Morning Wrap: ASX 200 to fall, S&P 500 lower on mixed earnings, MinRes sells gas assets

ASX 200 futures are trading 14 points lower, down 0.17%, as of 8:30 am AEDT.

Major US benchmarks fell overnight amid a mixed bag of earnings from Alphabet, AMD, Chipotle and more, the Bank of Japan has its interest rate decision today – expected to keep rates on hold, US and Eurozone GDP data largely exceeded economist expectations, MinRes is selling exploration permits for its oil and gas assets for up to $1.1 billion and Wesfarmers provides a trading update, with resilient sales at Bunnings.

Let's dive in.

S&P 500 SESSION CHART

S&P 500 lower, finished near worst levels (Source: TradingView)

OVERNIGHT MARKETS

• Major US benchmarks finished lower, selling pressure intensified after midday and ending near worst levels

• Bond yields higher, with the US 10-year yield closing at highest level since 10 July

• Today’s big story – Massive volume of earnings, Alphabet a bright spot on Cloud and AI, AMD missed and pressured semis, Eli Lilly missed and cut guidance, Caterpillar offered mixed-to-underwhelming results in industrials and Chipotle missed as higher prices hurt demand 

• Near-euphoric setup drive by rising GOP sweep odds may be signal to sell, says Citi (BBG)

• Price to hedge against US dollar moves surges to highest level in two years amid growing election risk (BBG)

• FOMO sees buyers clamour for gold-backed ETFs as central banks scale back purchases of the precious metal (FT)

• Industrial metals rise after reports of fresh possible China stimulus (BBG)

• Oil rises after sources say OPEC+ could delay December output hike (RT)

STOCKS

• Alphabet shares up 2.8% on Q3 earnings beat, cloud growth accelerated to 35% year-on-year while margins expanded 600 bps to just over 17%, cloud strength underpinned by adoption of AI products (RT)

• AMD dips 10% as Q3 earnings beat offset by slightly weaker-than-expected Q4 guidance, softer embedded and gaming performance to offset continued strength from data centres (RT)

• Eli Lilly shares dip 6% on Q3 earnings miss and FY24 guidance downgrade, weakness pinned on a sizeable weight loss drug Zepbound miss (FT)

• Chipotle tumbles 8% on Q3 earnings miss, higher menu prices hurt demand while steeper costs of ingredients weighed on margins (RT)

• EY resigned as auditor to Super Micro Computer citing concerns about governance and transparency, SMC shares dip 32% (BBG)

• Dropbox to cut 20% of its workforce, following 16% cut in 2023 (CNBC)

• Volkswagen wants its workforce to take pay cuts of 10% in order to remain competitive and safeguard jobs (YH)

• Snap Q3 revenue tops forecasts following ad business revamp (BBG)

• Visa to cut 1400 jobs and streamline its international business (BBG)

• UBS Q3 profit almost doubles vs expectations, driven by higher revenue and cost reductions (RT)

CENTRAL BANKS

• BOJ expected to leave policy unchanged today amid uncertainties from Japan, US elections (BBG)

POLITICS & GEOPOLITICS

• China and India have pulled back troops from the disputed Himalayan border, ending a four-year stalemate (BBG)

• Israel is considering a US-led deal to end the conflict in Lebanon (RT)

• Cyprus President says Lebanon ceasefire possible within weeks (RT)

• US and Taiwan set for talks to end double taxation for companies which could increase investment in American chip production (FT )

ECONOMY

• US Q3 GDP printed 2.8%, ahead of 2.6% consensus and a slight step-down from 3.0% in Q2, rise was underpinned by increased consumer spending as well as increases in exports and federal spending (RT)

• US defence spending on national defence surged in Q3 at the fastest pace in more than two decades (BBG)

• German inflation accelerated more sharply than expected and above the European Central Bank's 2% target (BBG)

• Most Eurozone GDPs expanded in Q3, with France and Spain beating forecasts and German avoiding recession (BBG)

• Australia underlying inflation remains elevated, keeping RBA on restrictive policy stance (BBG)

ASX TODAY

• 29Metals major shareholder EMR (~45% stake) is seeking a suitor for its stake, could lead to an all-company deal ahead of potential capital raising (The Aus)

• Bowen Coking Coal confident it can secure $60m via ongoing raise as the share remain suspended (The Aus)

• Catapult Group signs new multi-year deal with Rugby Football Union, Premiership Rugby and Premiership Women’s Rugby, terms undisclosed (CAT)

• Mineral Resources to sell 100% of its exploration permits in the Perth Basin to Hancock Prospecting, and enter two JV agreements, set to receive a total cash consideration of up to $1.1bn (MIN)

• Origin Energy releases 1Q25 report (ORG)

• Wesfarmers issues trading update at AGM, YTD Bunnings sales growth resilient with positive consumer and commercial segment growth, strength in Kmart Group, Officeworks sales supported by higher technology sales but demand has been impacted by challenging business conditions (WES)

• West African Resources reaffirms FY24 guidance (WAF)

WHAT TO WATCH TODAY

• Gold – Gold up 0.46% overnight to close at a record US$2,787 but Gold Miners ETF down 1.2% after UBS downgraded its outlook for the gold sector, lowering target prices for Barrick and Newmont. “"While gold price momentum remains positive, and we expect further upward revisions to consensus gold price forecasts, we see downside risks to volume and cost assumptions,” the report said

BROKER MOVES

• Data#3 upgraded to Overweight from Neutral; target $8.54 (JRD)

• Lynas downgraded to Neutral from Buy; target cut to $7.30 (GS)

• Nickel Industries downgraded to Hold; target remains $1.00 (JF)

• Nine Entertainment initiated Overweight with $1.60 target (JRD)

• Pilbara Minerals upgraded to Outperform from Hold; target up to $3.20 from $2.90 (CLSA)

• Premier Investments upgraded to Neutral from Sell; target up to $32.40 from $26.10 (GS)

• Newmont downgraded to Neutral from Buy; target cut to US$54 from US$67 (UBS)

• Zip downgraded to Neutral from Buy; target up to $2.90 from $1.90 (CITI)

Stocks trading ex-dividend: 

• Thu 31 Oct: Imperial Pacific (IPC) – 4.83%, London City Equities (LCE) – 1.88%, Autosports (ASG) – 3.29%

• Fri 1 Nov: Pengana Global Private Credit Trust (PCX) – 0.57%

• Mon 4 Nov: Brickworks (BKW) – 1.57%

• Tue 5 Nov: EZZ Life Science (EZZ) – 0.57%

• Wed 6 Nov: ResMed (RMD) – 0.15%

Other ASX corporate actions today: 

• Dividends paid: Rural Funds (RFF), Star Combo Pharma (S66), Steamships (SSM)

• Listing: None

• AGMs: Corporate Travel (CTD), JB Hi-Fi (JBH), Wesfarmers (WES), Woolworths (WOW)

Economic calendar (AEDT):

• 10:30 am: Australia Retail Sales (Sep)

• 11:30 am: China NBS Manufacturing PMI (Oct)

• 1:00 pm: Bank of Japan Interest Rate Decision

• 8:00 pm: Eurozone Inflation (Oct)

• 10:30 pm: US Core PCE Price Index (Sep)