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

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)

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)