Morning Wrap: ASX 200 to fall, global politics dominates overnight news cycle, BofA's 'big' investment calls for 2025

ASX 200 futures trading up 6 points, or (+0.07%), to 8,203, as of 8:30AM

Hi there, Hans here! I'll be taking care of the last two weeks of Morning Wraps for 2024.

It was a wild night for overseas news - and in particular, political news. The French government is on the brink of collapse, the South Korean President declared martial law ... before the National Assembly voted to lift it six hours later, and China has banned the sale of four key chipmaking metals to the US. And how did markets react to all this? Well, unless you play in French or South Korean assets, they either mostly shrugged or bought into safe haven assets like US bonds and the Japanese Yen.

Let's dive in.

S&P 500 SESSION CHART

A choppy session ends in the S&P 500 recording a flat trading session. (Source: TradingView)

OVERNIGHT MARKETS

• US equities were mixed in fairly quiet, rangebound Tuesday trading.

  • Nasdaq set a fresh record high, while S&P 500 edged out a gain to build on yesterday's record close.

• Tesla was the Mag7 laggard, falling 2.2% after Elon Musk's US$86 billion pay day proposal was voted down by a judge... again (Bloomberg)

• Treasuries, yen rally in safe haven bid, South Korean assets sell off after martial law declaration

• US dollar rises on strong US manufacturing data as euro falters amid French political turmoil (Reuters)

• Chinese Yuan drops to one-year low amid concerns about weak economy, higher tariffs

STOCKS

• Meta's Zuckerberg says he wants to play active role in shaping tech policy debate with Trump administration (FT)

• Intel looking outside for a new CEO, considering Marvell's Murphy (Bloomberg)

• Chinese industry association issues warning that US chips are "no longer safe" (Reuters)

• Gallium, germanium, antimony and superhard materials are no longer allowed to be shipped to America, says the Chinese Ministry of Commerce (Bloomberg)

POLITICS & GEOPOLITICS

• South Korean President Yoon says he will lift martial law after parliament votes to reject the declaration (ABC)

• Israeli military says Lebanon will be held responsible if ceasefire collapses (FT)

• French coalition government likely to fall after just three months in Wednesday's no confidence vote, EUR-USD cross-rate falls below 1.05 level (FT, FXStreet)

ECONOMY

• Global debt surged by over $12 trillion in first three quarters of 2024 to fresh record of nearly $323 trillion (Reuters)

• Thanksgiving-weekend shoppers down 1.7% y/y, though in-person shoppers up 3.8% y/y (Bloomberg)

• US job openings for the month of October beat expectations, rebounding off September's 42-month low. Quits rate up 0.2pp to 2.1%, reaching the highest levels since May 2024.

POINTS OF INTEREST

• Coffee (arabica) prices hit a 47-year high this week and Citi analysts suggest Breville Group (ASX: BRG) may be the way to play the trade:

  • “The price of coffee at cafes around the world is at risk of rising from here, which could be positive for Breville as consumers may be more inclined to start making coffee at home to save money,” said Citi analyst Sam Teeger.

• Reporting in The Australian Financial Review suggests that the founders of Pro Medicus (ASX: PME), Sam Hupert and Anthony Hall, were approached to sell more than $500 million worth of shares by a range of institutional investors. Pro Medicus shares are up 200% this year alone. (AFR)

• BofA is out with its 2025 investment outlook and the big message is to become a contrarian.

  • “We forecast 2025 outperformance of Bonds, International stocks, Gold relative to US exceptionalism consensus,” Michael Hartnett, BofA"s Chief Investment Strategist said in a note.

  • Hartnett and his team say investors should be watching out a lot more closely and hedging against tail risks like Trump's "America First" agenda and a second inflationary wave. But no tail risk is arguably more important than the bubble in the Magnificent 7 Stocks:

  • “We believe a AI/Magnificent 7 ‘bubble’ [is the] most obvious ‘tail’ ... We believe long crypto and China stocks (distressed value/tech-exposure) best plays in a Magnificent 7 bubble.”

BROKER MOVES

• Fenix Resources initiated buy at Bell Potter, price target of $0.41 implying 41% upside

• ALS initiated buy at Bell Potter, price target of $17.30 implying 10% upside

Stocks trading ex-dividend: 

• Wed 4 Dec: Qualitas Real Estate Income Fund (QRI) - 0.69%, various NAB and BEN bank bonds

• Thu 5 Dec: 1.20%, Fisher & Paykel Healthcare (FPH) – 0.49%, Hancock & Gore (HNG) – 3.47%

• Fri 6 Dec: Indiana Resources (IDA) – 45.45%

Other ASX corporate actions today: 

• Dividends paid: None

• Listing: None

Economic calendar (AEDT):

• 11:30am: Australia Q3 GDP (consensus forecast is +0.5%)

• Overnight: US ADP Employment Report, ECB President Christine Lagarde speaks