Morning Wrap: ASX 200 to fall, S&P 500 slips, Meta and Microsoft crush earnings, Copper prices collapse

ASX 200 futures are down 21pts (-0.24%) as of 8:30 am AEST.

In a nutshell:

• Major US benchmarks finished broadly lower after the Fed's hawkish hold

• Nasdaq futures up 0.9% after strong earnings from Meta and Microsoft

• Copper prices tumble on Trump tariffs, Rio Tinto shares tumbled overnight on poor earnings

Let's dive in.

S&P 500 SESSION CHART

S&P 500 tumbles after the Fed rate decision (Source: TradingView)

OVERNIGHT MARKETS

• Major US benchmarks finished mostly lower but off worst levels

• S&P 500 down for a second-straight day, Equal-weight S&P 500 underperformed by 42 bps amid weak breadth

• Today’s big story – A dizzying number of catalysts including hawkish Powell commentary, strong Q2 earnings, Meta and Microsoft surged after hours on better-than-expected results, Trump hit India and Brazil with 25% and additional 40% tariff and copper prices plunged on new copper tariff that excludes refined products

• S&P 500 approaches its historically toughest months: August and September (BBG)

EARNINGS

• Meta (+11.5% AH) topped Q2 earnings expectations on advertising strength, lifted the low end of its 2025 capex forecast (BBG)

• Microsoft (+8.5% AH) beats earnings expectations, Azure cloud-computing unit posts 39% rise in sales, capex for the quarter up 27% to a record $24.2bn (BBG)

• L'Oreal's (+4.9%) Q2 sales miss estimates on weak demand in North Asia, Europe, though China positive for first time in five quarters (BBG)

• Glencore (+1.9%) plans to cut $1bn in costs after reviewing its operations, lifts long-term profit forecasts (BBG)

• Kering's (+1.6%) Q2 sales drop 15% as Gucci slumps, warned weaker sales across all markets (RT)

• UBS (-0.1%) Q2 profit beats estimates as strong trading revenue offsets investment banking weakness (BBG)

• Visa (-0.1%) beat boosted by strong card spending volumes, but unchanged guidance underwhelms expectations (BBG)

• Toyota's (-0.8%) sales reach record high in first half, driven by hybrid demand and front-loaded purchases (BBG)

• Starbucks (-0.2%) revenue beats expectations as menu reset offsets domestic consumer slowdown (RT)

• Logitech (-2.9%) beats Q1 forecasts, mitigates tariff impact with price hikes, production shift out of China (RT)

• Mercedes-Benz (-4.0%) Q2 profit plummets 68% amid tariffs, China weakness, guides to 'significantly lower' vehicle sales (FT)

• Rio Tinto (-4.4%) reported its lowest first half profit in five years due to falling iron ore prices and cyclones in Western Australia (FT)

• HSBC (-5.5%) profit falls 26% amid China, Hong Kong real estate losses as Europe's largest bank pursues overhaul (FT)

• Adidas (-11.5%) records Q2 tariffs hit, flags cost increases of up to €200m in the second half of the year (FT)

CENTRAL BANKS

• Fed kept interest rates unchanged at 4.25-4.50%, Powell says “there are many, many uncertainties left to resolve,” opening sentence said “economic activity moderated in the first half of the year” vs. prior comments about “expand at a solid pace” (BBG)

• Bank of Canada holds at 2.75%, keeps door open for more cuts (BBG)

TARIFFS & GEOPOLITICS

• No breakthrough in US-China talks, Trump to decide on tariff deadline extension (BBG)

• Trump says goods from India will face a 25% tariff when entering the US beginning on Saturday (YF)

• Trump imposes 50% tariffs on semi-finished copper imports, though excludes refined copper (BBG)

• Trump hit Brazil with an additional 40% tariff, bringing total tariff rate to 50% (RT)

• Trump ends US de minimis exemption, impacting cheap goods (CNBC)

ECONOMY

• US Q2 GDP up 3.0% quarter-on-quarter vs. consensus for a 2.0% increase, annualised GDP running at 2.0% vs. 1.8% consensus, increase largely reflects decrease in imports and higher consumer spending (BBG)

• Eurozone economy grew by 0.1% in Q2, defying expectations amid global trade tensions (BBG)

• Australian inflation falls by more than expected, locking in August rate cut expectations (BBG)

ASX TODAY

Check out our Live Blog for the latest coverage and analysis for company announcements, market movements and economic updates.

• Beach Energy reports Q4 production of 4.6MMboe, in-line with market expectations, says it expects 30% year-on-year NPAT growth (BPT)

• Carnarvon Energy Chairman Robert Black purchases 2.5m shares (CVN)

• Deterra Royalties reports June quarter total royalty receipts of $89.1m vs. $61.9m a quarter ago (DRR)

• Rio Tinto reports 1H25 underlying earnings of $4.81bn vs. $5.03bn ests, interim dividend of $1.48 per share, reaffirms FY25 production guidance (RIO)

• Sims enters into MoU with Equest Steel, Sims to exclusively supply up to 550,000 tonnes of ferrous scrap annually (SGM)

WHAT TO WATCH TODAY

• Rio Tinto: NYSE-listed Rio shares tumbled 4.4%. The result was strong operationally, beating market expectations by 6% at the product group level, according to RBC Capital Markets. However, EPS and dividends were 10% and 4% miss respectively on higher finance items, tax and restructuring costs at Arcadium.

• Copper: Copper prices tumbled 18% overnight (though this refers to COMEX prices, not the global benchmark set by the LME). The move was driven by Trump's tariffs would be applied to semi-finished copper products (wire, pipe etc) but exclude refined meta (raw, pure metal), a major blow to US producers banking on protection. This drove broad-based weakness for copper miners, though most bounced off session lows (e.g. TSX-listed Capstone Copper finished 3.7% lower, off session lows of -9.8%)

• Tech: Strong Meta and Microsoft earnings should see positive flows for the broader tech sector. Meta capex spend and guidance should be a positive for data centre names like DGT.

BROKER MOVES

• Champion Iron downgraded to Neutral from Outperform; target cut to $5.00 from $5.60 (MQG)

• Droneshield upgraded to Buy from Hold; target remains $2.80 (BP)

• Lottery Corp downgraded to Neutral from Overweight; target up to $5.55 from $5.40 (JPM)

• MinRes downgraded to Underweight from Neutral; target up to $24.00 from $19.00 (JPM)

• MinRes downgraded to Underperform from Neutral; target up to $29.00 from $22.00 (MQG)

• Pilbara Minerals downgraded to Underweight from Neutral; target remains $1.25 (JPM)

Stocks trading ex-dividend: 

• Thu 31 Jul: Metrics Master Income Trust (MXT) – $0.013, Metrics Income Opportunities Trust (MOT) – $0.012, Metrics Real Estate (MRE) – $0.009

• Fri 1 Aug: Pengana Global Private Credit Trust (PCX) – $0.033, La Trobe Private Credit Fund (LF1) – $0.012

Other ASX corporate actions today: 

• Dividends paid: Rural Funds Group (RFF)

• Earnings: None

• IPOs: None

• AGMs: None

Economic calendar (AEST):

• 11:30 am: Australia Retail Sales (Jun)

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

• 1:00 pm: Japan Interest Rate Decision (Ests: Hold at 0.50%)

• 10:00 pm: Germany Inflation Rate (Jul)

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