Morning Wrap: ASX 200 to fall, S&P 500 and Dow mark best week this year, China stimulus disappoints

Major US benchmarks finished higher but off best levels as the S&P 500 and Nasdaq hit yet another fresh all-time high, Chinese stocks and commodity prices dipped as details on a US$1.4 trillion debt swap fell short of market expectations and Resolute Mining executives have been detained in Mali amid growing tensions over mining revenue.

Let's dive in.

S&P 500 SESSION CHART

S&P 500 higher but off best levels (Source: TradingView)

OVERNIGHT MARKETS

• Major US benchmarks finished higher, off best levels, with the S&P 500 and Nasdaq setting another fresh all-time high

• US weekly recap – Russell 2000 (+8.57%), Nasdaq (+5.74%), S&P 500 (+4.66%), Dow Jones (+4.61%)

• Today’s big story – China provided details around a US$1.4tn local government debt swap program, which was perceived as emphasis on stabilisation rather than stimulus

• Market’s path of least resistance remains higher, underpinned by the unwinding of election-related hedges, VIX retreat, favourable seasonality, return on corporate buybacks, deregulation and tax cut expectations 

• Trump trade more complicated than 2016 given higher inflation, deficits, rates and valuations (BBG)

• Strategists see rising risk of higher yields, fewer Fed rate cuts (BBG)

• Bitcoin hits record US$80,000 (BBG)

• Bumper US$20bn flowed into US equity funds on 7-Nov; US small-cap funds noted biggest daily additions since March (BBG)

• Chinese stocks, yuan declined after stimulus to support local government debt, signalling investors not impressed (BBG)

STOCKS

• Airbnb narrowly beat Q3 sales estimates, profit fell short as it spent heavily on marketing (RT)

• Boeing to repay furloughed staff, but it would proceed with plans to cut about 10% of its global workforce (RT)

• TSMC to suspend production for some Chinese AI chip customers to ensure compliance with US export controls (FT)

• Sony raises guidance on gaming strength, Q3 operating profit beats estimates (RT)

• Rivian on track to turn Q4 gross profit helped by cost cuts, sharp sales increase of green car credits (RT)

CENTRAL BANKS

• Fed cuts rates by 25 bp, Powell says he won't resign (BBG)

• Kashkari says strong economy, higher productivity could see fewer cuts (BBG)

• ECB's Holzmann says Dec cut a possibility but not guaranteed (BBG)

POLITICS & GEOPOLITICS

• Trump expected to move quickly and "ruthlessly" in threats to implement steep tariffs as soon as he takes office (FT)

• Putin congratulates Trump, says his desire to end Ukraine conflict deserves attention but must acknowledge realities on ground (FT)

• Trump plans to drastically increase sanctions on Iran and throttle oil sales in bid to weaken its support for of Middle East proxies (WSJ)

• EU officials spent a week in Beijing for intensive discussions and tout progress on negotiations to avoid EV tariffs (BBG)

ECONOMY

• US November consumer sentiment hits six month high, index of consumer expectations reaches highest since Jul-21 (RT)

• China CPI rises at slowest pace in four months despite ramp in stimulus (RT)

ASX TODAY

• AUB Chairman Peter Harmer discloses purchase of 4,900 shares (AUB)

• Genesis Capital to increase its offer for Pacific Smiles to $1.9825 per share, inclusive of October dividend (AFR)

• Incitec Pivot to relaunch fertiliser business sale process (The Aus)

• PointsBet could be subject to takeover bid worth over $300m from overseas suitor (The Aus)

• Resolute Mining CEO and executives detained in Mali amid tension over mining revenue from industry (BBG)

• Transurban facing pressure from NSW Government as it seeks to renegotiate toll road contracts (AFR)

• Woodside Energy in talks with suitors about a potential stake in its Driftwood and Scarborough Projects (The Aus)

WHAT TO WATCH TODAY

• Materials – Materials was the worst performing S&P 500 sector on Friday and US-listed names like BHP and Rio Tinto fell 4.4% and 4.5% respectively. China provided some widely anticipated policy details, where the 10 trillion yuan (US$1.4tn) local debt package underwhelmed. The measures were largely seen as stabilising rather than boosting growth. This will likely pressure local resource stocks, particularly iron ore and copper miners.

• Block – Dipped 6% last Friday but its NYSE-listed shares finished down just 0.9% (from session lows of -8.2%). Analyst reaction to its Q3 earnings varied widely from slight disappointment (slight QoQ deceleration in GPV) to optimism (improving profit growth and margins). 

BROKER MOVES

• Platinum Asset Management downgraded to Underweight from Neutral; however target up to $1.10 from $1.05 (JPM)

Stocks trading ex-dividend: 

• Mon 11 Nov: Champion Iron (CIA) – 1.76%, Macquarie Group (MQG) – 1.14%, Naos Ex-50 Opportunities Company (NAC) – 3.06%, Naos Small Cap Opportunities Company (NSC) – 2.60%

• Tue 12 Nov: GQG Partners (GQG) – 1.37%, National Australia Bank (NAB) – 2.14%, Global Data Centre Group (GDC) – 29.17%

• Wed 13 Nov: None

• Thu 14 Nov: Plato Income Maximiser (PL8) – 0.44%

• Fri 15 Nov: None

Other ASX corporate actions today: 

• Dividends paid: Imperial Pacific (IPC), London City Equities (LCE)

• Listing: None

• Earnings: Incitec Pivot (IPL)

• AGMs: None

Economic calendar (AEDT):

• No major economic announcements