Morning Wrap: ASX 200 to fall, S&P 500 and Nasdaq slip, US-Iran strikes push Brent above US$90

In a nutshell:

• Major US benchmarks closed broadly lower but off worst levels, though all still banked a winning month

• US and Iran exchanged fire for the first time in a month, sending Brent above US$90 a barrel and lifting the US 10-year Treasury yield past 4.75% for the first time since January 2025

• Markets now price a roughly 66% chance of a September Fed hike after Kevin Warsh's Jackson Hole debut, while Nvidia, Aon and Eli Lilly all put fresh capital to work

Let's dive in.

• Major US benchmarks broadly lower but off worst levels

• US monthly recap: S&P 500 (+2.62%), Nasdaq (+3.93%), Dow (+1.34%) and Russell 2000 (+0.86%)

• Dow was the weak link, dragged by Goldman Sachs (-0.8%), Alphabet (-2.0%) and Amazon (-2.5%) 

• Brent pushed above US$90 a barrel after US forces struck Iranian rocket launchers preparing to lay mines in the Strait of Hormuz

• US 10-year Treasury yield topped 4.75% for the first time since January 2025 as higher energy costs bolstered rate-hike expectations, with five-year yields also hitting their highest since early last year (BBG) 

• Anthropic's pending mega-IPO is crowding the US listing calendar, with the Claude developer expected to file publicly within weeks for a deal that could match or beat SpaceX's record $86.2bn debut (BBG)

• Citi's broadening call needs oil lower, with US equity strategy head Scott Chronert saying the bank wants WTI back below $80 and the 10-year yield falling before the rally extends beyond AI names (CNBC)

• Goldman Sachs chief executive David Solomon said he does not see "a lot of risks" in the borrowing and credit system at present, speaking from the G20 finance ministers' meeting in Asheville (CNBC)

• Tesla closed up 5.5% on volume ~46% above its three-month average, with investors positioning ahead of the 3 September Cybercab launch event in Austin and renewed focus on Full Self-Driving and robotaxi regulatory approvals (YF)

• Nvidia is investing $3.5bn in Taiwan's MediaTek through convertible bonds, with MediaTek adopting Nvidia technology to design custom AI chips that plug into Nvidia-based data centres (BBG)

• Apple slid nearly 2% on Tim Cook's final day as chief executive, after Bloomberg reported that App Store and product events leader Phil Schiller is stepping down, with John Ternus taking over as CEO from 1 September (CNBC)

• Aon fell about 7% after agreeing to buy insurance brokerage USI from KKR for $17bn in an all-cash deal funded entirely with new debt, netting KKR roughly $3.3bn in after-tax proceeds (BBG)

• Eli Lilly will acquire privately held Merida Biosciences for up to $2.88bn in cash, adding a platform that selectively degrades pathogenic autoantibodies, with lead candidate MER511 in Phase 1 for Graves' disease and thyroid eye disease (BBG)

• US forces struck two Iranian rocket launchers on Larak Island in the Strait of Hormuz on Sunday, the first publicly acknowledged American attack on Iranian positions since late July (CNBC)

• IGRC fired ballistic missiles and drones at the King Hussein and Al Azraq air bases in Jordan in an operation it called "Punishment of the Aggressor", with Jordan reporting eight missiles intercepted (AJ)

• Trump posted an AI-generated video on Truth Social captioned "Kharg Island being blown to smithereens", targeting the terminal that handles roughly 90% of Iran's crude exports, with no evidence the island was struck (Forbes)

• Key oil benchmarks rose more than 3% and hit session highs during US morning trade after Trump threatened Iran with additional attacks, adding a fresh inflation channel to the bond market selloff (BBG)

• Seoul's dismissal of congressional allegations that it discriminated against US-listed Coupang is straining ties with Washington, with lawmakers raising the prospect of retaliatory tariffs on the seventh-largest US trading partner (CNBC)

• Scott Bessent said the EU backed Operation Economic Outcast in "the strongest terms" and predicted Iran's economy would feel the effects of the sanctions campaign within weeks or months (AJ)

• Bessent insisted the plan can work without Beijing, telling CNBC the campaign to choke Iran's economy through sanctions on its financial enablers does not require China, Tehran's top oil buyer, to cooperate (CNBC)

• Venezuela's interim President Delcy Rodriguez said the 25-year oil pact would develop 17 oilfields and initially lift output to 1.5 million barrels a day, insisting in a late Sunday address that sovereignty over the reserves is secure (CNBC)

• Russia extended its diesel export ban by a further month to the end of September 2026, a weekend decision ING analysts flagged as another pillar of support for refined product prices (TP)

• CME FedWatch put September hike odds at 66%, nearly double the pre-Jackson Hole reading, implying a move to a 3.75% to 4.00% target range at the 15-16 September meeting (CNBC)

• Fed Chair Kevin Warsh told the G20 gathering that secular stagnation now describes a long-gone era, adding that the present moment is better characterised as one of global secular growth and a worldwide investment surge (CNBC)

• Warsh flagged PCE inflation at 3.7% over 12 months and 4.1% over six months as "concerning", well above the 2% target, reiterating that interest rates remain the Fed's predominant tool (Forbes)

• Barclays now expects two more hikes this year, in September and December, totalling 50 basis points, after the Fed chair's first Jackson Hole address landed more hawkish than markets had positioned for (Forbes)

• Citigroup economist Andrew Hollenhorst pushed back on the repricing, writing that Warsh's Friday comments were relatively uncontroversial and have been restated by the chairman every time he has spoken (CNBC)

• Investors have largely locked in a September ECB rate increase, with German inflation data the immediate focus before euro zone flash figures land later in the week (RT)

• Treasury Secretary Scott Bessent said the US bond market is outperforming other global bond markets, telling CNBC he is on the same page as Warsh when it comes to bonds (CNBC)

• China's official manufacturing PMI rose to 49.8 in August from 49.2 in July, beating the 49.6 median in a Reuters poll but staying below the 50 line for a second consecutive month (CNBC)

• China's non-manufacturing PMI was unchanged at 49.0, matching July's reading and marking the weakest level since December 2022, with ING's Lynn Song saying domestic demand remained sluggish through the month (RT)

• Australian company gross operating profits rose 1.8% in the June quarter, missing expectations for a 2.0% gain after a 1.5% decline in the prior period, with mining, technical services and manufacturing offsetting weaker retail and wholesale trade (RT)

• The Melbourne Institute monthly inflation gauge rose 0.5% in August, down from a 1.0% increase in July and marking a second straight monthly gain as price pressures ease from their March peak (FX)

• Canyon Resources independent committee unanimously rejects majority holder A2MP's 5c bid as undervaluing the business, a 42% discount to the 8.7c price at the time and down from 26c offered in March. Takeovers Panel interim orders block A2MP declaring the bid unconditional (AFR)

• Collins Foods first 17 weeks of FY27 total sales +6.6% on pcp in constant currency, with KFC SSS +3.4% in Australia, -3.4% in the Netherlands and -5.3% in Germany. Europe turned over the last four weeks, Netherlands SSS +3.1% and Germany -0.1% (CKF)

• Frontier Energy executes all major contracts for Waroona Stage One, a 132MW solar and 81.5MW/6.9-hour BESS build in WA. Fixed-price equipment and EPC deals cover most of the $310m budget, fully funded with $22m contingency. Western Power connection unconditional, site works start September (FHE)

• Haranga Resources appoints Patrick Mutz MD and CEO from 1 September to lead the Lincoln Gold Project in California, holding a maiden 2.46Mt at 5.1g/t for 402koz and $90m of prior capital spend including a 315ktpa plant (HAR)

• Light & Wonder sees Caledonia sell down 3.9% via a $372m Barrenjoey block trade floored at $124, a 6% discount. Caledonia held 9.7% pre-trade and says LNW stays its largest position with no intention to sell more in the medium term (AFR)

• Is it time to be bearish? Since 1980, the ASX 200 has averaged a 0.42% decline in September and finished higher 54% of the time. On a total returns basis since 2001, it's averaged a 0.65% decline and finished positive just 44% of the time, making it the worst month on both counts. Seasonality on its own isn't a reason to sell but against a backdrop where yields are breaking out (US 10-year at its highest since Jan-25 and the Aussie 10-year pushing the top of its recent range, not far off a 15-year high), oil prices remain elevated (US diesel futures also within 3% of all-time highs) and a growing likelihood of higher rates, September is shaping up as a rough patch.

• Energy strength: The S&P 500 energy sector just missed its 18-Aug record high. US diesel futures are near record highs, which implies downstream markets are extremely tight, and names like Viva and Ampol are still trading vertically. Chinese coking coal is running just as hard, with futures up 46% in August for their largest monthly gain on record, according to Bloomberg. With Hormuz still effectively closed and US-Iran attacks resuming after a four-week break, energy remains an underrated sector.

Stocks trading ex-dividend: 

• Tue 1 Sep: Bendigo and Adelaide Bank (BEN) – $0.33, Codan (CDA) – $0.29, Domino's Pizza Enterprises (DMP) – $0.325, Earlypay (EPY) – $0.002, Endeavour Group (EDV) – $0.012, Fortescue (FMG) – $0.46, Helloworld Travel (HLO) – $0.05, HMC Capital (HMC) – $0.06, Kapstream Investment Trust (KIT) – $0.013, L1 Global Long Short Fund (GLS) – $0.02, L1 Group (L1G) – $0.02, L1 Long Short Fund (LSF) – $0.038, Magellan Financial Group (MFG) – $0.255, Pengana Global Private Credit Trust (PCX) – $0.013, Propel Funeral Partners (PFP) – $0.069, Revolution Private Credit Income Trust (REV) – $0.014, Stealth Group Holdings (SGI) – $0.015, Wesfarmers (WES) – $1.20, Woolworths Group (WOW) – $0.52, Worley (WOR) – $0.25

• Wed 2 Sep: Australian Clinical Labs (ACL) – $0.092, Australian Ethical Investment (AEF) – $0.10, Downer EDI (DOW) – $0.163, Integrated Research (IRI) – $0.05, Karoon Energy (KAR) – $0.012, Liberty Financial Group (LFG) – $0.23, Medibank Private (MPL) – $0.109, Mercury NZ (MCY) – $0.141, Monadelphous Group (MND) – $0.59, Newmont Corporation (NEM) – $0.26, Objective Corporation (OCL) – $0.08, Origin Energy (ORG) – $0.30, PLS Group (PLS) – $0.05, Prime Financial Group (PFG) – $0.009, Seek (SEK) – $0.25, Shaver Shop Group (SSG) – $0.055, Shriro Holdings (SHM) – $0.01, Solvar (SVR) – $0.085, Sonic Healthcare (SHL) – $0.63, Steadfast Group (SDF) – $0.128, Tribeca Global Natural Resources (TGF) – $0.10, Universal Store Holdings (UNI) – $0.17, Whitehaven Coal (WHC) – $0.06, Yancoal Australia (YAL) – $0.07

• Thu 3 Sep: Acumentis Group (ACU) – $0.005, Amcor (AMC) – $0.92, Ashley Services Group (ASH) – $0.011, Beacon Lighting Group (BLX) – $0.034, BHP Group (BHP) – $1.392, Cash Converters International (CCV) – $0.01, Clinuvel Pharmaceuticals (CUV) – $0.05, Coles Group (COL) – $0.37, Euroz Hartleys Group (EZL) – $0.05, Fenix Resources (FEX) – $0.01, Finbar Group (FRI) – $0.03, GTN (GTN) – $0.052, Ironbark Balanced Income (IBC) – $0.006, Jumbo Interactive (JIN) – $0.15, Jupiter Mines (JMS) – $0.007, Korvest (KOV) – $0.40, Laserbond (LBL) – $0.008, Mayfield Group Holdings (MYG) – $0.024, Meridian Energy (MEZ) – $0.132, Nib Holdings (NHF) – $0.21, Pacific Current Group (PAC) – $0.28, Peter Warren Automotive Holdings (PWR) – $0.006, Qualitas (QAL) – $0.077, Ramsay Health Care (RHC) – $0.485, Resimac Group (RMC) – $0.06, Schaffer Corporation (SFC) – $0.45, Sigma Healthcare (SIG) – $0.02, Symal Group (SYL) – $0.049, Woodside Energy Group (WDS) – $0.795, Wotso (WOT) – $0.014

• Fri 4 Sep: Ampol (ALD) – $1.85, Aussie Broadband (ABB) – $0.036, Big River Industries (BRI) – $0.02, Comms Group (CCG) – $0.001, Eagers Automotive (APE) – $0.25, Embark Early Education (EVO) – $0.015, Generation Development Group (GDG) – $0.01, Hitech Group Australia (HIT) – $0.04, Viva Energy Group (VEA) – $0.077, Whitefield Industrials (WHF) – $0.052

Other ASX corporate actions today:       

• Dividends paid: Dicker Data (DDR)

• Earnings: Audeara (AUA), Carnarvon Energy (CVN), Mayfield Childcare (MFD)

• IPOs: None

• AGMs: Collins Foods (CKF)
  

Economic calendar (AEST):

• 11:30 am: Australia Building Permits

• 11:45 am: China RatingDog Manufacturing PMI

• 7:00 pm: Eurozone Inflation Rate

• 12:00 am: US ISM Manufacturing PMI

• 12:00 am: US JOLTs Job Openings