Morning Wrap: ASX 200 to fall, S&P 500 and Nasdaq give back gains + Transurban, Mirvac earnings

Major US benchmarks opened higher but sold off into market close, copper prices hit a fresh 5-month low on growth concerns, oil prices soar on bullish demand and geopolitical tensions, Airbnb flags weakening US demand and August reporting season ramps up with results from AMP, Transurban and Mirvac.

Let's dive in.

S&P 500 SESSION CHART

S&P 500 gives back all of its early gains to finish at worst levels (Source: TradingView)

OVERNIGHT MARKETS

• Major US benchmarks gave back early gains to finish lower and near worst levels

• Price action was bearish – S&P 500 down -0.77% from session highs of 1.73%

• Market failed to carry over momentum from Turnaround Tuesday, notable drivers of weakness include earnings disappointments (Airbnb, Super Micro Computing, Novo Nordisk) and continued talk about systematic fund selling 

• Big Tech was mixed, with Tesla (-4.4%) and Nvidia (-5.1%) the notable decliners

• Copper prices hit a fresh 5-month low as growth concerns linger

• Fund managers bought Monday's dip as retail investors fled (Bloomberg)

• VIX spike has traders bracing for more summer volatility (FT)

• Bond traders dialing back forecasts for aggressive Fed rate cuts (Bloomberg)

• Corporate issuance tops US$1tn for 2024 as firms take advantage of lower yields before US election (Bloomberg)

• European gas prices soar to YTD highs, Ukraine seize major gas-transit point (Bloomberg)

• US crude stockpiles fall by more than expected in a bullish demand sign (Reuters)

STOCKS

• Airbnb shares dive 13% as management warns of slowing US demand (CNBC)

• Super Micro shares dip 20% as fiscal Q4 EPS missed consensus by more than 20% on softer-than-expected margins  (Bloomberg)

• Novo Nordisk shares down 8% on Q2 sales miss on obesity drug sales as bottlenecks start to hit but CEO says the miss was just a 'blip' (Bloomberg)

• Disney beats fiscal Q3 EPS and raises FY24 earnings growth to 30% from prior 25%, flags softness in theme park sales due to pressure on low-income consumers (Reuters)

• Tesla recalling more than 1.6m vehicles in China for a remote software fix (AP)

CENTRAL BANKS

• BOJ Deputy Governor Uchida downplays prospects of another rate hike amid financial instability (Bloomberg)

• Majority of economists still expect BOJ to hike rates again by year-end (Bloomberg)

• PBoC pulls back its daily support for the yuan (Bloomberg)

POLITICS & GEOPOLITICS

• Polls say Harris is up 3 points over Trump (The Hill)

• Iran looking to hurt Israel while stopping short of starting regional war (Bloomberg)

• Ukraine pierces border with Russia near key gas transmission hub (Reuters)

ECONOMY

• US recession fears may be overstated but shakier data readings suggest they are not unfounded (NY Times)

• China export growth unexpectedly falls as US slowdown weighs (Bloomberg)

• German industrial output beats estimates in June (Bloomberg)

• South Korea reports biggest current account surplus in almost seven years (Korea Times)

ASX TODAY

• Guzman y Gomez holder Pinnacle Investment Management increases holding to 12.52% from 10.43% (GYG)

• Light & Wonder reports Q2 AEBITDA of $330m vs. $308m consensus (LNW)

• Ramelius continues to evaluate Spartan Resources, management say the stake acquired in June was to give Ramelius a ‘seat at the table’ (The Aus)

• Red 5 investor seeking to sell $138m stake at 33.5 cents a piece (AFR)

 WHAT TO WATCH TODAY

The overnight price action was a reminder that volatility is here to stay. Market bottoms are not formed the day after a big drop but instead a process.

Our overnight ETF watchlist was mixed but pretty much all of them finished near session lows. Even the ones that managed to tick higher – E.g. Global X Uranium ETF up 0.54%, down from session highs of 4.2%. The poor momentum and selling into strength may be a theme to look out for on Thursday.

Corporate earnings are starting to pick up. Here are the main ones to watch out for today:

• AMP: Consensus is looking for first-half statutory net profit of $72m

• Light & Wonder: According to Zacks Investment Research, analysts expect EPS of $1.04 per share and $805.9m revenue

• Transurban: Macquarie (as of 16 July) is looking for $403m NPAT, EPS of 60 cents and a full-year dividend of 62 cents per share

• Mirvac: Macquarie (as of 28 July) expects NPAT of $31.2m, EPS of $2.00 and a full-year dividend of 10.5 cents per share

BROKER MOVES

• Amcor upgraded to Overweight from Neutral; target up to $16.35 from $14.80 (Jarden)

• Audinate upgraded to Outperform from Neutral; target cut to $10.50 from $14.40 (Macquarie)

• Brickworks downgraded to Neutral from Buy; target cut to $30 from $32.50 (UBS)

• Guzman Y Gomez initiated Overweight with $31.80 target (Morgan Stanley)

• REA Group upgraded to Buy from Hold; target up to $218 from $203 (Bell Potter)

• Spark NZ downgraded to Neutral from Overweight; target remains NZ$4.67 (Jarden)

Stocks trading ex-dividend: 

• Thu 8 Aug: None

• Fri 9 Aug: Djerriwarrh Investments (DJW) – $0.08, Aloca (AAI) – $0.107

• Mon 12 Aug: None

• Tue 13 Aug: None

• Wed 14 Aug: Australian Foundation Investment Co (AFI) – $0.145, Resmed (RMD) – $0.057

Other ASX corporate actions today: 

• Dividends paid: Arena REIT (ARF) – $0.0435

• Listing: None  

• Earnings: Transurban (TCL), Mirvac (MGR), AMP (AMP), Charter Hall Long Wale REIT (CLW)

• AGMs: None

Economic calendar (AEST):

• 11:30 am: Australia Business Confidence (Jul)