Morning Wrap: ASX 200 to fall, S&P 500 tumbles on Fed hold, US-Iran war flares up again

In a nutshell:

• Major US benchmarks tumbled and finished at worst levels

• S&P 500 (-1.52%) aggressively sold off in the last hour of trade, flipping from a ~0.2% gain to a negative close

• A hawkish Fed hold, as three policymakers dissented in favour of a quarter-point hike, the most one-directional dissent since 2016

• US 30-year yields spiked to the highest since 2007, while the 10-year returned to the upper bound of its recent trading range

• Iran fired missiles at US bases in Jordan and Trump vowed retaliation, sending Brent up 6% to US$88 a barrel

Let's dive in.

• Major US benchmarks finished sharply lower and at worst levels

• Markets sold off aggressively into the close, with the S&P 500 flipping from a ~0.2% gain to (1.5%) decline in the last hour of trade

• Defensive and energy-related pockets of the market held up, with Staples and Communication Services eking out a small gain

• US 30-year yield jumped 12 bps to 5.21%, the highest since Jul-07, while the 10-year rose 8 bps to 4.68% 

• Interest-rate swaps priced ~60% odds of a Fed hike in September after the hold, with a 25 bp hike fully priced by December (BBG)

• Apollo chief economist Torsten Slok said the Fed's reduced guidance under Warsh is fuelling a "yo-yo" bond market, citing the 30-year's surge past 5.22% (BBG)

• Nasdaq 100 entered a technical correction, extending its slide from a record to about 11%, with the Nasdaq Composite closing more than 10% below its all-time high (BBG)  

• Twenty of the world's most valuable chip stocks have shed $1.3 trillion since Friday's close, led by a $238bn fall in Nvidia's market value (CNBC) 

• JPMorgan's US Tactical Positioning Monitor flashed a buy signal for the S&P 500, with Andrew Tyler's team calling client positioning oversold enough to warrant a tactical buying opportunity (TS)

• Kospi slid as much as 13% intraday and closed down 6%, triggering a circuit breaker for a second straight day and taking its two-day fall to 16% (BBG)

• Wall Street banks demand extra collateral from hedge funds as AI stock selloff accelerates (FT)

• South Korea convenes emergency meeting after stock rout as finance minister apologizes over leveraged ETF (BBG)

• Microsoft Q4 FY26: revenue up 18% to $90.0bn, ~3% ahead ests, EPS $4.81 up 32% year-on-year and ~14% ahead of ests, Azure revenue topped US$100bn for the first time and Microsoft 365 Copilot surpassed 30m paid seats, shares up ~8% after hours (CNBC)

• Meta Q2 2026: Revenue up 28% to $60.8bn, ~1% ahead of ests, EPS $6.18 missed ests by ~14%, Q3 revenue guidance soft, shares tumble ~8% after hours (CNBC)

• SK Hynix Q2 2026: revenue up 257% to 79.32 trillion won, ~6% below consensus, operating profit also a miss despite soaring 557% to 60.54 trillion won, shares closing 9.6% lower (CNBC)

• IGRC fired ballistic missiles at a US air base and military command centre in Jordan, ending a days-long lull (CNBC)

• Trump vowed retaliation, saying "we'll be hitting them hard, they're going to get a beating" after the intercepted attack (CNBC)

• US and Saudi aircraft struck multiple Iran-aligned militia logistics and weapons sites in eastern Iraq, retaliating for more than 30 drone attacks over three days (CNBC)

• Iran rejected Oman's plan for joint management of the Strait of Hormuz and countered with an arrangement giving Tehran greater control, deputy foreign minister Kazem Gharibabadi said (AJ)

• FCC banned imports of new foreign-made humanoid robots, quadruped robot dogs and power inverters, adding both categories to its Covered List on national security grounds (AP)

• Companies reconsider moving supply chains back to China as US tariff rates stabilise (NYT)

• Washington weighing controls on the use of Chinese open-source AI models (AP)

• Fed held the federal funds target at 3.50-3.75% on a 9-3 vote, a fifth consecutive hold, with all three dissenters preferring a quarter-point hike (CNBC)

• Cleveland's Hammack, Minneapolis' Kashkari and Dallas' Logan dissented, the first time since September 2016 that three policymakers dissented in the same direction (CNBC)

• Warsh on the split: "I asked for a good family fight, and I got one," describing an active and robust discussion rather than an inertial one (CNBC)

• Warsh reiterated the Fed has no tolerance for persistently elevated inflation, which has run above the 2% target for more than five years (AP)

• FOMC statement said economic activity is expanding at a solid pace despite elevated uncertainty owing in part to the Middle East conflict (AP)

• Warsh's statement was again markedly shorter than the pre-2026 norm, consistent with his removal of forward guidance from FOMC communications (CNBC)

• Australian CPI rose 3.8% year-on-year in June, down from 4.0% in May and below the 4.0% expected, the softest reading since February, the likelihood of another RBA hike eased to ~50% from 90% before the release (BBG)

• Domino's Pizza reaffirms FY26 underlying NPAT of $118-122m and flags ~$259m of write-downs, ~$246m non-cash. FY26 SSS -4.1% (Aus/NZ -4.7%) but free cash flow ~$164m, up ~$116.6m on FY25, and net leverage cut to ~1.9x EBITDA (DMP)

• National Australia Bank reports June-quarter B&PB business lending +4%, the strongest June month since FY22, with home lending balances +2% though application values fell 9%. NPLs to GLAs improved to 2.91% from 3.00%, but watch loans rose 8% (NAB)

• PLS Group posts record FY26 production and sales, both +17% yoy, with June-quarter revenue +31% to $743m on realised pricing +13% to US$2,107/t. Cash margin +26% to $579m and cash +57% to $2,290m after the inaugural US$600m bond (PLS)

• The bad stuff: In a nutshell, a pretty rough overnight session. US 2-year yield eased but longer-dated yields soared as the market is worried about inflation and wants the Fed to act more aggressively. In addition, oil prices spiked ~6% to US$88 a barrel after US-Iran tensions flared up again. There was a classic defensive pivot overnight, with Staples (+0.26%), Communication Services (+0.20%), Real Estate (-0.19%) and Healthcare (-0.61%) outperforming on a relative basis. Meanwhile, sectors like Homebuilders, Defence, Airlines, pockets of mining (uranium, rare earths) underperformed. Interestingly, the iShares Expanded Tech-Software ETF (+0.64%) finished higher overnight.

• Coronado Global Resources downgraded to Speculative Sell from Speculative Hold (Bell Potter)

• Mineral Resources upgraded to Neutral to Sell; target up to $60 from $58 (Goldman Sachs)

• Perpetual downgraded to Neutral from Overweight; target up to $20 from $19.50 (JPMorgan)

• Westpac upgraded to Buy from Neutral; target up to $45 from $38.80 (UBS)

Stocks trading ex-dividend: 

• Thu 30 Jul: 360 Capital Mortgage REIT (TCF) – $0.05, Gryphon Capital Income Trust (GCI) – $0.014, KKR Credit Income (KKC) – $0.017, Mirrabooka Investments (MIR) – $0.095, Perpetual Credit Income Trust (PCI) – $0.006

• Fri 31 Jul: Metrics Master Income Trust (MXT) – $0.014, Metrics Income Opportunities Trust (MOT) – $0.011, Metrics Real Estate Multi-Strategy Fund (MRE) – $0.009, Pengana International Equities (PIA) – $0.125 

Other ASX corporate actions today:       

• Dividends paid: RAM Essential Services Property Fund (REP)

• Earnings: Champion Iron (CIA) 

• IPOs: None

• AGMs: None

Economic calendar (AEST):

• 11:30 am: Australia Building Permits

• 7:00 pm: Eurozone GDP growth

• 9:00 pm: Bank of England Interest Rate Decision (Ests: Hold at 3.75%)

• 10:30 pm: US Core PCE Price Index