Morning Wrap: ASX 200 to fall, Dow closes at all-time high, Gold at record levels

ASX 200 futures are trading 27 points lower, down 0.32%, as of 8:30 am AEDT.

Major US benchmarks finished mixed overnight, Magnificent 7 stocks ticked higher on bumper TSMC results (where management noted "insane" AI-demand), Chinese stocks tumble as stimulus efforts continue to miss expectations, the European Central Bank cut rates for a third straight meeting and gold scores a second consecutive all-time high.

Let's dive in.

S&P 500 SESSION CHART

S&P 500 faded early strength to close around breakeven (Source: TradingView)

OVERNIGHT MARKETS

• Major US benchmarks finished mixed, with the S&P 500 and Nasdaq fading early strength to close near worst levels

• Today’s big story – Magnificent 7 stocks continued to trend higher following bumper TSMC earnings and guidance

• A number of moving pieces were in play – Latest batch of earnings and solid economic data offered support to soft-landing narrative, reopening of buyback window and seasonality tailwinds, though backup in yields, US dollar strength and China stimulus scepticism widely cited as overhangs 

• China announces fresh measures to boost lending for stalled property projects to $560bn yuan (BBG)

• Chinese stocks slump into a correction as stimulus hopes wane after press conference comes in short (BBG)

• Despite Mideast tensions, oil traders are still decidedly bearish on 2025 oil outlook (BBG)

• Iron ore tumbles to a three-week low as sentiment on China demand worsens (BBG)

STOCKS

• TSMC rallies 9.7% on Q3 revenue and earnings beat, net income up 54.2% to NT$325.3bn, Q4 guidance well-above consensus, noted AI-related demand as “insane” and just the beginning (BBG)

• PPG Industries to lay off 1,800 employees amid efforts to cut costs (AP)

• Meta reveals it laid off some staff at WhatsApp and Instagram in effort to align with 'strategic goals' (AP)

• Uber explores bid for Expedia, though still in very early stages and no current discussions underway (FT)

• Nestle cuts sales and profit outlook as new CEO grapples with weak consumer demand (BBG)

CENTRAL BANKS

• ECB cuts rates for third time to prop up weakening economy (BBG)

• Money markets are implying 20% chance of 50 bp cut at the December ECB meeting (BBG)

• Denmark cuts rates by 25 bps in line with ECB rate decision (BBG)

• Goldman Sachs expects series of consecutive 25bp Fed rate cuts from November 2024 through June 2025 (RT)

POLITICS & GEOPOLITICS

• Israel announces death of Hamas leader, Netanyahu says war will go on (RT)

• US lawmakers press Biden administration to block Huawei suppliers from purchasing US chipmaking equipment (BBG)

ECONOMY

• US September retail sales up 0.4% month-on-month vs. 0.3% consensus, on lower gasoline prices and strong spend across retail, healthcare and food (RT)

• Japan exports fall for first time in 10 months amid drop in autos, China-bound shipments (RT)

• Swiss watch exports down sharply in September as China demand deteriorates (BBG)

• Australia September unemployment rate unchanged at 4.1% vs. 4.2% consensus, employment rose 64,100, more than double estimates (BBG)

ASX TODAY

• APA major shareholder UniSuper launches $500m block sale or 5.3% of the company, shares offered to fund managers at $7.23-7.43 (AFR)

• Bank of Queensland under investigation for charging fees to dead customers (AFR)

• Flight Centre says trading marginally above 1Q24 across most key metrics, too early to draw conclusions but 1Q25 growth adversely impacted by airfare deflation and downtrading in some large accounts (FLT)

• Star Entertainment confirms NICC issued fine of $15m for series breaches of four internal control manuals and proposing to amend suspended casino licence to include more requirements around board constitution and key management personnel (SGR)

• Yancoal reports Q3 coal production up 24% to 10.2Mt and $1.98 billion cash balance (vs. $8bn market cap), reaffirms FY guidance (YAL)

WHAT TO WATCH TODAY

Not a whole lot going on – Uranium ETF ticked 1.2% higher overnight after rallying 7.0% in the previous session. So it will be interesting to see if the sector can hold those gains (uranium is notoriously choppy). Gold is running hot and up 3.2% over the last six sessions. Gold miners have the tendency to underperform the underlying commodity but recently (and finally) finding some upside. Big movers yesterday include AMP rallied 17.7% on Thursday after announcing massive inflows, while OFX crashed 35% on disappointing trading update. Flight Centre's trading update appears to be a net negative, so will be interesting to see how that trades.

BROKER MOVES

• Challenger initiated Buy with $8.25 target (BP)

• Lynas downgraded to Hold from Buy; target cut to $8 from $8.30 (BP)

• Perpetual upgraded to Overweight from Neutral; target up to $23.50 from $22 (JPM)

• Webjet Group initiated Overweight with $1.20 target (JPM)

Stocks trading ex-dividend: 

• Fri 18 Oct: None

• Mon 21 Oct: Clover Corp (CLV) – 1.29%, Plato Income Maximiser (PL8) – 0.44%, Sandon Capital (SNC) – 3.25%, WAM Capital (WAM) – 4.81%

• Tue 22 Oct: None

• Wed 23 Oct: None

• Thu 24 Oct: None

• Fri 25 Oct: Bank of Queensland (BOQ) – 2.43%

Other ASX corporate actions today: 

• Dividends paid: ARB Corp (ARB)

• Earnings: Santos (STO)

• Listing: None

• AGMs: None

Economic calendar (AEDT):

• 9:30 am: Japan Inflation Rate (Sep)

• 12:00 pm: China GDP Growth (Q3)

• 12:00 pm: China Industrial Production, Retail Sales and Fixed Asset Investment (Sep)

• 4:00 pm: UK Retail Sales (Sep)

• 10:30 pm: US Building Permits (Sep)