Morning Wrap: ASX 200 to fall, S&P 500 slips, Oil prices spike over Middle East conflict

US stocks finished lower despite a modest recovery in the last hour of trade, oil prices continued to surge amid geopolitical tensions in the Middle East, Nvidia shares jump after CEO notes 'insane' demand for Blackwell chips, Chinese stocks take a breather after the recent V-shaped run and Rio Tinto might be eyeing off a major lithium acquisition amid depressed valuations.

Let's dive in.

S&P 500 SESSION CHART

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

OVERNIGHT MARKETS

• Major US benchmarks finished lower but off worst levels

• S&P 500 and Nasdaq on pace to end lower for the week after three consecutive weekly gains

• Oil prices spiked ~4% after Biden said Israel targeting Iran oil assets is under consideration

• Today’s big story – Another quiet session with light volume and choppy action as the market awaits further catalysts as US unemployment data. A flurry of dovish central bank comments did not provide much of an uplift for markets while Chinese stimulus optimism waned with a sharp pullback in Hong Kong

• Markets awaiting clarity on Israel’s response to Iran’s missile attack, Citi says a major strike on Iranian oil facilities could take 1.5mbpd off the market (BBG)

• China rally comes to halt with technicals and profit-taking to blame(Bloomberg)

• China equity rally may trigger rotation in global portfolios as investors redirect funds from other markets (Bloomberg)

• Crude jumps higher after Biden US and Israel are discussing strikes on Iran's oil infrastructure (BBC)

STOCKS

• OpenAI has secured a new US$4bn revolving credit line after it closed a US$6.6bn funding round (RT)

• Amazon plans to hire 250,000 workers for this holiday shopping season, the same number as last year (RT)

• Walmart, Target, Costco and Nike poised to face biggest impact if US port strikes continue (YH)

• Nvidia CEO says demand for Blackwell product is 'insane' (WSJ)

• European automakers brace for prolonged and deep downturn amid a confluence of negative drivers (FT )

CENTRAL BANKS

• Chicago Fed Goolsbee repeats rates need to come down a lot over next year (BBG)

• Richmond Fed Barkin says price pressures may not fade as fast as expected (RT)

• BoE Governor Bailey says it could cut rates more aggressively on good inflation news (GDN)

• ECB's Schnabel signals shift on inflation, lifts rate-cut expectations (RT)

• BOJ rate hike prospects thrown into doubt after Ishiba pushback (BBG)

POLITICS & GEOPOLITICS

• US and western allies urge Israel to avoid striking Iran's nuclear facilities as efforts to avert regional war mount (FT)

• EU secures enough support from member countries to impose tariffs of up to 45% on China EVs (RT)

ECONOMY

• US East and Gulf coast port strike dragging into its third day, ~45 containerships anchored and unable to unload vs. 3 on Sunday (RT)

• US Sept services PMI prints 54.9 vs. 51.7 consensus, a one-and-a-half year high amid strong growth in new orders (RT)

• Eurozone September services PMIs show business activity slips back into contraction (RT)

• UK Sept services PMIs show firms slow their price increases (RT)

• Japan services PMI slows, business confidence drops to 20-month low (RT)

ASX TODAY

• Alliance Aviation Services confident that any schedule changes from BHP Nickel West will be taken up by existing and new customers (AQZ)

• Fletcher Building holder Schroder Investment Management increases holding to 10.24% from 7.16% (FBU)

• HMC Capital nearing $2bn acquisition of Global Switch Australia, HMC looking to IPO the data centre REIT on the ASX by the end of 2024 (AFR)

• Regis investors seek dividend clarity as the development of its McPillamy’s project in NSW appears off the agenda for now (The Aus)

• Rio Tinto potentially eyeing off a major deal in the lithium space, including Arcadium and Albemarle (The Aus)

WHAT TO WATCH TODAY

• Not a whole lot: Another relatively quiet session with soft-ish lead from Wall Street and fading China momentum

• Copper: Copper prices pulled back 2% after rallying to a two-month high. This triggered a sharp pullback for the Copper Miners ETF, down 3.8% overnight. Watch out for weakness across local names like Sandfire

• Cochlear: Citi upgrades target price by 19% but no EPS changes, citing recent share price weakness and expectations that COH can maintain 10% pa growth for longer

• Energy: Another spike in oil prices overnight, now up almost 10% in the last five sessions. No major escalation in terms of Israeli retaliation but prices clearly responding to speculation about an attack on Iranian oil facilities. S&P 500 Energy sector up only 1.5% vs. Brent 4.3%. Still a positive tailwind for local energy names like Karoon, Woodside and Beach

BROKER MOVES

• AMA Group initiated Add with $0.08 target (MORG)

• Cochlear upgraded to Neutral; target up to $305 from $255 (CITI)

Stocks trading ex-dividend: 

• Fri 4 Oct: None

• Mon 7 Oct: Ridley Corporation (RIC) – 1.84%

• Tue 8 Oct: Clime Capital (CAM) – 1.66%, Katana Capital (KAT) – 0.42%, MFF Capital Investments (MFF) – 1.84%, Perenti (PRN) – 3.79%, Reece (REH) – 0.64%

• Wed 9 Oct: Naos Emerging Opportunities Company (NCC) – 4.76%

• Thu 10 Oct: Duxton Water (D2O) – 2.60%, Wam Active (WAA) – 3.37%

Other ASX corporate actions today: 

• Dividends paid: Auckland International Airport (AIA), Auswide Bank (ABA), Big River Industries (BRI), Bisalloy Steel Group (BIS), Breville Group (BRG), Corporate Travel Management (CTD), Echelon Resources (ECH), Evolution Mining (EVN), IPD Group (IPG), Joyce Corp (JYC), Kina Securities (KSL), Lycopodium (LYL), Mader Group (MAD), Midway (MWY), Motorcycle Holdings (MTO), Perpetual (PPT), Reliance Worldwide Corp (RWC), Service Stream (SSM), Spark New Zealand (SPK), Tourism Holdings (THL), Vita Life Sciences (VLS), WiseTech Global (WTC).

• Listing: None

• AGMs: None

Economic calendar (AEST):

• 11:30 am: Australia Home Loans (Aug)

• 10:30 pm: US Non Farm Payrolls (Sep)

• 10:30 pm: US Unemployment Rate (Sep)