Morning Wrap: ASX 200 to fall, Nasdaq inches into record territory, Block to join S&P 500

ASX 200 futures are down 49pts (-0.56%) as of 8:30 am AEST.

 In a nutshell:

• Major US benchmarks finished relatively flat/slightly lower

• Relatively uneventful session, with a handful of better-than-expected earnings from names like Netflix, American Express and 3M (but shares struggled for upside)

• Block set to join the S&P 500, Trump sues News Corp

Let's dive in.

S&P 500 SESSION CHART

S&P 500 flat amid choppy trade (Source: TradingView)

OVERNIGHT MARKETS

• Major US benchmarks finished mostly lower, in a relatively rangebound and uneventful session

• Today’s big story – Trump escalated demands in EU trade talks, pushing for a 15-20% minimum tariff and rejected 25% sectoral duties on EU autos, Fed’s Waller continued to make the case for a July rate cut, while several high-profile earnings failed to drive upside

• US weekly recap – Nasdaq (+1.51%), S&P 500 (+0.59%), Russell 2000 (+0.23%) and Dow (-0.07%)

• Markets now pricing a flatter rate path, down to 42 bps of cuts by year-end vs. 50 bps a week ago, largely driven by strong retail sales data

• Investors flocking to high-dividend stocks, with ETF inflows reaching $17.5bn amid expected rate cuts (BBG)

• Magnificent 7 stocks diverge as AI impact, valuations scrutinised in Q2 results (WSJ)

• Strong corporate earnings powered by consumers, but market punishing disappointments by most in nearly three years (BBG)

• Foreign holdings of Treasuries hit record high in May, China's holdings fall to Feb-2009 lows (RT)

STOCKS

• Netflix exceeds earnings expectations, raises revenue forecasts amid subscriber growth but analysts say "the shares need a breather" (BBG)

• Nvidia warns Chinese customers of limited supplies for H20 AI chip (RT)

• Astronomer CEO resigns after being caught on kiss cam with head of HR at Coldplay concert (CNBC)

• Amazon is cutting jobs in its cloud division, AWS, to manage rising AI costs and optimise resources (BBG)

• Lululemon faces slowing sales, fewer store visitors and waning demand for its iconic black leggings, raising concerns about earnings trajectory (BBG)

• Burberry's sales fell a better-than-feared 1% with strong growth in the Americas (BBG)

CENTRAL BANKS

• Fed Governor Waller said he believes it makes sense to cut by 25 bp July, also argued July offers optionality, saying Fed could hold policy for one or two more meetings after July if data remain steady (FED)

• ECB likely to hold rates at 2.0% and delaying response to potential US tariffs until they materialise (BBG)

TARIFFS & GEOPOLITICS

• Trump courts Beijing and dials back most aggressive measures as China hawks lose influence (NY Times)

• China's rare earth magnet exports to US surge in June after trade deal, seeing 660% month-on-month jump (RT)

• EU to prepare retaliation plan as US trade stance hardens(BBG)

• Bangladesh secures US wheat deal, hoping for tariff relief amid trade tensions (RT)

• China says seeks stable trade ties with the US, urging responsible actions amid tariff negotiations (RT)

• Japan and EU to discuss rare earths partnership in bid to reduce reliance on China (NK)

• Indonesia negotiating details of its trade deal with the US, seeking exemptions for palm oil and nickel exports (RT)

ECONOMY

• US consumer sentiment hits highest level in five months but still 16% below Dec-24 levels, year-ahead inflation expectations down for a second straight month to 4.4% (BBG)

• Japan June CPI eases to 3.3% vs. 3.7% in the previous month but core inflation climbed to 3.4%, the fastest pace since Jan-24 (BBG)

• China injects most short-term cash last week since January to provide ample support to the economy (BBG)

ASX TODAY

Check out our Live Blog for the latest coverage and analysis for company announcements, market movements and economic updates.

• Block set to join S&P 500, effective prior to the open of trading on Wednesday, 23 July, NYSE-listed shares surge 8.5% after hours (XYZ)

• Euroz Hartleys shareholders approve capital return of $23m (14 cps vs. $1.05 last close), ex-dividend date of 5-Aug (EZL)

• Newscorp faces Trump lawsuit, seeking $10bn after WSJ publishes alleged Epstein letter (NWS)

• Nine's largest shareholder, Bruce Gordon, considering options, including full takeover bid (The Aus)

• Regis Resources reports Q4 gold production of 87.4kt, guides to FY26 gold production of 350-380koz (RRL)

• Yancoal buys additional 3.75% stake in Moolarben JV for $110.5m cash (YAL)

WHAT TO WATCH TODAY

• Lithium: The lithium sector continues to run hot, with Pilbara Minerals (+8.5%) rallying to highest level since 1-Apr last Friday, VanEck Rare Earth/Strategic Metals ETF (+3.1%) hit a 13-month high overnight. A key catalyst for the sector is Chinese lithium carbonate futures, which open at 11:00 am AEST.

• Pullback dynamics: Some slight softness overnight but S&P/ASX 200 futures imply a sizeable 49pt (-0.56%) pullback. Let's see how the market holds up after ripping 2.2% higher last Thu-Fri.

• Block, Newscorp: Block's S&P 500 inclusion announcement came out after US market closed on Friday. The stock is set to surge in today's session. Trump is also suing Newscorp for US$10bn vs. US$17.7bn market cap (probably just a shock-value amount, nothing serious right?).

BROKER MOVES

• BHP downgraded to Neutral from Outperform; target of $41 (MQG)

• Eagers Automotive downgraded to Sell from Neutral but target up to $16.50 from $14.80 (UBS)

• James Hardie downgraded to Neutral from Overweight; target cut to $42.60 from $44.00 (JHX)

Stocks trading ex-dividend: 

• Mon 21 Jul: None

• Tue 22 Jul: Finbar Group (FRI) – $0.02

• Wed 23 Jul: None

• Thu 24 Jul: None

• Fri 25 Jul: None

Other ASX corporate actions today: 

• Dividends paid: Charter Hall Social Infrastructure REIT (CQE), Ricegrowers (SGLLV)

• Earnings: None

• IPOs: None

• AGMs: None

Economic calendar (AEST):

No major economic announcements.