Morning Wrap: ASX 200 to fall, S&P 500 flat as Meta lifts the market, US-Iran talks in focus

In a nutshell:

• Major US benchmarks finished mixed, reversing early loses to finish near best levels

• US 30-year yield reached its highest level since 2004 after a second round of long dated Treasury buybacks disappointed, with traders now pricing a 67.5% chance of an October Fed hike

• Brent settled flattish at US$104.9 a barrel after US and Iranian negotiators in New York explored a phased path out of the war, with Tehran reopening the Strait of Hormuz in return for Washington lifting its economic blockade

Let's dive in.

• Major US benchmarks finished mixed and near the flatline after a rocky session, with the S&P 500 bouncing off session lows of (-0.51%)

• Stocks came off session lows after Reuters reported US and Iranian negotiators in New York were weighing a phased end to the conflict (CNBC)

• The vertical ascent for bond yields continued, with the US 2-year up 3 bps to 4.93% and US 10-year up 10 bps to 5.20%, both the highest since 2007

• US 30-year yield climbed 9bps to 5.48%, its highest since 2004, as a global selloff driven by inflation fears and government debt burdens deepened

• Treasury bought back about US$4bn of 20-year and 30-year bonds in the second round of Scott Bessent's enlarged programme, with long-end yields rising to session highs on the news

• Brian Rehling at Wells Fargo said the buyback operation is unlikely to alter the path of long-term rates, which he expects to keep rising until markets believe inflation is contained (NBC)

• Japan's 10-year government bond yield rose 10 basis points to 3.075%, its highest since 1996, as the market reopened after the Silver Week holidays (BBG)

• UK gilts and German bunds also sold off, with yields on various European bonds hitting fresh multi-year highs (CNBC)

• Oracle sent a force majeure notice to a Blue Owl Capital unit developing Project Jupiter, its 1,400-acre New Mexico Stargate campus, seeking to defer payments if the site misses its 2028 start (BBG)

• Meta shares have jumped 39% in September on the launch of its Muse personal AI assistant, the best month since July 2013 and putting the stock on the cusp of a US$2tn valuation (BBG)

• MGM Resorts tumbled 11% after Barry Diller's People Inc withdrew its US$18bn buyout proposal for the hotel and casino operator (TS)

• Starbucks will close about 250 underperforming cafes, roughly 1% of its more than 18,000 North American locations, in the second such round under chief executive Brian Niccol (CNBC)

• US and Iranian negotiators in New York are exploring a phased path out of the war, with Tehran reopening the Strait of Hormuz in return for Washington lifting its economic blockade (RT)

• Qatari officials are mediating the talks, with both sides pushing for a breakthrough on Thursday on the sidelines of the United Nations General Assembly (BBG)

• Neither side wants to surrender its leverage first, according to two Iranian sources, two regional officials and two Western diplomats, though Tehran recognises the economic cost of prolonged confrontation (RT)

• The Senate narrowly rejected a war powers resolution demanding an end to the Iran war by 49 votes to 50, with four Republicans joining most Democrats in support (AP)

• The war has cost US$43.5bn so far and has become a flashpoint in the November midterm election, with more Republicans peeling away from the president (AP)

• Treasury Secretary Scott Bessent said the US and China extended their tariff truce to 10 January from an expiry of 10 November, preserving lower levies and rare earth access (CNBC)

• Trump said he does not expect any moves to put guardrails around artificial intelligence at the summit, posting that the US guardrail is the Department of Justice (BBG)

• Trump said in an arrival ceremony speech that the two countries have been working towards a more balanced trading relationship, with security, technology and AI on the agenda (CNBC)

• Greer said China is making progress on a commitment to buy 200 Boeing aircraft but gave no indication further orders are near (RT)

• Traders are pricing a 67.5% chance the Fed hikes in October, up from 11% a month ago, according to the CME FedWatch tool (CNN)

• The RBA Monetary Policy Board meets on 28 and 29 September, with all four major banks and most money market traders expecting a 25 basis point hike to 4.60%, a 15-year high (ABC)

• Governor Michele Bullock said Australia's jobs market is probably still a bit too tight and is putting upward pressure on wages, business costs and inflation (ABC)

• US Initial jobless claims fell 1,000 to a seasonally adjusted 197,000 in the week ended 19 September against ests of 201,000, near levels last seen in 1969 (RT)

• New single-family home sales jumped 6.4% in August to a seasonally adjusted annualised rate of 684,000 against ests of 615,000, the highest since December 2025 (RT)

• The Freddie Mac 30-year fixed mortgage rate averaged 7.03% for the week, up from 6.95%, its highest level since January 2025 (RT)

It's crickets out there!

• Same old story. Major US benchmarks held up well, but largely thanks to a small handful of >US$1tn market cap tech names. Under the surface, breadth has deteriorated to abysmal levels. The S&P 500 Advance-Decline line has dropped below its 200-day average for the first time since the April 2025 tariff selloff. The indicator tracks the daily number of rising stocks minus falling stocks as a running total, showing whether gains are broad-based or carried by a few names. Weakness is most pronounced among small and mid caps, cyclicals and yield-sensitive sectors. Meanwhile, US yields continue to move vertically, with the 10-year now above 5.20%, and oil remains near US$100 a barrel. So we remain in this uncomfortable state, and the market remains dicey at best, with only a few odd pockets of strength.

Stocks trading ex-dividend: 

• Fri 25 Sep: Teaminvest Private Group (TIP) – $0.015

• Mon 28 Sep: Shine Justice (SHJ) – $0.025, Viva Leisure (VVA) – $0.03, Lindsay Australia (LAU) – $0.017

• Tue 29 Sep: Acrow (ACF) – $0.014, DPM Metals (DPM) – $0.042, EVZ (EVZ) – $0.006, Rural Funds Group (RFF) – $0.029, Centuria Industrial REIT (CIP) – $0.043, Centuria Office REIT (COF) – $0.022, Tasmea (TEA) – $0.085, Cadence Capital (CDM) – $0.03, Cadence Opportunities Fund (CDO) – $0.075, Charter Hall Social Infrastructure REIT (CQE) – $0.045, Charter Hall Long Wale REIT (CLW) – $0.064, Charter Hall Retail REIT (CQR) – $0.066, Ram Essential Services Property Fund (REP) – $0.01, Arena REIT (ARF) – $0.045, Waypoint REIT (WPR) – $0.043, iShares S&P Mid-Cap ETF (IJH) – $0.00, iShares S&P 500 ETF (IVV) – $0.00, iShares S&P Small-Cap ETF (IJR) – $0.00

• Wed 30 Sep: Staude Capital Global Value Fund (GVF) – $0.033, Nick Scali (NCK) – $0.39, Sims (SGM) – $0.20, Cedar Woods Properties (CWP) – $0.25, Genusplus Group (GNP) – $0.036

• Thu 1 Oct: CUE Energy Resources (CUE) – $0.003, Imperial Pacific (IPC) – $0.08, Kip Mcgrath Education Centres (KME) – $0.06, London City Equities (LCE) – $0.025, Pengana Global Private Credit Trust (PCX) – $0.013, Vulcan Steel (VSL) – $0.038, Wam Strategic Value (WAR) – $0.033

Other ASX corporate actions today:       

• Dividends paid: AMP (AMP), Atlas Pearls (ATP), Credit Corp Group (CCP), Finbar Group (FRI), Globe International (GLB), GQG Partners (GQG), Infragreen Group (IFN), Korvest (KOV), LaserBond (LBL), McMillan Shakespeare (MMS), Pinnacle Investment Management Group (PNI), Sky Network Television (SKT), Steadfast Group (SDF), Woodside Energy Group (WDS), Woolworths Group (WOW), XRF Scientific (XRF)

• IPOs: None

• AGMs: None

Economic calendar (AEDT):

• 4:00 pm: German consumer confidence

• 10:30 pm: US durable goods orders