Morning Wrap: ASX 200 to fall, S&P 500 struggles on inflation woes, Nvidia lifts Nasdaq to fresh record high

ASX 200 futures are down 66pts (-0.77%) as of 8:30 am AEST.

In a nutshell:

• Major US benchmarks finished mostly lower, with gains largely driven by Nvidia (+4.0%) while pretty much everything else struggled

• US inflation was slightly cooler-than-expected, but still stoked concerns about core goods inflation and tariff impacts

• A few high-profile miner quarterlies coming through this morning, including Rio Tinto and Evolution Mining

Let's dive in.

S&P 500 SESSION CHART

S&P 500 gave back early gains to finish lower and at worst levels (Source: TradingView)

OVERNIGHT MARKETS

• Major US benchmarks finished mostly lower and near worst levels

• S&P 500 briefly crossed the 6,300 level for the first time on record but faded early gains, marking a weak close

• Breadth was very negative, with more than 90% of S&P 500 constituents lower and the Equal-weight S&P 500 underperformed the official benchmark by 99 bps

• Nvidia (+4.0%) was the key driver of gains at the index level after the company said it can resume selling its H20 AI chip to China

• Markets struggled despite a slightly cooler US core inflation print, which still flagged some tariff pass-through in core goods. This dialed back Fed’s September rate cut expectations to ~53% from 60%

• Major US banks including JPMorgan, Citi and Wells Fargo reported strong Q2 earnings but guidance was somewhat mixed

• Japan's 10-year yield surges to levels not seen since the 2008 GFC (BBG)

• Wall Street strategists warn of risks if Treasury relies more on Treasury bills to cover deficit (BBG)

• JPMorgan's Dimon hints private credit may have peaked, citing high costs and low spreads (BBG)

• Weaker US dollar threatens European earnings, currency shifts become key focus this reporting season (BBG)

BofA FMS SURVEY

• Latest Global Fund Manager Survey highlighted the most bullish sentiment since Feb-25, with a surge in risk appetite over the past three months

• Cash levels declined 0.3 pp to 3.9%, triggering a sell signal (as low cash levels sometimes coincide with market peaks)

• Biggest jump in US exposure since Dec-24, largest three-month spike in tech allocations since Mar-09

• Recession expectations fell for a third-straight month

• Short US dollar was the most crowded trade (for the first time in history)

STOCKS

• Nvidia to sell H20 AI chip in China after US assurances (BBG)

• Citigroup shares hit highest since 2008 after profit beat, buyback plan (RT)

• Google to invest $25bn in data centers and AI infrastructure across largest U.S. electric grid (CNBC)

• Blackstone to invest $25bn in AI data centers and energy (AX)

• Apple to announce $500m commitment to MP Materials, the only rare earth mine currently operating in US (FB)

• Oracle to invest $3bn in AI, cloud expansion in Germany, Netherlands (YF)

• Rio Tinto chooses Simon Rrott as new boss, maintaining status quo leadership (FT)

CENTRAL BANKS

• Trump administration has started formal search for new Fed chair (WP)

• Tariff-linked inflation complicating Trump's pressure on Fed to cut rates (POLT)

• Trump's push for 1% Fed rate could backfire, reignite inflation and undermine independence (RT)

TARIFFS 

• EU eyes €72bn in US goods for trade countermeasures, including aircraft and bourbon (POLT)

• Trump locks in trade deal with Indonesia after tariff threat, remains light on details (CNBC)

• China restricts export of key EV battery technologies, strengthening its global dominance (NYT)

• Canada's Carney anticipates intensified US trade talks, doubts Trump's willingness to fully drop tariffs (BBG)

• US slaps 17% duty on Mexican tomatoes after trade talks fail, aiming to boost domestic production (BBG)

ECONOMY

• China's Q2 GDP up 5.2% year-on-year vs. 5.1% ests, but slowdown looms amid trade risks and weak demand (BBG)

• China home prices drop faster, down 0.27% in May or the most in eight months, calls for support grow louder (BBG)

• Australian consumer sentiment rises slightly in July despite RBA rate hike, finances improve (BBG)

US INFLATION

• June core CPI up 0.2% month-on-month vs. 0.3% ests

• Annualised core up 2.9% vs. 3.0% consensus, but up from 2.8% in May

• Headline CPI up 0.3% month-on-month, in-line with expectations

• Annualised headline at 2.7%, in-line but up from 2.4% in May

• Shelter index up 0.2% month-on-month, accounting for the bulk of the increase

• Core goods up 0.2% month-to-month, accelerating from May’s flat reading as tariff impacts take the spotlight

ASX TODAY

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

• Evolution reports FY25 production guidance towards the top end, but costs also at top end, provides FY26 guidance of 710-780koz (EVN)

• Newscorp authorises new $1bn buyback program, intends to accelerate the pace of buyback (NWS)

• Rio Tinto reports Q2 iron ore production of 83.7Mt vs. 81.6Mt consensus, FY25 production guidance unchanged but iron ore shipments expected to be at the lower end of guidance range, copper towards the higher end (RIO)

• Spartan Resources removed from ASX effective prior to open on 23-Jul and replaced by Infratil (IFT)

WHAT TO WATCH TODAY

• Get ready for a pullback: The overnight session was very weak, with pretty much everything ex-semiconductors finishing lower. Yields are starting to surge to uncomfortable levels (US 10-year at 4.49%), BofA survey flags some toppy data points, US banks are beating earnings but guidance was mixed. Get ready for a bit of weakness today, let's see how the dust settles.

BROKER MOVES

• Pepper Money downgraded to Neutral from Outperform but target up to $1.70 from $1.65 (MQG)

• Technology One downgraded to Sell from Hold but target up to $35.75 from $35.50 (BP)

Stocks trading ex-dividend: 

• Wed 16 Jul: None

• Thu 17 Jul: WAM Global (WGB) – $0.04

• Fri 18 Jul: None

Other ASX corporate actions today: 

• Dividends paid: Pepper Money (PPM), Garda Property (GDF)

• Earnings: None

• IPOs: None

• AGMs: None

Economic calendar (AEST):

• 4:00 pm: UK Inflation (Jun)

• 10:30 pm: US PPI (Jun)