Morning Wrap: ASX 200 to fall, S&P 500 and Nasdaq eke out another record close, Newmont crushes earnings

ASX 200 futures are down 39pts (-0.45%) as of 8:30 am AEST.

In a nutshell:

• S&P 500 and Nasdaq recorded yet another all-time high, but breadth was negative

• Alphabet tops Q2 earnings expectations, but shares barely moved

• Newmont smashes Q2 earnings estimates, Bapcor faces sharp analyst downgrades

Let's dive in.

S&P 500 SESSION CHART

S&P 500 ekes out a small gain (Source: TradingView)

OVERNIGHT MARKETS

• Major US benchmarks finished mixed, but well-off best levels

• S&P 500 and Nasdaq set yet another all-time high, but breadth was negative and the Equal-weight S&P 500 finished 0.32% lower

• Today’s big story – Alphabet results reiterate AI secular growth theme, Google search volumes continued to grow, Youtube and Cloud revenues ahead but higher capex guidance sparked concerns 

• JPMorgan still see 'significant step higher' in US equities, fueled by trade deals, data, and M&A (BBG)

EARNINGS

• Deutsche Bank (+8.3%) books record Q2 profit of €1.48bn, topping analyst expectations, as litigation costs fall (FT)

• Nestle (+5.0%) delivers modest sales growth largely due to price hikes, launches strategic review of vitamins business (BBG)

• Alphabet (+0.8%) Q2 EPS beat, revenue ahead in Search, Youtube and Cloud, some focus on increased capex forecast by US$10bn to US$85bn for 2025 (BBG)

• Alaska Air (-5.6%) raises profit outlook for 2025 to over $3.25 per share, citing increased business travel demand (BBG)

• IBM (-7.6%) Q2 software sales underwhelm as group eyes acceleration of GenAI bookings (BBG)

• Tesla's (-8.2%) earnings miss signals reduced deliveries, lower average selling price and end of EV tax credit challenges (BBG)

• Southwest Airlines (-11.1%) reports Q2 revenue decline, forecasts mixed Q3 unit revenue amid economic uncertainty (BBG)

• Chipotle (-13.3%) lowers annual sales growth target and misses quarterly estimates (RT)

STOCKS

• Blackstone COO says dealmaking pause due to tariffs is now over (YF)

• AMD says TSMC chips produced in Arizona will cost company 5-20% more than those produced in Taiwan (BBG)

• BofA announces fresh $40bn buyback, replacing current $25bn program (BBG)

CENTRAL BANKS

• Trump to visit Fed on Friday as White House ramps up criticism of headquarter renovation costs (BBG)

• ECB expected to remain on hold after summer, markets see less than 25% chance of a 25 bp cut in September (RT)

• BOJ to hike in Oct or Jan-26 amid improving underlying inflation trends (BBG)

• RBA Governor Bullock notes labor market tightness, rate cuts to proceed in measured and gradual manner (BBG)

• RBNZ chief economist Conway says scope to cut rates further with tariffs exerting disinflationary drag (BBG)

TARIFFS & GEOPOLITICS

• Trump suggests new global baseline tariff will not be below 15% and could be as high as 50% (BBG)

• South Korea weighs creation of $100bn fund to invest in US as part of deal that involves lowered 15% tariff (BBG)

• Philippines aiming to reduce 19% tariff rate to 15%, details of trade deal need further discussions (BBG)

• Australian to remove restrictions on US beef as it looks to secure tariff relief (RT)

ECONOMY

• Eurozone composite PMI rose to 51 in July from 50.6 in June and above market expectations of 50.7, manufacturing recorded highest reading since July 2022 (BBG)

• UK economy shows stagnation signs as July's PMI drops to 51.0, driven by services decline (FT)

• South Korea Q2 GDP up 0.6% quarter-on-quarter vs. market estimates of 0.5%, signaling resilience even as trade tensions simmer and domestic financial risks deepen (BBG)

ASX TODAY

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

• CoStar receives FIRB approval for proposed acquisition of Domain (DHG)

• FleetPartners Group could be taken out by PE firms after recent share price firm, TPG or KKR noted as potential suitors (The Aus)

• Newmont reports Q2 EPS of $1.43 vs. $1.16 consensus, adjusted EBITDA of $3.0bn vs. $2.64bn consensus, produced 1.5m ounces of gold for the quarter, reaffirmed FY25 production and cost guidance (NEM)

• Rio Tinto reportedly weighing the sale of its titanium business (RT)

WHAT TO WATCH TODAY

• Bapcor: Shares crashed 28% on Thursday after preliminary FY25 earnings update flagged ~13% NPAT miss, $48-50m in significant items, restructuring disruptions and three Board resignations. The stock is facing steep target price cuts this morning, with Macquarie lowering its target by 35% to $3.80. It'll be interesting to see how it trades today.

• Newmont: Q2 EPS was 23% ahead of consensus, reaffirmed FY25 AISC guidance of US$1,630/oz and authorised an additional $3bn in buybacks. NYSE-listed shares up 3.9% after hours.

• Lithium: Chinese lithium carbonate futures spiked 7.2% on Thursday to 76,680 yuan a tonne as rumours said several lithium miners will halt production for about three months. The news helped Pilbara Minerals finish 3.5% higher on Thursday (reversing early declines of 5.1%), Chinese lithium names like Ganfeng rallied 8.0%. Overnight names like Albemarle and SQM finished 6.8% and 4.7% higher respectively.

BROKER MOVES

• Bapcor downgraded to Neutral from Outperform; target cut to $3.80 from $5.85 (MQG)

• Bell Potter downgraded to Hold from Buy but target up to $1.85 from $1.45 (BP)

• Fortescue downgraded to Underperform from Neutral but target up to $16 from $15 (MQG)

• Graincorp upgraded to Buy from Hold; target up to $8.45 from $7.85 (BP)

• Karoon Energy downgraded to Neutral from Outperform; target cut to $1.80 from $2.15 (MQG)

• Lynas upgraded to Neutral from Underweight; target up to $10.00 from $4.90 (JPM)

• Reece upgraded to Neutral from Sell but target lowered to $14.30 from $16.80 (GS)

• Strike Energy downgraded to Neutral from Buy; target cut to $0.16 from $0.25 (GS)

Stocks trading ex-dividend: 

• Fri 25 Jul: Alternative Investment Trust (AIQ) – $0.046

• Mon 28 Jul: AVJennings (AVJ) – $0.167, Spheria Emerging Companies (SEC) – $0.036

• Tue 29 Jul: None

• Wed 30 Jul: Mirrabooka Investments (MIR) – $0.065

• Thu 31 Jul: None

Other ASX corporate actions today: 

• Dividends paid: 360 Capital Group (TGP), 360 Capital REIT (TOT), ALS (ALQ), Steamships (SST)

• Earnings: None

• IPOs: None

• AGMs: None

Economic calendar (AEST):

• 4:00 pm: UK Retail Sales (Jun)

• 10:30 pm: US Durable Goods Orders (Jun)