Morning Wrap: ASX 200 to fall, S&P 500 lower, Oil prices spike on US strikes in Iran

In a nutshell:

• Major US benchmarks finished mostly lower, but futures pointing to further declines after US attacked three Iranian nuclear sites over the weekend

• Oil prices opened 4.0% higher, but currently fading early gains

• The ASX is set to remove the staggered opening this morning, with all stocks to open at 10:00 am AEST

Let's dive in.

S&P 500 SESSION CHART

S&P 500 lower, finished near session lows (Source: TradingView)

OVERNIGHT MARKETS

• Major US benchmarks mostly lower, finished near worst levels

• US weekly recap: Russell 2000 (+0.42%), Nasdaq (+0.21%), Dow (+0.02%), S&P 500 (-0.15%)

• Today’s big story – US hit three of Iran’s nuclear sites on Sunday, widening the Middle East conflict and stoking fears of Iran leaving the nuclear Non-Proliferation Treaty, cyber attacks and closing off the Strait of Hormuz

• Brent crude opened ~4.0% higher to US$80 a barrel on Monday, trading at a fresh five-month high

• US stocks could face further selling pressure due to corporate buyback blackout period and month-and-quarter end selling/rebalancing 

• Investors reassess Mag-7 trade, tilt toward international stocks, small caps and defensive (WSJ)

• Trump's Iran strikes rattle crypto markets as Ether plunges 10% and Bitcoin slips below US$100,000 (BBG)

• Brent crude could rise to US$90 a barrel if the Strait of Hormuz closes, says Citi (BBG)

• Oil prices poised to surge as traders brace for Iran retaliation, potential crude flow disruptions (BBG)

• Japan's Ministry of Finance to lower issuance of 20-and-30 year bonds, 40-year notes (WSJ)

STOCKS

• Apple seeking Indian firms to manufacture equipment for its iPhone production, aiming to enhance local capacity (BS)

• Tesla signs a deal to build its first grid-scale battery storage station in Shanghai, investing CNY4B (RT)

• Semiconductor stocks under pressure after US sought to remove waivers that allowed Chinese companies to access American technology (WSJ)

• Circle shares rallied 20% after the Senate approved its proposed stablecoin legislation (CNBC)

CENTRAL BANKS

• Powell expected to defend slow Fed rate hike path, patient stance in this week's Capitol Hill testimony (BBG)

GEOPOLITICS

• US strikes three of Iran’s main nuclear sites, putting the US directly into Tehran’s war with Israel (BBG)

• Trump declares US airstrikes on Iran a success, hints at more action (NYT)

• Hegseth, Vance say US military strikes target Iran's nuclear program, not regime change (AX)

• Iran vows to defend itself after US attacks (CNBC)

• US strikes on Iran spark regional alarm, neighbors urge restraint, fears of wider conflict grow (BBG)

• Iran launches missile barrage at Israel after US strikes Iranian sites, causing damage but limited casualties (NYT)

• China offers rhetorical support to Iran, but stops short of providing material support amid desire to avoid US sanctions (BBG)

TARIFFS  

• Trump's focus on auto trade deficit a key point in US-Japan trade talks (BBG)

• Canada imposes 100% tariffs on non-US steel and aluminium imports in bid to counter oversupply (FT)

• EU's Dombrovskis says trade talks with US making progress but reiterates readiness to respond if no solution is found (BBG)

• Vietnam says held constructive talks with US, but nothing substantive on key issues such as China transshipment practices (RT)

ECONOMY

• US attacks on Iran fuel global economic uncertainty, raising risk of higher oil prices and slower growth (BBG)

• Japan core inflation hits 3.7% in May, highest since early 2023 amid surge in food prices (BBG)

• UK retail sales fell 2.7% May, the steepest decline since December 2023, indicating potential economic struggles in the second quarter (BBG)

• South Korea's current account surplus with the US hit a record high, complicating trade deal efforts with Trump (BBG)

ASX TODAY

Be sure to check out our Live Blog for the latest coverage and analysis for company announcements, market movements and economic updates.,

• AMP weighing major break-up, with bank sale or demerger (The Aus)

• Santos takeover faces potential South Australian government opposition, seeking guarantees that suitors will keep the company’s headquarters in Adelaide and sing off on big investments (AFR)

• SmartPay to be acquired by Shift4 Payments for NZ$1.20 cash per share, unchanged from prior 2-May offer, directors unanimously recommend shareholders to vote in favour of the scheme (SMP)

• Spark New Zealand to sell its 10% stake in Hutchison Telecommunications for NZ$47 million (SPK) 

WHAT TO WATCH TODAY

• Volatility: Commodity markets have just opened and we're already seeing some volatile moves for Brent crude, briefly up 4.1% to US$80.30 and currently up just 2.1% to US$77.1.

• ASX changes: The ASX is set to remove the staggered opening this morning, with all stocks to open at the same time (+/-15 seconds at 10:00 am AEST). There have been some reports that opening trades faced delays of up to 60 seconds. It will be interesting to see if the changes face any issues, especially on a high volume day like today.

BROKER MOVES

• ANZ downgraded to Sell from Neutral; target cut to $26.50 from $30 (UBS)

• Fortescue downgraded to Neutral from Buy; target cut to $16 from $17.50 (UBS)

• IGO Limited downgraded to Neutral from Buy; target cut to $4.10 from $4.40 (UBS)

• Liontown Resources downgraded to Sell from Neutral; target remains at $0.50 (UBS)

• Lovisa upgraded to Neutral from Sell; target up to $30 from $26 (UBS)

• Lynas Rare Earths downgraded to Underperform from Neutral; target remains $8.00 (MQG)

• Pilbara Minerals downgraded to Neutral from Buy; target cut to $1.30 from $1.60 (UBS)

• REA Group downgraded to Hold from Buy; target cut to $262 from $267 (BP)

Stocks trading ex-dividend: 

• Mon 23 Jun: Fisher & Paykel (FPH) – $0.222

• Tue 24 Jun: None

• Wed 25 Jun: None

• Thu 26 Jun: None

• Fri 27 June: Arena REIT (ARF) – $0.046, Centuria Capital Group (CNI) – $0.052, Centuria Industrial REIT (CIP) – $0.041, Centuria Office REIT (COF) – $0.025, Charter Hall Long Wale REIT (CLW) – $0.063, Charter Hall Retail REIT (CQR) – $0.124, Charter Hall Social Infrastructure REIT (CQE) – $0.038, Digico Infrastructure REIT (DGT) – $0.109, Homeco Daily Needs REIT (HDN) – $0.021, National Storage REIT (NSR) – $0.056, Region Group (RGN) – $0.07, Rural Funds Group (RFF) – $0.029, Waypoint REIT (WPR) – $0.041

Other ASX corporate actions today: 

• Dividends paid: Resimac Group (RMC)

• Earnings: Metcash (MTS)

• IPOs: None

• AGMs: None

Economic calendar (AEST):

• 9:00 am: Australia Manufacturing and Services PMI (Jun)

• 5:30 pm: Germany Manufacturing and Services PMI (Jun)

• 6:30 pm: UK Manufacturing and Services PMI (Jun)

• 11:45 pm: US Manufacturing and Services PMI (Jun)