Morning Wrap: ASX 200 to fall, S&P 500 and Nasdaq tumble on Warsh's hawkish Fed debut

In a nutshell:

• US benchmarks slumped after Fed Chair Kevin Warsh's first FOMC held rates at 3.5%-3.75% and the new dot plot signalled a potential rate hike by year-end

• US 2-year yield jumped 13 bps to 4.18%,the highest since Feb-25, US Dollar index up 0.8% to 100.3 but still mostly rangebound, gold snapped a four-day win streak and fell 1.7% overnight

• Brent crude slid for a fifth straight session to about US$78 per barrel, a three-month low, with the US-Iran peace deal set to be signed in Geneva on Friday

Let's dive in.

• Major US benchmarks lower, all three indexes finished near worst levels as stocks fluctuated through Chair Warsh's press conference before extending losses into the close

• All sectors finished lower, with the Equal-weight S&P 500 (-1.50%) underperforming the cap weighted benchmark by 29 bps

• Rate-sensitive 2-year yield jumped 13 basis points to 4.18%, highest since Feb-25, after nine of 18 FOMC officials penciled in a rate hike by year-end 

• Hawkish FOMC and lack of forward guidance weighed on markets, with consumer-facing and rate-sensitive sectors like Discretionary, Real Estate, Staples and Communications all down more than 2%

• Gold snapped a four-day win streak and tumbled 1.7% on the stronger dollar and elevated real yields

• SpaceX up as much as 5.9% in early trade, finished the session down 4.9% to US$191.82

• Citadel says retail investors poured into US stocks at record pace on day of SpaceX IPO, surpassing previous record by 58% (BBG)

• BMW shares tumble 8% to lowest in over five years after the German automaker cut its 2026 profit outlook, citing weakening demand in China and Iran-war-linked disruptions (CNBC)

• OpenAI burned $3.7bn in 1Q26, over half of its $5.7bn revenue (TI)

• Samsung reports rising chip production orders from BYD, Google, AMD amid TSMC capacity strain (NK)

• Quantum tech firm EigenQ to go public in $3bn SPAC deal (RT)

• US-Iran draft MoU includes reopening Strait of Hormuz, $300B economic package, immediate oil sanctions relief (BBG)

• Interim deal lets Iran resume oil exports immediately and access a $300bn development program (BBG)

• Israel rejects US request to withdraw troops from southern Lebanon (BBG)

• Trump says US will not invest $300bn reconstruction fund floated for Iran (FT)

• Trump said at the G7 summit in Evian, France, the US would "go right back to dropping bombs" on Iran if he didn't like the final deal, calling the Geneva memorandum of understanding "not final" ahead of Friday's signing (CNBC)

• Israel continued limited strikes in Lebanon, with Iran warning that any continued Israeli troop presence or further strikes in Lebanon would violate the emerging US-Iran agreement (CBS)

• European nations including the UK, Germany, France and Italy said they were ready to lift sanctions on Iran in exchange for Tehran taking steps on its nuclear programme (RT)

• IEA cuts 2026 oil demand forecast, says post Iran war supply rebound could trigger 2027 glut (CNBC)

• Trump pauses adding DeepSeek, CXMT, others to China's national security blacklist (RT)

• Rates held at 3.50-3.75% as expected, with the statement shortened to emphasise solid growth and a stable labour market, while flagging elevated uncertainty from the Iran conflict

• Updated dot plot shows 12.5bps of additional tightening by end-2026 (median midpoint 3.75%), vs. market pricing of ~19bps of hikes pre-meeting and a March SEP that had projected 25bps of cuts

• 9 of 18 officials see at least one hike in 2026 (six expect multiple), only one forecast a cut, and median dots for 2027 and 2028 also moved higher

• 2026 forecasts revised to 3.6% headline PCE (from 2.7%), 3.3% core PCE (from 2.7%), 4.3% unemployment (from 4.4%) and 2.2% GDP growth (from 2.4%)

• ECB says a US‑Iran peace accord may not prevent further rate hikes despite easing oil pressures (BBG)

• Sweden's central bank pauses rates for sixth meeting but flags it may tighten if Iran war raises inflation (BBG)

• Bank of Korea warns big tech bonuses may spur wider wage growth and stronger consumer demand, complicating inflation (BBG)

• US retail sales rose 0.9% month-on-month in May, well ahead of the 0.5% consensus, and up 6.9% year-on-year, with service station receipts up 26.5% year-on-year reflecting higher gasoline prices, and motor vehicle sales adding 1.2% month-on-month (RT)

• UK inflation unexpectedly steady at 2.8% in May, services rise, transport major contributor (CNBC)

• Emeco guides FY26 operating EBITDA of $290-295m vs. $315m ests (EHL)

• PMET advances on-site lithium refining strategy (PMT)

• Washington H. Soul Pattinson to divest certain Brickworks assets/divisions to Goodman JV (SOL)

• Hawkish Fed, higher US dollar, higher yields: New Fed Chair Warsh struck a hawkish tone while announcing a sweeping review of how the Fed operates. The policy statement deliberately shortened and stripped of forward guidance, making macro harder to predict. This drove all the stuff that places downward pressure on equities and commodities, where yields spiked (particularly the short-end), VIX jumped and US dollar trended higher. Copper fell 1.7%, platinum down 3.6%, gold down 1.6% and silver down 1.9%. This drove broad weakness across our overnight ETF watchlist, with most resource-related ETFs, as well as Homebuilders, Software, Airlines etc. down 1-3%.

• Cuscal initiated Buy with $6.00 target (Goldman Sachs)

• Nick Scali downgraded to Neutral from Overweight; target cut to $17.10 from $24 (JPMorgan)

• ResMed downgraded to Equal-weight from Overweight; target cut to US$230 from US$286 (Morgan Stanley)

Stocks trading ex-dividend: 

• Thu 18 Jun: AFT Pharmaceuticals (AFP) – $0.016

• Fri 19 Jun: None

• Mon 22 Jun: PT Antam (ATM) – $0.067, Fisher & Paykel (FPH) – $0.27

• Tue 23 Jun: None

• Wed 24 Jun: None
  

Other ASX corporate actions today:       

• Dividends paid: ResMed (RMD)

• Earnings: None

• IPOs: None

• AGMs: None

Economic calendar (AEST):

• 9:00 pm: BoE Interest Rate Decision (Ests: Hold at 3.75%)