Morning Wrap: ASX 200 to fall, S&P 500 retreats + Gold and uranium stocks climb

The stock market took a breather last Friday as rate-cut euphoria faded, FedEx reported earnings well-below market expectations – flashing a warning on the economy, uranium stocks rally after Microsoft announces an agreement to restart a 835MW nuclear facility in Pennsylvania and gold tops US$2,600 for the first time on record.

Let's dive in.

S&P 500 SESSION CHART

Choppy session for the S&P 500 (Source: TradingView)

OVERNIGHT MARKETS

• Major US benchmarks finished mostly lower but finished near best levels

• Relatively choppy and uneventful session after a big Thursday rally that pushed the Dow and S&P 500 to fresh all-time highs

• US weekly recap – Russell 2000 +2.0%, Dow +1.6%, S&P 500 +1.3%, Nasdaq +1.4% 

• Today’s big story – FedEx (-15.2%) missed first-quarter earnings by almost 25%, underpinned by reduced demand for priority services, increased demand for deferred services and constrained yield growth, full-year earnings cut by ~2.5% at the midpoint

• Big jump in sentiment – AAII bull-bear spread jumped 15.6 pp to 24.4% for week-ended 20-Sep, the biggest weekly increase since Nov-23 while BofA’s Flow Show report noted US equities attracted ~US$34bn for week-ended 19-Sep, the largest inflow in nine weeks and third largest this year

• Markets may have already priced-in rate cut benefits to US stock markets, capping further upside (RT)

• Higher 10-year yields after Fed cut a reminder that central bank does not have full control over borrowing costs (WSJ)

STOCKS

• FedEx cuts FY outlook after posting lower profits and revenues (BBG)

• Apple iPhone 16 hits stores today but missing key AI features (BBG)

• Mercedes-Benz cuts FY outlook on lower-than-expected China sales (RT)

• Buffet's remaining US$34bn stake in BofA is now pure profit (BBG)

• US banks made US$1tn from Fed's two-and-a-half-year era of high interest rates as deposit rate increases lagged (FT)

• Qualcomm interested in buying all of Intel, analysts flag as a setback on its gross margins and cash flow and do little to dampen its reliance on TSMC (BBG)

CENTRAL BANKS

• Fed Governor Waller says inflation is softening much faster than expected and the Fed could support another 50 bp cut if the labour market worsens (CNBC)

• BOJ leaves policy rate unchanged, Ueda reaffirms policy adjustments, upgrades consumption outlook (RT)

• PBOC keeps lending rates unchanged against expectations for a cut (RT)

• ECB VP de Guindos says all options open on next policy move (BBG)

• BoE Mann says they should move slowly and then cut rates aggressively (BBG)

• RBA to keep policy interest rates steady and cut in March quarter 2025 (RT)

POLITICS & GEOPOLITICS

• House Republicans work with Democrats on three-month deal to avert government shutdown (Axios)

• Israel unleashes heavy strikes on Lebanon as western allies urge restraint (FT)

• EU and China aim to resolve differences over Chinese EVs after negotiators fail to strike deal (SCMP)

ECONOMY

• China mulls scrapping major homebuying curbs to boost demand (BBG)

• Japan's core inflation rate accelerates for fourth consecutive month (RT)

• UK retail sales had a monthly rise of 0.4%, beating expectations but but consumer confidence tumbles in anticipation of 'painful' budget (FT)

ASX TODAY

• Fletcher Building seeks to raise NZ$700m in emergency funding to lower debt as earnings weighed by depressed New Zealand economy (AFR)

• Healius likely to sell its Lumus Imaging business to Affinity Equity Partners, asking price excluding costs was $700m (The Aus)

• Incitec Pivot is sounding out prospective buyers for its fertiliser operation after previous discussions with Indonesian buyer Pupuk Kaltim fell through (The Aus)

• REA Group raises bid for Rightmove to close to 5.9 billion euros, up approximately 7% from its previous offer (FT) 

WHAT TO WATCH TODAY

• Uranium: Global X Uranium ETF (+4.1%) after Microsoft announced a power purchase agreement with major US utilities provider, Constellation. The deal will enable the restart of a 835MW nuclear facility, bringing a significant supply of reliable electricity. Expect some positive follow through for local names but the catalyst isn't as robust as some of the previous supply-related events.

• Gold: Gold closed above US$2,600 for the first time on record, pushing the VanEck Gold Miners ETF 2% higher overnight. Higher bullion prices should support a strong session for local gold names.

• Defensives vs. everything else: Utilities, telcos and staples were the only sectors to finish green last Friday, while Industrials (largely due to FedEx), Materials and Tech underperformed. Could this see a bit of a defensive lean in today's session?

BROKER MOVES

• Atlas Arteria upgraded to Outperform from Neutral; target up to $5.26 from $5.10 (MQG)

• Evolution Mining downgraded to Neutral from Buy; target up to $4.50 from $4.10 (BofA)

• Regis Resources downgraded to Neutral from Buy; target remains $2.00 (BofA)

• Westgold upgraded to Buy from Hold; target up to $2.85 from $2.20 (Euroz)

Stocks trading ex-dividend: 

• Mon 23 Sep: Bisalloy Steel (BIS) – $0.115

• Tue 24 Sep: Pacific Smiles (PSQ) – $0.033, WT Financial (WTL) – $0.005, Briscoe (BGP) – $0.115, Southern Cross Electrical (SXE) – $0.05 

• Wed 25 Sep: H&H High Conviction (HCF) – $0.02, Stealth Group (SGI) – $0.008, Genesis Energy (GNE) – $0.064, Nick Scali (NCK) – $0.33, Imdex (IMD) – $0.013, Cedar Woods (CWP) – $0.17, Teaminvest (TIP) – $0.015

• Thu 26 Sep: Vulcan Steel (VSL) – $0.118, Shine Justice (SHJ) – $0.04, PRL Global (PRG) – $0.03, Garda Property Group (GDF) – $0.018

• Fri 27 Sep: Tasmea (TEA) – $0.04, Dexus Industria REIT (DXI) – $0.041, Dexus Convenience Retail REIT (DXC) – $0.051, Rural Funds (RFF) – $0.029, Arena REIT (ARF) – $0.046, 360 Capital Mortgage (TCF) – $0.05, Charter Hall Social Infrastructure REIT (CQE) – $0.037, Charter Hall Long Wale REIT (CLW) – $0.063, Centuria Office REIT (COF) – $0.025, Centuria Industrial REIT (CIP) – $0.041, Comms Group (CCG) – $0.003, Coventry Group (CCG) – $0.003, Lindsay Australia (LAU) – $0.028

Other ASX corporate actions today: 

• Dividends paid: ARN Media (A1N), Smartgroup Corporation (SIQ), oOh media (OML), Embark Early Education (EVO)

• Listing: Webjet Group (WJL) at 12:00 pm

• AGMs: None

Economic calendar (AEST):

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

• 6:00 pm: Eurozone Manufacturing and Services PMI (Sep)