Morning Wrap: ASX 200 to fall, chip rebound lifts S&P 500 and Nasdaq, copper and gold keep sliding

In a nutshell:

• Chipmakers led a tech rebound that lifted the S&P 500 and Nasdaq as Americans voted in the midterms, even as Apple and most S&P 500 members lagged

• Oil whipsawed as the US and Iran weighed fresh mediator proposals, although Tehran said it would not accept diplomacy based on coercion. Brent settled flat at US$104.5 a barrel, but whipsawed between US$107.2 and US$100.8

• Meta drew up to US$58bn of orders for a US$15bn US dollar bond sale, a fresh test of investor appetite for Big Tech's AI debt

Let's dive in.

• Major US benchmarks mostly higher in late trade, a chip rally tried to revive the AI trade and lifted the S&P 500 and Nasdaq

• Breadth was soft, with seven of the eleven sectors trading lower and the Equal-weight S&P 500 (-0.33%) underperformed the cap-weighted index by 69 bps

• Treasury yields briefly spiked after September job openings jumped to a four-month high, with the 10-year up 12 bps intraday to 5.03% before paring gains to finish 5 bps higher at 4.96%

• Chip stocks bounced from a fresh bear market, the Philadelphia Semiconductor Index having closed Monday about 22% below its 6 October high (YF)

• Goldman Sachs trader Bobby Molavi says 60% of the S&P 500 is in bear market territory, even with the index within about 3% of its record high (BBG)

• UBS says low hedge fund positioning and favourable seasonality could fuel a year-end S&P 500 squeeze once the midterm vote is out of the way (BBG)

• AllianceBernstein's Nelson Yu urges investors to diversify beyond AI after Monday's drop pushed the Nasdaq 100 into its third correction of the year (BBG)

• US-listed bitcoin ETFs lost more than $1bn over two sessions as the Binance hack and midterm uncertainty weighed on crypto sentiment (BBG)

• Traders are positioning for a Democratic sweep to tighten regulation of crypto and prediction markets, putting Trump-era digital finance winners at risk (BBG)

• AMD Q3 revenue up 45% to $13.4bn, ~2% ahead of ests, data centre up 97% to $8.55bn, adj. EPS $2.09 beat by ~7%. Q4 revenue guided to ~$17bn, ~5% above ests, as Helios rack shipments ramp. Shares up ~7% after hours

• Apple fell 1.9%, bucking the tech rebound, after a mixed outlook in its first quarterly report under CEO John Ternus (BBG)

• Meta set to raise $15bn from a five-part US dollar bond sale, drawing up to $58bn of orders, about 3.9 times the deal size, with a debut euro note to follow (BBG)

• Shopify Q3 revenue $3.74bn, ~0.3% below ests and its first miss since 2022. GMV of $119.15bn also short, adjusted EPS $0.49 beat, shares down 8.0% (YF)

• Palantir shares slipped 1.6% despite Q3 revenue and profit beating ests and a raised full-year revenue outlook, with US commercial sales topping US government revenue for the first time (YF)

• CrowdStrike to buy AI security startups Fiddler and Dreadnode for a combined $495m (YF)

• The US and Iran are reviewing fresh mediator proposals to avoid a return to all-out war, with Qatar expecting feedback from both sides within two days (BBG) 

• Iranians face inflation of almost 80% and a rial that has lost half its value against the US dollar this year, as the US naval blockade strangles trade and oil exports (BBG) 

• Trump says he agreed with Netanyahu to cut about $4bn in annual US military aid to Israel by year-end, although the current 10-year aid deal runs through 2028 (BBG)

• Iran's Foreign Ministry says Tehran will not accept diplomacy based on coercion, a day after Washington and Tehran both signalled openness to a settlement (CNBC)

• Americans voted in midterm elections with control of Congress at stake, Polymarket giving Democrats a 76% chance of winning both chambers as of Tuesday morning (YF)

• Trump says a US-Canada trade deal is coming very soon, adding that Canada would supply fertilizer to the US without tariffs as part of the agreement (YF)

• No major overnight headlines

• US job openings rose to 7.5m in September from a revised 7.2m and above ests, with the hiring rate edging up to 3.4% (YF)

• US petrol and diesel prices hit record Election Day highs, the national averages at $4.14 and $6.29 a gallon respectively, according to AAA (YF)

• City Chic Collective expects positive EBIT in 1H FY27 and a positive cash balance with no drawn debt, after August’s step down in promotional activity lifted group trading gross margin 240bps. Revenue ex-wholesale fell 1.7%, but ANZ comparable store sales rose 15.4% and full-price stores jumped 19.6% (CCX)

• Goodman Group targets FY27 operating EPS growth of 9% and a 30.0 cents distribution, with the total portfolio lifting to $90.0bn. Annual like-for-like NPI growth of 4.0% (6.2% ex Greater China) and occupancy of 95.5% as Chinese market rents continue to reset (GMG)

• Goodman Group holds development WIP at $19.7bn across 51 projects on an 8.3% yield on cost, with data centres 79% of the book but just 31% precommitted. Global power bank rises to 6.6 GW, 3.6 GW secured, and full-building hyperscale negotiations are advanced on several sites (GMG)

• RBA recap: The RBA voted 6-3 to hike 25 bps to 4.85%, citing a “materially higher” inflation outlook and an unemployment rate of 5%. The three dissenters softened the tightening bias, even as the statement closed by saying further tightening in financial conditions is warranted to return inflation to target.

• 3-year tanks, REITs surge: Markets took the decision well, with the Aussie 3-year down 7 bps to 4.78%, its lowest since 7-Sep. Yield-sensitive or consumer-facing stocks ripped, including Real Estate (+2.8%), Discretionary (+1.8%), Telcos (+1.7%) and Staples (+1.2%). JB Hi-Fi was up ~1.7% heading into the decision and closed 3.0% higher. Charter Hall was tracking around breakeven and also finished up 3.0%. You get the idea. It reinforces a rotation that’s been building for the past 2-3 weeks, where REITs and retailers have bottomed out of a sharp drawdown and started to turn, at the expense of miners and tech.

• More miner weakness: Base and precious metals faded Monday’s tentative bounce, with copper down 2.0% to US$6.47/lb (off session lows of -3.3%), aluminium down 1.7% to US$3,027/t and gold down 0.4% to US$3,927/oz. That kept the pressure on our resource-related overnight ETFs, most of which struggled to bounce on Monday anyway. The Global X Copper Miners ETF finished 1.5% higher from session highs of 3.5%, then fell another 1.5% overnight to its lowest since 30-Mar. For all the talk about supply-side constraints and a commodity supercycle, the price action is saying the opposite.

Stocks trading ex-dividend:

• Wed 4 Nov: Qualitas Real Estate Income Fund (QRI) – $0.011

• Thu 5 Nov: Future Generation Global (FGG) – $0.042

• Fri 6 Nov: New Murchison Gold (NMG) – $0.003

• Mon 9 Nov: Clime Capital (CAM) – $0.005, Future Generation Australia (FGX) – $0.038, NAOS Ex-50 Opportunities Company (NAC) – $0.016, NAOS Small Cap Opportunities Company (NSC) – $0.01

Other ASX corporate actions today:       

• Dividends paid: K&S Corp (KSC) 

• Earnings: None

• IPOs: None

• AGMs: Nanosonics (NAN)

Economic calendar (AEDT):

• 9:00 am: Australia Ai Group Industry Index

• 9:00 pm: Eurozone Inflation

• 2:00 am: US ISM Services PMI