Morning Wrap: ASX 200 to open near record, S&P 500 rallies on bank results, Aluminium stocks to rise

ASX 200 futures are trading 46 points higher, up 0.55%, as of 8:30 am AEDT.

Major US benchmarks rallied overnight – with the S&P 500 posting its 45th record close of the year, US earnings season kicks off with better-than-expected earnings from JPMorgan and Wells Fargo, analysts note a record amount of cash flowing into Chinese equities, US producer prices printed in-line with market expectations, China's deflation problems continued to persist in September and aluminium stocks like South32 and Alcoa are set to soar on Monday.

Let's dive in.

S&P 500 SESSION CHART

S&P 500 rallies to finish near best levels (Source: TradingView)

OVERNIGHT MARKETS

• Major US benchmarks finished higher and near best levels

• S&P 500 posted 45th record close of the year, first close above 5,800

• Today’s big story – Decent newsflow across the board, including better-than-expected Q3 earnings from JPMorgan and Wells Fargo, US PPI was in-line with market expectations

• US weekly recap: Dow +1.21%, S&P 500 +1.11%, Nasdaq +1.13%, Russell 2000 +0.98%

• Earnings season ramps up this week with market expecting weaker margins, slowing earnings growth quarter-on-quarter (BBG)

• Strategists expect bull market to keep up into 2025 with strong earnings growth, solid economy (YH)

• Managers say fixed income backdrop best in decades amid soft landing confidence (FT)

• China market volatility triggering major fund shifts, including rapid drawdown of WMPs, retail traders pile-in (BBG)

• Fresh record of US$6.47tn floods US money market funds as investors seek out lofty yields amid Fed rate cut (BBG)

• BofA notes record US$39bn flowed into Chinese equities last week, recommends buying and China dips (BBG)

STOCKS

• JPMorgan rallies 4.4% as Q3 revenue, EPS and NII top analyst expectations (RT)

• Wells Fargo soars 5.6% on EPS beat, but revenue and NII missed (RT)

• Tesla’s Robotaxi Event was seen as long on promises, short on details, shares dive 8.7% (RT)

• BP Q3 hit by weak refining margins due to slowdown in global demand for fuel and lower oil trading (RT)

CENTRAL BANKS

• ECB expected to cut again this week after ruling out more easing a month ago (FT)

• Fed officials downplay hotter-than-expected US CPI, though Bostic open to pause (BBG)

• Chicago Fed's Goolsbee says he doesn't see convincing evidence economy overheating despite strong payrolls report (BBG)

• Bank of Korea cuts by 25 bp amid weak economy, below-target inflation; signals near-term pause (BBG)

• ECB expected to accelerate rate cuts, aiming for neutral stance by end of 2025 (BBG)

POLITICS & GEOPOLITICS

• US stays on the sidelines as conflict in Lebanon plays out (RT)

• Biden planning to send antimissile system to Israel to bolster defence against Iran (WSJ)

• Gulf states lobbying Washington to stop Israeli strikes on Iran oil assets due to fear of retaliation on their own (RT)

• Israel launches deadliest strike in Lebanon since start of war, Hezbollah says senior official survived assassination attempt (RT)

ECONOMY

• US producer prices unchanged month-on-month in September vs. consensus of 0.1% rise, core PPI in-line (RT)

• China’s deflationary pressure builds in September, inflation up 0.4% year-on-year while producer prices stood at -2.8% (RT)

• UK's GDP growth at 0.2% in August, industrial production up 0.5% (RT)

• France introduces spending cuts and tax hikes to bring deficit to 5% of GDP (RT)

• South Korea exports jump 33% in first 10 days of October (RT)

ASX TODAY

• Incitec Pivot fertiliser unit back in BGH Capital’s crosshairs (The Aus)

• TPG Telecom sells fibre and fixed EGW assets to Vocus for an enterprise value of $5.25bn (TPG)

WHAT TO WATCH TODAY

• South32, Alcoa: Emirates Global’s bauxite exports from Guinea were reportedly halted over the weekend, according to Bloomberg. Bauxite is needed in the production of aluminium, with prices rallying as much as 3.8% overnight before settling 1.8% higher.

• Banks: Financials was the best performing S&P 500 sector overnight, up 1.95%. Key themes from JPMorgan and Wells Fargo results was that net interest income was better-than-expected, with solid credit metrics. This could see some positive flow for local financials. It’s worth noting that the S&P/ASX 200 Financials Index rallied 2.4% last week amid oversold conditions and a rotation back into banks.  

BROKER MOVES

• Catapult upgraded to Buy from Hold; target up to $2.75 from $2.35 (BP)

• COG Financial Services initiated Speculative Buy with $1.25 target (MORG)

• REA Group initiated Overweight with $250 target (MS)

Stocks trading ex-dividend: 

• Mon 14 Oct: Clime Capital (CAM) – 1.66%, Civmec (CVL) – 2.71%, Star Combo Pharma (S66) – 2.31%

• Tue 15 Oct: Cadence Capital (CDM) – 3.95%, Cadence Opportunities Fund (CDO) – 3.93%, Harvey Norman (HVN) – 2.46%, United Overseas Australia (UOS) – 0.87%, Wam Microcap (WMI) – 3.35%, Washington H Soul Pattinson (SOL) – 1.57%

• Wed 16 Oct: Future Generation Australia (FGX) – 2.76%, Horizon Oil (HZN) – 6.82%, Wam Alternative Assets (WMA) – 2.54%

• Thu 17 Oct: Cadence Capital (CDM) – 3.95%, Cadence Opportunities Fund (CDO) – 3.93%, Future Generation Global (FGG) – 2.68%, Gowing Bros (GOW) – 1.59%, K & S Corporation (KSC) – 2.23%, Latitude Group (LFSPA) – 1.69%, Cosol (COS) – 1.48%

• Fri 18 Oct: None

Other ASX corporate actions today: 

• Dividends paid: BlueScope Steel (BSL), CAR Group (CAR), Comms Group (CCG), Downer EDI (DOW), Eureka Group (EGH), Flight Centre Travel Group (FLT), Garda Property Group (GDF), IVE Group (IGL), Integrated Research (IRI), Lovisa (LOV), Nick Scali (NCK), Nufarm Finance NZ (NFNG), Peet (PPC), Qube (QUB), Ramelius Resources (RMS), Saunders International (SND), Shine Justice (SHJ), Sigma Healthcare (SIG), Sims (SGM), SKS Technologies Group (SKS), South32 (S32), Super Retail Group (SUL), Wagners (WGN), WT Financial Group (WTL)

• Listing: None

• AGMs: None

Economic calendar (AEDT):

• 1:00 pm: China Balance of Trade (Sep)