Morning Wrap: ASX 200 to open at record highs, S&P 500 rally broadens, Uranium stocks surge

ASX 200 futures are trading 60 points higher, up 0.72%, as of 8:30 am AEDT.

Major US benchmarks finished higher as market gains started to broaden to include small caps and defensives, Amazon announces a historic US$500m investment into nuclear capabilities – sending uranium stocks sharply higher, UK and New Zealand CPI falls to lowest level since 2021, Alcoa smashes quarterly earnings expectations and several miners are due to report their quarterlies today.

Let's dive in.

S&P 500 SESSION CHART

S&P 500 higher, finished near best levels (Source: TradingView)

OVERNIGHT MARKETS

• Major US benchmarks finished higher and near best levels

• S&P 500 was 0.48% short of another fresh all-time high

• Today’s big story – Market gains broadened out after a rotation out of tech/momentum on Wednesday, earnings activity continued to pick up with the results in the “good enough” camp and economic data continues to show disinflation momentum 

• US Investor Intelligence poll shows bulls increasing to 57.6%, highest reading since late July and now in the high-risk danger zone

• Strategists continue to raise S&P 500 targets after underestimating market's strength (BBG)

• Analysts cut European Q3 earnings estimates at fastest pace in seven months (RT)

• Oil edges up after Israel says it was keeping options open in how to attack Iran, focus on Chinese demand (BBG)

• China property stocks jump before housing minister to give press briefing Thursday (BBG)

STOCKS

• ASML down 21% in two days after it booked only half the orders analysts expected, company sees “quite some upside” for AI but “other market segments are taking longer to recover” (BBG)

• Morgan Stanley soars 6.5% on revenue and earnings beat, with strong wealth management, IB and trading performance (RT)

• Amazon plans to invest more than US$500m to develop small, modular nuclear reactors (CNBC)

• GM investing $625M in a JV to produce lithium in the US (CNBC)

• Stellantis expects Q3 shipments to fall 20% (RT)

• Intel falls as China Cybersecurity Association recommends review of chipmaker's products (Reuters)

• United Airlines beats Q3 estimates, announces US$1.5bn buyback (RT)

• Adidas raises full-year guidance after better-than-expected Q3 performance (RT)

CENTRAL BANKS

• Atlanta Fed's Bostic expects US economy to slow this year but still robust, disinflation could see some bumps (BBG)

• BoE rate cut bets rise after UK inflation falls below central bank's 2% target for the first time since April 2021(RT)

• RBA's Hunter says running through implications for economic forecasts from China stimulus measures (BBG)

POLITICS & GEOPOLITICS

• Trump defends his tariff plan, threatens levies on car imports from EU and Mexico (BBG)

• Israel strikes Beirut targets for first time in nearly a week, hits municipal building in south Lebanon (BBG)

• China President Xi says willing to be partner and friend with US (RT)

ECONOMY

• UK CPI falls to 1.7% in September, slowest pace since April 2021 (BBG)

• US import prices fell by the most in nine months in September amid sharp decrease in energy product costs (RT)

• New Zealand CPI returns to RBNZ target band for first time since early 2021, up 2.2% in September (BBG)

ASX TODAY

• Quarterly reporting season – Companies reporting September quarterlies include De Grey (DEG), Genesis Minerals (GMD), BHP (BHP) and more (Announcements)

• Alcoa reports Q3 EPS of 57 cents (ex-items) vs. 25 cents consensus, raises 2024 shipments forecast up 0.2Mt to 12.9-13.1Mt (AAI)

• AUB Group major shareholder Odyssey offloads 7.7% stake at $30.70 per share or a 1% discount to Wednesday’s close (AFR)

• DUG Technology seeking to raise $30m to fund growth strategy (AFR)

WHAT TO WATCH TODAY

• Alcoa: Smashed Q3 earnings expectations and outlined a number of sequential favourable impacts from higher shipments and lower costs. A strong session for Alcoa is expected as its NYSE-listed shares are up around 9.8% in after hours trade.

• Airlines: Could see some positive flow for local names after United Airlines surged 12.4% to levels not seen since Feb 2020. Its Q3 earnings beat market expectations by 8.6%, underpinned by “unproductive capacity left the market in mid-August … we saw a clear inflection point in our revenue trends that propelled United to exceed Q3 expectations.”

• Uranium: Uranium equities surged overnight, with the Global X Uranium ETF opening 1.75% higher and finishing up 7.0%. The move was driven by Amazon’s plans to invest US$500m in small modular nuclear reactors in the US. This follows previous commitments by Alphabet and Microsoft to develop nuclear capability. It’s worth noting that uranium is one of the most heavily shorted sectors on the market. Paladin Energy, Boss and Deep Yellow have short interest of 13.76%, 13.56% and 9.79% respectively. Expect a strong session, propelled by short covering.

BROKER MOVES

• Bank of Queensland upgraded to Hold from Underperform; target up to $6.40 from $5.10 (CLSA)

• Evolution Mining downgraded to Neutral from Outperform; however target up to $4.60 from $4.50 (MQG)

• Evolution Mining downgraded to Underweight from Neutral; target remains $4.10 (JPM)

• Hub24 downgraded to Accumulate from Buy; however target up to $68 from $55 (OM)

• Rio Tinto downgraded to Neutral from Outperform; target cut to $119 from $120 (MQG)

Stocks trading ex-dividend: 

• Thu 17 Oct: Cosol (COS) – 1.49%, Future Generation Global (FGG) – 2.66%, Gowing Bros (GOW) – 1.59%, K & S Corporation (KSC) – 2.08%, Latitude Group (LFSPA) – 1.69%

• Fri 18 Oct: None

• Mon 21 Oct: Clover Corporation (CLV) – 1.29%, Sandon Capital Investments (SNC) – 3.25%, WAM Capital (WAM) – 4.81%

• Tue: 22 Oct: None

• Wed 23: Oct: None

Other ASX corporate actions today: 

• Dividends paid: Flight Centre Travel Group (FLT), Lovisa (LOV), Nick Scali (NCK), Ramelius Resources (RMS), Sigma Healthcare (SIG), South32 (S32), Super Retail Group (SUL), Tasmea (TEA)

• Listing: None

• AGMs: ARB Corp (ARB), Perpetual (PPT), Auckland International Airport  (AIA), Treasury Wine Estate (TWE), Bailador Technology Investments (BTI)

Economic calendar (AEDT):

• 9:50 am: Japan Balance of Trade (Sep)

• 10:30 am: Australia Unemployment Rate (Sep)

• 10:15 pm: ECB Interest Rate Decision – Consensus 25 bp cut

• 10:30 pm: US Retail Sales (Sep)