Morning Wrap: ASX 200 to open at fresh all-time highs, S&P 500 and small caps surge on Powell speech

ASX 200 futures are up 84pts (+0.94%) as of 8:30 am AEST.

In a nutshell:

• Major US benchmarks finished sharply higher after Powell carefully opened the door to rate cuts in September, focusing on employment risks over inflation

• Russell 2000 surged 3.8% to trade a fresh year-to-date highs

• Massive day for earnings, with Pilbara Minerals, Ansell, Bendigo Bank and more due to report

Let's dive in.

S&P 500 SESSION CHART

S&P 500 gapped up, closed at best levels (Source: TradingView)

OVERNIGHT MARKETS

• Major US benchmarks snapped a five-day losing streak and rallied to close near best levels

• US weekly recap: Russell 2000 (+3.30%), Dow (+1.53%), S&P 500 (+0.27%) and Nasdaq (-0.58%)

• Stocks were mixed last week, clawing back weekly declines thanks to the Friday rally, with the Russell 2000 outpacing the S&P by 300 bps and posting its best week since early July

• Today’s big story: Powell delivered a more dovish-than-expected speech, noting that shifting balance of risks may warrant policy adjustment

• China stocks extend gains, despite property crisis and tariffs, raising bubble concerns (YF)

• Nvidia earnings this week seen as big volatility event, with traders looking for reassurance around AI spending (BBG)

• Dovish Powell is prompting Vanilla puts or put spreads on the SPX as a market hedge (BBG)

• Fund managers say returns on EM assets will outperform developed peers (BBG)

STOCKS

• Nvidia orders halt to H20 production after China directive against purchases (RT)

• US government takes 10% stake in Intel, Trump set to meet CEO again (CNBC)

• Spotify to raise prices as it invests in new features and targets 1 billion users (FT)

• Alcohol giants are quickly trying to adapt to changing tastes as only 54% of Gen-Z drinks (YF)

• Meta signs $10bn-plus cloud deal with Google (TI)

• Workday posts stronger Q2 profit, revenue meets expectations, acquires Paradox (WSJ)

• Intuit sales surge 20% in Q4, but weaker forecast drags shares down (WSJ)

• Zoom Communications forecasts sales growth in boost for AI-related tools (BBG)

TARIFFS

• US-EU trade deal excludes wine and spirits, frustrating European exporters (BBG)

• Tariffs could reduce the deficit by $4tn if in place through to 2035 (CBO)

• Trump says US may impose significant tariffs on imported furniture in the coming months (AX)

POWELL JACKSON HOLE SPEECH

• Payroll growth slowed to ~35,000 a month in the past three months, down from 168,000 a month in 2024, with downward revisions subtracting 258,000 jobs. Unemployment steady at 4.2%, but risks of job losses rising as immigration-driven labor force growth weakens.

• GDP grew just 1.2% in 1H25, half the 2.5% pace in 2024, mainly on softer consumer spending.

• Tariffs now visible in inflation: Headline PCE +2.6% y/y, core PCE +2.9%, with goods prices up 1.1% y/y after falling in 2024. Powell views this as a likely one-off shock but warned of risks if expectations or wages respond.

• Powell said risks have shifted: Employment to the downside, inflation to the upside — a dovish tilt compared with recent hawkish Fedspeak.

• Futures now price a ~90% probability of a September cut (vs 75% before), showing markets saw the remarks as groundwork for easing.

• Fed abandoned average inflation targeting and “shortfalls” language, returning to flexible inflation targeting with emphasis on anchored expectations and a balanced approach when employment and inflation goals diverge.

• Powell’s message: Growth is slowing, labor market softening, tariffs pushing up prices but inflation manageable — clearing the way for rate cuts unless inflation turns.

ECONOMY

• UK consumer confidence hits 12-month high after BoE rate cuts (BBG)

• Germany GDP slumps 0.3% in Q2, signaling deeper recessionary territory (FT)

• Japan's core inflation cools to 3.1% in July on easing rice price pressures (CNBC)

ASX TODAY

Today's massive day for earnings, and we’ll be covering all the key results as they drop. Follow our Live Blog for the latest company announcements, consensus numbers, market moves, and economic updates.

WHAT TO WATCH TODAY

• A massive rally: Big overnight move on perceived Powell dovishness and shift from inflation to employment focus. Russell 2000 up massively, and several of our overnight ETFs up 3-6% (mostly tech and resources).

• Day twos: Always keen to see how Friday's reporting season winners performed, notably Zip (rallied over 20% on broad earnings beat), Guzman Y Gomez (smashed almost 20% on poor guidance).

BROKER MOVES

• Healius upgraded to Positive from Neutral; target up to $1.05 (E&P)

• Helia Group downgraded to Underperform from Neutral but target up to $4.10 from $3.35 (HLI)

• Macquarie Group upgraded to Overweight from Neutral; target up to $241 from $207 (JPM)

• Monash IVF downgraded to Hold from Buy; target cut to $0.77 from $1.15 (BP)

• PWR Holdings downgraded to Hold from Buy; target cut to $7.75 from $8.0 (BP)

• PWR Holdings downgraded to Neutral from Positive; target cut to $7.88 from $8.10 (E&P)

• Resolute Mining downgraded to Neutral from Outperform; target is $0.75 (MQG)

• Telix Pharmaceuticals initiated Overweight with $25.60 target (MS)

Stocks trading ex-dividend: 

• Mon 25 Aug: Contact Energy (CEN) – $0.196, Hansen Technologies (HSN) – $0.055, Magellan Financial Group (MFG) – $0.469, Regal Asian Investments (RG8) – $0.06, Step One Clothing (STP) – $0.024, Vicinity Centres (VCX) – $0.06

• Tue 26 Aug: AGL Energy (AGL) – $0.25, Bega Cheese (BGA) – $0.06, Challenger (CGF) – $0.15, Deterra Royalties (DRR) – $0.13, Eureka Group Holdings (EGH) – $0.007, HMC Capital (HMC) – $0.06, REDOX (RDX) – $0.065

• Wed 27 Aug: Amotiv (AOV) – $0.22, Bell Financial Group (BFG) – $0.03, Fat Prophets Global Contrarian Fund (FPC) – $0.05, Maxiparts (MXI) – $0.031, Ooh!Media (OML) – $0.022, Telstra Group (TLS) – $0.095, The Lottery Corporation (TLC) – $0.085, Treasury Wine Estates (TWE) – $0.207

• Thu 28 Aug: Australian United Investment Company (AUI) – $0.28, Beach Energy (BPT) – $0.06, Heartland Group Holdings (HGH) – $0.018, Ignite (IGN) – $0.035, IPH (IPH) – $0.195, REA Group (REA) – $1.38, Ventia Services Group (VNT) – $0.107, Vgi Partners Global Investments (VG1) – $0.06, Woodside Energy Group (WDS) – $0.813

• Fri 29 Aug: Ampol (ALD) – $0.40, Carlton Investments (CIN) – $0.68, Fiducian Group (FID) – $0.247, Orora (ORA) – $0.05, Pengana International Equities (PIA) – $0.014, Platinum Capital (PMC) – $0.03, Shape Australia Corporation (SHA) – $0.125

Other ASX corporate actions today: 

• Dividends paid: None

• Larger Cap Earnings: Aussie Broadband (ABB), Abacus Group (ABG), Annsell (ANN), Bendigo Bank (BEN), Clarity Pharmaceuticals (CU6), Dalrymple Bay (DBI), Data#3 (DTL), Endeavour Group (EDV), EVT (RVT), Gold Road (GOR), Index (IMD), Liberty Financial Group (LFG), Navigator Global (NGI), NIB Holdings (NHF), Pilbara Minerals (PLS), Perenti (PRN), Regis Healthcare (REG), Reece (REH), Regal Partners (RPL), Stanmore Resources (SMR), Santos (STO), Tasmea (TEA)

• Small-to-Mid Cap Earnings: 5G Networks (5GN), Adore Beauty (ABY), Acrow (ACF), Aeris Resources (AIS), Australian Unity Office Fund (AOF), Biome (BIO, Carindale Property (CDP), Close the Loop (CLG), Cog Financial Services (COG), GDI Property (GDI), GenusPlus Group (GNP), Genetic Signature (GSS), GTN (GTN), Humm Group (HUM),Infomedia (IFM), IPD Group (IPG), Kogan (KGN), Lindsay Australia (LAU), Mayne Pharma (MYX), Nuix (NXL), Polynovo (PNV), PeopleIN (PPN), Praemium (PPS), Race Oncology (RAC), RPMGlobal (RUL), Shaver Shop (SSG), Southern Cross Media (SXL), Symal Group (SYL)

• IPOs: None

• AGMs: None

Economic calendar (AEST):

No major economic announcements.