Morning Wrap: ASX 200 to fall, Wall Street sinks on rate worries, Gold and oil prices trend higher

ASX 200 futures are trading 30 points lower, down -0.38% as of 8:30 am AEDT.

Major US benchmarks sold off as bond yields continued to push higher, gold prices hit another all-time high of US$2,280 an ounce, oil prices hit levels not seen since late October amid rising geopolitical tensions and EV deliveries from Tesla, Rivian and GM paint a bearish view for demand.

Let's dive in.

S&P 500 SESSION CHART

S&P 500 gaps down to finish lower for a second consecutive session (Source: TradingView)

ASX TODAY

• ASX 200 set to fall for a second consecutive session as rising bond yields place downward pressure on equity markets

• Boss Energy passes final technical milestone in Honeymoon re-start strategy

• Coronado Global CFO discloses sale of 8,100 shares

• Westgold Resources cuts FY gold production guidance and hikes up cost guidance

• Virgin Money UK announces full cancellation of remaining buyback program with immediate effect 

• Austal's long-serving chairman weighs retirement as bids land (AFR)

• HMC-managed HealthCo and Wellness REIT circles Aussie healthcare assets (The Australian)

BROKER NOTES

• Bellevue Gold downgraded to Neutral from Overweight but target increased to $1.85 from $1.80 (Barrenjoey) 

• Capricorn Metals upgraded to Overweight from Neutral and target increased to $5.60 from $5.00 (Barrenjoey)

• Emerald Resources upgraded to Neutral from Underweight and target increased to $3.0 from $2.90 (Barrenjoey)

• Gold Road Resources downgraded to Neutral from Outperform but target remains $1.70 (Macquarie)

• Orora downgraded to Neutral from Positive with $2.61 target (E&P)

• Whitehaven Coal upgraded to Overweight from Neutral and target increased to $7.70 from $7.15 (Barrenjoey)

MARKETS

• S&P 500 gaps down 0.75% at the open but remained relatively rangebound for the session

• Gold set another record high of US$2,280 an ounce and finished the session at best levels

• WTI crude settled 1.8% higher and hit its highest levels since late October amid Iran-Israel and Ukraine-Russia headlines

• Growing inflation risk from recent commodity upswing – Bloomberg Commodity Index is up more than 3% in the past month while oil is breaking out to year-to-date highs

• Markets facing a number of early headwinds heading into the second quarter – Bond yield resurgence with 10-year yields hitting four-month highs, worries the Fed won’t cut in 2024, stretched positioning and sentiment indicators, cracks in the consumer resilience theme and EV weakness

• Copper rallies back above US$9,000 a tonne on rising optimism around Chinese economy (Bloomberg)

• Investors are turning away from 'buy India, sell China' strategy as Chinese valuations become more attractive (Bloomberg)

INTERNATIONAL STOCKS

• PVH full-year sales guidance missed citing difficult macro backdrop and EU weakness (Bloomberg)

• UBS to commence new share buyback program of up to $2bn (Bloomberg)

• GM reports a 1.5% decline in vehicle sales during first quarter of 2024 (CNBC)

• Rivian Q1 vehicle production comes in below consensus at 13,980 (Reuters)

• Tesla reports an 8.5% year-on-year decline in deliveries in the first quarter (CNBC)

• GE Vernova started trading on the NYSE, following its spinoff from General Electric (CNBC)

CENTRAL BANKS

• Cleveland Fed President Mester says she still expects a rate cut this year but cited the need for more confidence (Fed)

• RBA minutes show no discussion on hiking (Bloomberg)

• Xi's call to increase trading of government bonds suggests China moving into line with other major central banks (Bloomberg)

• BOJ JGB purchases confirm lower FY24 trajectory (Nikkei)

ECONOMY

• US job openings rise slightly, in-line with expectations and little changed month-on-month at 8.75 million (Reuters)

• ECB says consumer inflation expectations fall to lowest since Ukraine war as officials prepare to cut rates in June (Bloomberg)

• Eurozone manufacturing downturn deepened again in March, PMI shows (Reuters)

• UK store inflation hits 2-year low as supermarket price wars cool things down (Bloomberg)

• South Korea inflation unchanged against forecasts for fall, clouding BOK rate cut prospects (Bloomberg)

• Indian manufacturing activity expands at quickest pace in 16 years, underpinned by strong domestic and external demand (Reuters)

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Sectors to Watch: Oil and Gold

Markets are in the midst of a pullback as yields push higher (which has also stoked some upward pressure on bond volatility – otherwise known as the MOVE index). This is placing downward pressure on a number of sectors including growth (tech and discretionary), yield sensitive sectors (e.g. real estate) and risk (e.g. Bitcoin down 5.9% overnight). The good thing is that we're coming off a pretty big run – So let's see if the market can muster up a calm and collective 3-5% pullback. As for sectors to watch today:

Oil: WTI crude has pushed above US$85 a barrel for the first time since October 2023 on rising geopolitical tensions. Energy was the best performing S&P 500 sector overnight, up 1.37% (vs. S&P 500 -0.72%). While local names like Beach Energy (ASX: BPT) and Karoon Energy (ASX: KAR) have managed to capture some upside, the largest and most obvious beneficiary – Woodside (ASX: WDS) – has struggled. Woodside's adjusted NPAT is expected to slump from US$3.3 billion in FY23 to US$1.15bn in 2026 due to falling energy prices and its focus on decarbonisation, according to Macquarie.

Gold: Gold continued to power ahead overnight, up 1.26% to US$2,279 an ounce and closing near best levels. The VanEck Gold Miners ETF added 1.28% overnight to close at its highest level since July 2023. Most ASX-listed gold names were up 2-8% on Tuesday. Let's see if they can continue trending higher.

Companies trading ex-dividend: 

• Wednesday, 4 April: Lindsay Australia (LAU) – $0.021, Clime Capital (CAM) – $0.014, Eureka Group (EGH) – $0.007, ARB Corp (ARB) – $0.34

• Thursday, 5 April: None

• Friday, 6 April: None

• Monday, 9 April: Brickworks (BKW) – $0.24

• Tuesday, 10 April: None

• Wednesday, 11 April: Cosol (COS) – $0.01, Duxton Water (D20) – $0.036

Other ASX corporate actions today: 

• Dividends paid: Lycopodium (LYL) – $0.37, Lifestyle Communities (LIC) – $0.055, Generation Development Group (GDG) – $0.01, Bega Cheese (BGA) – $0.04, AMP (AMP) – $0.02, Servcorp (SRV) – $0.12

• Listing: None

Economic calendar (AEDT):

• 9:00 am: Australia AI Group Industrial Index (Mar)

• 8:00 pm: Eurozone Inflation (Mar)

• 1:00 am: US ISM Services PMI (Mar)