Morning Wrap: ASX 200 to fall, S&P 500 and Nasdaq sharply lower on Middle East tensions

The local sharemarket is set to face a heavy session after Iran launched an unprecedented attack at Israel, the S&P 500 finished down for a second-straight week while the Nasdaq logged its fifth weekly decline in the past six weeks, gold briefly soars to another record high of US$2,431 before finishing the session lower and US earnings season takes off to a flying start.

Let's dive in.

S&P 500 SESSION CHART

S&P 500 lower, finished near worst levels (Source: TradingView)

MARKETS

• Major US benchmarks lower in Friday trading, finished near worst levels

• Dow and S&P 500 down for a second straight week, while Nasdaq down for a third

• Risk-off tone attributed to Iran’s major missile attack on Israel and worries that this will spark a wider regional war

• Risk-off atmosphere drove a spike in VIX and US dollar, a selloff in cryptocurrency markets and volatile price action for gold and oil – both finished off session highs 

• Global equity funds dumped for second consecutive week on hotter inflation worries and pushback against June Fed rate cut (Reuters)

• EPFR data shows US large cap stocks suffered largest weekly outflow since December 2022 (Reuters)

• Oil likely to rise after weekend's Iran strike but longer-term trends may depend on Israel's response (Bloomberg)

• US and UK launch crackdown on Russian metals trade and limit Moscow's export revenue (FT)

ASX TODAY

• ASX 200 set for a heavy session on Monday, broad-based weakness is to be expected

• Sub sectors that sold off heavily overnight include lithium/rare earths, biotech, airlines and fintech

• Ampol may be interested in EG Group’s Australian service stations (The Australian)

• Gold Road Resources weighing bid for Greenstone Gold Mines (The Australian)

• Incitec Pivot fertiliser deal catches political heat (AFR)

• News Corp plots major shake-up as Meta money ends, Google deal nears (AFR)

INTERNATIONAL STOCKS

• Apple's Mac line up being overhauled with a new M4 chips focused on AI (Bloomberg)

• US regulators probing Morgan Stanley's wealth management unit over money laundering prevention measures (FT)

• Big banks struggling to implement handful of AI products (Axios)

• Cathie Wood's Ark Investment Management discloses stake in OpenAI (Bloomberg)

EARNINGS

• Of the 6% of S&P 500 companies that have reported for Q1, 83% have beaten EPS expectations, better than the 77% five-year average of 77% and aggregate earnings have so far beaten expectations by 12.4%, above the five-year average of 8.5% 

• Wells Fargo (-0.4%) earnings top estimates even as lower interest income cuts into profits (CNBC)

• BlackRock (-2.9%) assets hit record US$10.5tn but inflows miss expectations (Reuters)

• JPMorgan (-6.5%) shares slip as outlook overshadows profit rise (FT)

CENTRAL BANKS

• Weak yen complicates BoJ rate hike timing (Reuters)

• ECB likely to enact hawkish cut in June but a strong deviation from Fed path unlikely (Bloomberg)

• Two BoE rate cuts now priced in following hotter US CPI data (London Times)

• BoK unchanged as expected, tweaks guidance for possible 2H24 rate cut (Bloomberg)

• Singapore central bank keeps policy unchanged amid elevated inflation (Bloomberg)

• PBoC expected to leave policy rate unchanged, drain some liquidity (Reuters)

GEOPOLITICS

• Iran launches 300+ drones and missiles at Israel (AP)

• Israel's defence relied on allied cooperation and multi-layered anti-missile systems (FT)

• Biden cautions Netanyahu, US will not participate in counter-offensive on Iran (CNN)

• US pressing countries such as China, Turkey and Saudi Arabia to convince Iran against striking Israel (FT)

ECONOMY

• US consumer sentiment slips, inflation expectations increase up to 3.1% in April from 2.9% last month (Reuters)

• China exports fall in March and miss consensus by big margins in setback to recovery (Bloomberg)

• German inflation eases in March, helped by falling energy and food prices (Reuters)

• UK GDP up 0.1% in February, rebounding from technical recession (Bloomberg)

• New Zealand manufacturing in longest stretch of contraction since 2009 (Bloomberg)

Companies trading ex-dividend: 

• Mon 15 April: WAM Active (WAA) – $0.03, Cadence Capital (CDM) – $0.03, SDI (SDI) – $0.015, New Hope (NHC) – $0.17

• Tue 16 April: WAM Global (WGB) – $0.06

• Wed 17 April: Washington H Soul Pattinson (SOL) – $0.40 

• Thu 18 April: The Reject Shop (TRS) – $0.10, WAM Capital (WAM) – $0.077, Horizon Oil (HZN) – $0.015 

• Fri 19 April: WAM Research (WAX) – $0.05 

Other ASX corporate actions today: 

• Dividends paid: Car Group (CAR) – $0.345, Kina Securities (KSL) – $0.05, Cochlear (COH) – $2.0, Saunders International (SND) – $0.02, Civmec (CVL) – $0.02

• Listing: None

Economic calendar (AEST):

• 11:30 pm: US Retail Sales (Mar)