad Holdings (AHL) – $0.021, Argo Global Listed Infrastructure (ALI) – $0.055, Atlas Pearls (ATP) – $0.014, Aussie Broadband (ABB) – $0.024, Beacon Lighting Group (BLX) – $0.039, Big River Industries (BRI) – $0.02, Clinuvel Pharmaceuticals (CUV) – $0.05, Coles Group (COL) – $0.32, Eagers Automotive (APE) – $0.24, Generation Development Group (GDG) – $0.01, Globe International (GLB) – $0.10, Ironbark Capital (IBC) – $0.013, Karoon Energy (KAR) – $0.024, Laserbond (LBL) – $0.008, Meridian Energy (MEZ) – $0.128, Microequities Asset Management Group (MAM) – $0.02, Schaffer Corporation (SFC) – $0.45, Servcorp (SRV) – $0.14, Sky Network Television (SKT) – $0.122, Symal Group (SYL) – $0.059, TPG Telecom (TPG) – $0.09, Viva Energy Group (VEA) – $0.028, Vitura Health (VIT) – $0.002, Wotso (WOT) – $0.013

• Fri 5 Sep: Adrad Holdings (AHL) – $0.021, Argo Global Infrastructure (ALI) – $0.055, Aussie Broadband (ABB) – $0.024, Coles Group (COL) – $0.32, Microequities Asset Mgmt (MAM) – $0.02, Objective Corp (OCL) – $0.13, Pacific Current Group (PAC) – $0.28, Peet (PPC) – $0.05, Vitura Health (VIT) – $0.002, Viva Energy (VEA) – $0.028

Other ASX corporate actions today: 

• Dividends paid: Bravura Solutions (BVS)

• Earnings: None

• IPOs: None

• AGMs: None

Economic calendar (AEST):

• 9:00 am: Australia Ai Group Industry Index (Aug)

• 11:30 am: Australia Q2 GDP Growth

• 12:00 am: US JOLTs Job Openings (Jul)