Morning Wrap: ASX 200 to fall, S&P 500 and Nasdaq higher as chip stocks lead AI rebound

In a nutshell:

• Chipmakers led a tech rebound that lifted the Nasdaq and S&P 500, though most S&P 500 stocks fell and the Dow finished slightly lower

• Treasuries sold off as haven demand faded, with traders rebuilding bets on Fed hikes into next year ahead of next week's FOMC

• European stocks slid after violent French protests, while Brent held near US$110 as Houthi-Saudi hostilities kept Gulf supply fears elevated

Let's dive in.

• Major US benchmarks mostly higher, finished off best levels as an early chip-led surge faded through the afternoon

• Chip stocks led the rebound from the Nasdaq 100's worst week since the April 2025 tariff turmoil, with the Philadelphia Semiconductor Index (+1.6%) snapping an eight-day losing streak, its longest in 18 years

• Chipmakers led by Micron (+2.9%) and Intel (+2.4%) added nearly $250bn in market value even as roughly 70% of S&P 500 stocks fell

• Treasuries fell as the tech rebound sapped haven demand, lifting yields six to eight basis points as traders rebuilt bets on Fed hikes next year while still pricing a December increase (BBG)

• AI financing jitters lingered, with CoreWeave reversing early gains to close 0.4% lower despite a Goldman Sachs upgrade to buy, while its credit default swaps sit at distress levels after last week's 25% plunge (CNBC)

• European stocks fell more than 1% after violent weekend protests that could force governments to lift spending, with French bond yields climbing much faster than German Bunds (AP)

• Brent crude swung between US$107-110 a barrel before settling near US$109, as uncertainty over when the Iran war will allow energy flows to normalise kept prices volatile (AP)

• Goldman Sachs' Ben Snider kept his 8,000 year-end S&P 500 target and sees the index reaching 8,700 by end-2027, modelling 36% earnings growth this year (YF)

• The Q3 earnings bar is high, with analysts forecasting 29% year-on-year profit growth for S&P 500 companies, per FactSet, as Meta, Tesla and Netflix report this week (AP)

• Amazon jumped 5% after Morgan Stanley named it a top pick and raised its price target to $350 from $335, citing five upcoming catalysts (CNBC) 

• Meta price target lifted to $820 from $775 at Morgan Stanley, which reiterated its overweight rating ahead of Wednesday's Q3 result (CNBC)

• Apple reiterated at buy by Bank of America, which said global average ship times for the iPhone Duo have stretched to 82 days (CNBC)

• SpaceX rose 1.3% after Elon Musk pledged to give one SpaceX share to every kid in America next year (AP)

• Iran’s Kharg Island oil terminals have sat empty since late August, with crude exports falling from almost 1 million barrels a day in July to nothing as the US blockade bites (BBG) 

• Zelenskyy accused Trump of pressuring Ukraine to surrender to Russia, while offering a new proposal on Trump's demand that Kyiv stop striking Russian refineries (BBG)

• Putin proposed a summit with Trump and Xi Jinping next month to discuss ending the war in Ukraine, the Wall Street Journal reported (BBG)

• France saw one of its worst bouts of protest violence in years over the weekend, sending French equities to lead losses across Europe (YF)

• Trump's steel tariffs are curbing US imports and lifting prices, helping Cleveland-Cliffs post a Q3 profit that topped estimates and sending its shares sharply higher (BBG)

• Copper traders are growing wary of the bull market with no sign of US tariffs on the metal, after US imports helped drive LME prices to a record near $15,000 a tonne last month (BBG)

• BofA economists kept their call for a Fed rate hike next week, arguing inflation has worsened since September, even as 85% of the market expects a hold (YF)

• China's Q3 GDP grew 4.5% year-on-year, ahead of 4.4% estimates and up from a three-year low of 4.3%, as tech exports offset a deepening property slump (CNBC)

• China's September retail sales rose 1.1% year-on-year, beating forecasts for 0.6% (CNBC)

• China's September industrial output grew 5.5% year-on-year, in line with forecasts (CNBC)

• China's fixed asset investment fell 7.2% year-on-year in January to September, while the urban unemployment rate held at 5.2% (CNBC)

• US homes falling out of contract hit 14.5% in September, the highest share on record outside the early pandemic months, per Redfin data (YF)

• Bellevue Gold produces 35.6koz in the September quarter, down from 41.6koz, with AISC rising to $3,096/oz after the new mining contractor ramped up slower than planned. Deferred ounces will be recovered later and FY27 guidance of 150-170koz is unchanged. Hedge book cut to 57.5koz (BGL)

• BHP holds FY27 guidance across all commodities despite Q1 copper output falling 19% to 400.7kt on lower feed grades, planned maintenance and severe weather in Chile. Iron ore of 66.5Mt was up 4% on pcp, with WAIO lifting 4%. Jansen potash on track for mid-CY27 (BHP)

• Gentrack wins a contract with Momentum Energy to move its 200,000-plus Australian residential and business meter points onto the g2 billing platform, following a competitive evaluation. No contract value or revenue timing was disclosed (GTK)

• HUB24 reports Q1 platform net inflows of $4.0bn, down 23% on pcp, with total FUA of $168.6bn up 15%. Platform FUA rose 18% to $143.7bn. Signed 45 new licensee agreements and added 211 advisers over the quarter (HUB)

• Judo Capital reaffirms FY27 profit before tax guidance of $210-220m, with gross loans at $15.1bn and NIM tracking to plan. Impaired and 90-day past due loans rose to 3.16% from 2.90% at June, still below its through-the-cycle assumption. AAA pipeline of $1.9bn reflects SME caution (JDO)

• Regis Resources produces 83.0koz at an AISC of $3,617/oz, in line with expectations, and maintains FY27 guidance on a stronger second half. Cash and bullion rose to $1.28bn, including a $51m Vault Minerals break fee. The Federal Court ruled the McPhillamys Section 10 Declaration invalid (RRL)

• Not a whole lot. Not the most inspiring overnight lead, where tech/semis bounced but finished off best levels (e.g. Nasdaq up 1.11% vs. session highs of 1.81%). Breadth was weak, with the Equal-weight S&P 500 (-0.32%) underperforming the cap-weighted index by 73 bps, and the Dow finished fractionally lower. Our overnight ETF watchlist traded mostly lower, Rare Earth/Strategic Metals (-1.6%) hit a fresh 14-month low and now down 51% since 11-May, Gold Miners (-1.4%) softened as gold reversed a small intraday gain to finish 0.59% lower, most other resource-related ETFs fell around 0.5–1.0% lower.

• Coal anyone? A few interesting data points to consider for the unloved sector – i) Chinese coal production fell 6.8% year-on-year to 385Mt in September, extending a run of annual declines that began in April, ii) recent coal deals (AngloCoal, Kestrel and Malabar) imply coal prices of US$300-500 a tonne, well-above where coal prices trade today and iii) coal has underperformed oil and LNG. The Chinese coal data on Monday was the likely driver behind a broad rally across names like Whitehaven, New Hope and Yancoal, all of which rallied around 5%.

Key events 

Stocks trading ex-dividend:

• Tue 20 Oct: Clover Corporation (CLV) – $0.013, GQG Partners (GQG) – $0.033, Kingsgate Consolidated (KCN) – $0.10

• Wed 21 Oct: None

• Thu 22 Oct: N1 Holdings (N1H) – $0.004

• Fri 23 Oct: None

Other ASX corporate actions today:       

• Dividends paid: Verbrec (VBC), Viva Leisure (VVA)

• Earnings: None

• IPOs: None

• AGMs: Bendigo Bank (BEN), Codan (CDA), Meridian Energy (MEZ), Region Group (RGN)

Economic calendar (AEDT):

• 122:15 pm: China Loan Prime Rate

• 5:00 pm: UK Unemployment

• 11:30 pm: US Building Permits, Housing Starts