Morning Wrap: ASX 200 to fall, S&P 500 caps off September at record highs, Miners take a breather

The S&P 500 and Dow finished the September quarter off at record highs, Powell says the central bank will lower rates "over time", commodity prices and mining stocks take a breather after the recent China-led rally, European automakers face challenges as EV demand stall and overall sales weaken.

Let's dive in.

S&P 500 SESSION CHART

S&P 500 rallies in the last hour of trade to eke out a fresh all-time high (Source: TradingView)

OVERNIGHT MARKETS

• US benchmarks finished higher, erased afternoon declines to finish near best levels

• S&P 500 clawed its way back up to a record close, adding to last week’s gains

• US Quarterly Recap – Russell +8.9%, Dow +8.2%, S&P 500 +5.5%, Nasdaq +2.5%

• Today’s big story – Markets in waiting mode ahead of catalysts that’ll provide more clarity on the Fed rate cut cycle including JOLTs job openings, ISM Manufacturing PMI, September payrolls as well as Q3 earnings season next week

• Powell’s speech leaned hawkish, says he sees tow more interest rate cuts, totalling 50 bps if “the economy performs as expected” (RT)

• China equities near bull market territory as strategists eye more upside (RT)

• US market rally broadening with more sectors outside of tech participating (RT)

• Economists unconvinced market-boosting moves in US and China recently enough to brighten global outlook (BBG)

• Iron ore jumps after major Chinese cities ease home-buying restrictions (BBG)

STOCKS

• European autos stocks wipe off $10bn after several profit warnings from Stellantis, Volkswagen and Aston, sector trading at a near-record 60% discount to the market’s average PE ratio (RT)

• Stellantis cuts annual guidance, citing weaker global industry dynamics, rising China EV competition (BBG)

• Marsh McLennan to acquire rival McGriff Insurance Services in a US$7.8bn cash transaction, in largest ever deal (BBG)

• SoftBank to invest US$500m in OpenAI, The Information reports (RT)

CENTRAL BANKS

• ECB likely to cut rates in October amid signs of slowing Eurozone growth (FT)

• Japan's incoming PM Ishiba says BOJ must remain accommodative (RT)

POLITICS & GEOPOLITICS

• Israeli ground invasion of southern Lebanon is imminent and awaiting final approval, according to Israeli officials (Axios)

• Markets indicating Iran will opt for de-escalation in tensions rather than war (CNBC)

• Japan's Ishiba declares snap election for 27-Oct as markets recalibrate policy outlook (RT)

ECONOMY

• China lowers mortgage rates in latest attempt to revive property market (BBG)

• US East Coast port strike looms with no talks scheduled, could cost the US economy $5bn a day and raise prices for consumers (RT)

• China official PMI mixed while Caixin PMI misses expectations (BBG)

• Japan industrial production notably misses, retail sales beat (BBG)

ASX TODAY

• Namoi Cotton takeover bid lifted to 77 cents from 68 cents by Louis Dreyfus (NAM)

• Qatar Airways to take a 25% stake in Virgin Australia, subject to regulatory approval, CEO says “it will further strengthen Virgin’s ability to compete over the long term” (The Aus)

• REA withdraws offer for Rightmove, says its final offer represented a 45% premium to Rightmove’s 12-month volume weighted average share price but the lack of meaningful engagement has impeded the ability to progress discussions (REA)

• ResMed announces five-year financial outlook at Investor Day – targeting high-single digit revenue growth, earnings growth higher than revenue growth, growth and differentiate unmatched core sleep apnea franchise and capitalise on market opportunity in broader sleep health and breathing adjacencies (RMD)

• Seven West and Network 10 edge towards TV deal at Southern Cross (AFR)

• Wesfarmers among the parties running the ruler over MinRes’ Perth Basin assets – Hancock Prospecting, Mitsui and Beach Energy are among the other potential buyers (The Aus) 

WHAT TO WATCH TODAY

• Miner fatigue: Resources took a breather overnight following a massive 4-5 day rally. Copper prices finished 1% lower, down from session highs of 4.1%. Singapore iron ore futures closed 6.6% higher, down from session highs of 11%. The sector is now extremely overbought. Can it settle and continue to trend higher? Or is China still in a rut and the overbought stocks are set to collapse under its own weight?

BROKER MOVES

• Orica downgraded to Neutral from Overweight; target remains $18.50 (JARD)

• Qoria downgraded to Hold from Buy; target up to $0.42 from $0.40 (ARGS)

• Scentre Group downgraded to Neutral from Buy; target up to $3.80 from $3.65 (BofA)

Stocks trading ex-dividend: 

• Tue 1 Oct: Genusplus Group (GNP) – 1.02%, Sigma Healthcare (SIG) – 0.35%, Sims (SGM) – 0.79%, Switzer Dividend Growth Fund (SWTZ) – 0.35%, Wam Strategic Value (WAR) – 2.51%, Fonterra Shareholders' Fund (FSF) – 6.70%, – 0.15%, Pengana Global Private Credit Trust (PCX) – 0.57%

• Wed 2 Oct: None

• Thu 3 Oct: ARB Corporation (ARB) – 0.74%, Myer (MYR) – 0.60%, New Hope Corporation (NHC) – 4.22%

• Fri: 4 Oct: None

Other ASX corporate actions today: 

• Dividends paid: Base Resources (BSE), Freightways Group (FRW), Regal Partners (RPL), Treasury Wine Estates (TWE), Worley (WOR)

• Listing: None

• AGMs: The Lottery Corp (TLC) 

Economic calendar (AEST):

• 11:30 am: Australia Retail Sales (Aug)

• 7:00 pm: Eurozone Inflation Rate (Sep)

• 12:00 am: US ISM Manufacturing PMI (Sep)

• 12:00 am: US JOLTs Job Openings (Aug)