Morning Wrap: ASX 200 to fall, S&P 500 posts worst day since 2022 + Newmont, Fortescue quarterlies

The S&P 500 marked its first 2% dip in 365 days after earnings from Tesla and Alphabet sucked the momentum out of big tech stocks, the Bank of Canada cut interest rates by 25 bps for a second month in a row, Newmont's Q2 earnings smash analyst expectations, Ampol flags a below consensus first-half and more quarterlies to come.

Let's dive in.

S&P 500 SESSION CHART

S&P 500 trends lower to finish at worst levels (Source: TradingView)

OVERNIGHT MARKETS

• Major US benchmarks finished lower and near worst levels

• S&P 500 fell more than 2% for the first time in 365 days, Nasdaq marked its worst performance since Oct-2022 – Just over US$1.1tn was wiped from US markets today

• Magnificent 7 stocks down between 2-12%, led by Tesla (-12.3%)

• Disappointing big-tech earnings takeaways (Tesla and Alphabet) were a major drag on sentiment, although the bar was high and commentary around secular growth tailwinds remained sound

• Economic growth concerns have come into play as Visa flagged a July spending slowdown, American food processing company Lamb Weston noted weak restaurant traffic

• US 2-year yield fell 6 bps while the 10-year rose 3 bps – the 2-and-10 year spread has reached the least inverted level since July 2022

• Copper fell for an eighth consecutive session, marking the longest losing streak since February 2020, down 10.5% since 12-Jul

• IG bond issuance this month already highest since 2017 as investors lock in high yields before Fed rate cuts (Bloomberg)

• Chinese stocks slide amid fresh fears market headed freefall despite policy buffers put in place (Bloomberg)

STOCKS

• Alphabet reports Q2 results, with revenue 0.5% above and operating income 5% better than consensus – highlights traction behind new AI features, cloud segment quarterly revenue above US$10bn for the first time but capex was US$13.2bn or US$1bn above consensus and up 90% year-on-year (Bloomberg)

• Tesla Q2 profits down 45% year-on-year despite revenue growth of 2%, average vehicle selling price down almost 13% quarter-on-quarter, management reaffirmed deliveries likely to remain lower year-on-year (Bloomberg)

• Visa Q3 revenue growth misses estimates as steep borrowing costs limited consumer spending (Reuters)

• CrowdStrike projected to cost Fortune 500 companies over US$5bn in losses (Reuters)

• OpenAI may lose as much as US$5bn this year and forced to raise more cash in the next 12 months (The Information)

• LVMH quarterly sales in China down 14% as wealthy shoppers reined in spending on luxury goods (Bloomberg)

• Deutsche Bank Q2 pauses buybacks, raises credit provisions after Q2 loss (Bloomberg)

CENTRAL BANKS

• Bank of Canada cuts by 25 bp for a second-straight meeting (Bloomberg)

• RBA Governor Bullock says Australian inflation more persistent than overseas (AFR)

POLITICS & GEOPOLITICS

• Democrats finalise plans to formally nominate Harris as candidate (Bloomberg)

• Harris seeks to finish Biden's progressive agenda (Axios)

• Biden and Netanyahu to discuss Gaza truce (Reuters)

• Tensions in Middle East escalating after unprecedented Houthi attack on Tel Aviv (USIP)

ECONOMY

• US July PMIs climbed to the highest since April-22 – manufacturing PMI fell into contraction of 49.5 vs. 51.6 consensus while services PMI advanced to 56 vs. 55 consensus – average prices charged for goods and services rose at the slowest rate since January (Reuters)

• US GDP data expected to show weakest back-to-back quarters of growth since 2022 (Bloomberg)

• UK PMI at two-month high on jump in new business growth (Reuters)

• Japan flash manufacturing PMI falls into contraction as services rebound (Reuters)

• German GfK consumer confidence recovers significantly in August (Reuters)

• South Korea consumer sentiment hits one-year high on rate cut hopes and surging exports Reuters)

• South Korea business sentiment softens over weak demand and high interest rates (Yonhap)

ASX TODAY

• Ampol reports unaudited half-year RCOP EBIT of approximately $500-510m (ALD)

• Bellevue Gold planning to raise up to $200m to repay debt (AFR)

• Coronado reports Q2 ROM production of 7.2Mt, up 23.8% quarter-on-quarter (CRN)

• Lynas Rare Earths holder Georgina Rinehart discloses purchase of 12.3m shares, raising stake from 5.8% to 7.1% (LYC)

• Macquarie issues Q1 update, performance consistent with expectations (MQG)

• Next Science reports Q2 sales of $5.8m, up 5% year-on-year, reaffirms full-year guidance and positive cash flow for the second half (NXS)

 WHAT TO WATCH TODAY

Brace for a tough session. However, S&P 500 sectors like Utilities, Healthcare, Energy and Staples finished higher overnight. This could lead to a difficult but not disastrous day for local stocks.

• Ampol: The first-half EBIT number $505m (mid-point) is a sizeable miss against Macquarie forecasts of $618m (data from May).

• Newmont: NYSE-listed Newmont shares are up 0.6% after hours following the Q2 earnings release. The company reported Q2 EPS that was around 16% ahead of consensus. Total gold production for the quarter stood at 1.53m ounces, in-line with analyst expectations. Let's see if this results in any kind of gap up for local Newmont shares

• Sub sector selloffs: Our overnight ETF watchlist had plenty of sectors down 2-5%, including Lithium, Uranium, Fintech, Steel, Cloud and more. This could see local names experience a fairly weak open

• More to come: Plenty more quarterlies to be announced before market open. Keen to see any indication of a dividend or capital management from Karoon Energy, further clarity about Fortescue's pivot from green hydrogen

BROKER MOVES

• 29Metals downgraded to Sell from Hold; target cut to $0.34 from $0.44 (Canaccord)

• Opthea initiated Speculative Buy with $0.70 target (Bell Potter)

• Pantoro upgraded to Buy from Hold; retains $0.10 target (Bell Potter)

• Perpetual upgraded to Buy from Neutral; target remains $25 (UBS)

Companies trading ex-dividend: 

• Thu 25 July: None

• Fri: 26 July: None

• Mon 29 July: None

• Tue 30 July: Mirrabooka Investments (MIR) – $0.09, 360 Capital Mortgage REIT (TCF) – $0.042

• Wed 31 July: None

Other ASX corporate actions today: 

• Dividends paid: Australian Unity Office (AOF) – $0.037, Ricegrowers (SGLLV) – $0.45 

• Listing:None  

• Earnings: Next Science (NXS), PurpleProfle (PPL)

• Quarterlies: Northern Star (NST), Karoon Energy (KAR), Fortescue (FMG), Sandfire Resources (SFR), Coronado Global (CRN), Regis Resources (RRL)

• AGMs: None 

Economic calendar (AEST):

• 10:30 pm: US Durable Goods Orders (Jun)

• 10:30 pm: US GDP Growth (Q2)