Morning Wrap: ASX 200 to rally, Equal-weight S&P 500 hits all-time highs as Fed cuts rates by 25 bps

ASX 200 futures are up 86pts (+1.00%) as of 8:30 am AEDT.

 In a nutshell:

• Major US benchmarks broadly higher after the Fed cut rates by 25 bps and outlined plans to purchase US$40bn per month in Treasury bills from 12-Dec

• Fed cut came with three dissents, with Goolsbee and Schmid favouring a hold while Miran called for a 50 bp cut

• S&P 500 and Nasdaq both within ~1.5% of all-time highs, while Russell 200 and Equal-weight S&P both rallied to fresh records

Let's dive in.

S&P 500 SESSION CHART

S&P 500 rallied on the Fed cut (Source: TradingView)

OVERNIGHT MARKETS

• Major US benchmarks broadly higher, rallied post Fed cut/press conference to close at best levels

• Distance from all-time highs (% to last record close): S&P 500 (~0.1%), Nasdaq (~1.5%), Dow (~0.4%), Russell 2000 (record close)

• Solid breadth despite flattish performances from Utilities, Staples and Tech, Equal-weight S&P 500 outperformed the official benchmark by ~71 bps and closed at fresh all-time highs

• Fed's 25 bp rate cut as expected, forward guidance tweaked (mostly positive takeaways) and plans to purchase US$40bn per month in Treasury bills, the latter seen as a positive tailwind for risk sentiment

• Wall Street shrugs off AI bubble fears despite valuations nearing dot‑com levels but investors hesitate to exit (NYT)

• Global bond yields surge to 2009 highs signaling end of rate-cut cycles and renewed investor concern on policy (BBG)

• Bond traders betting on shallower Fed rate cut path in 2026 amid broader hawkish repricing (BBG)

• Record high ~$10bn M&A driven by debt financing fuels mega‑deals like Paramount's $54bn in debt Warner bid (WSJ)

• China property stocks rally on Vanke debt progress, policy support hopes (BBG)

STOCKS

• Netflix could need billions of additional borrowing to finance an upsized bid for Warner Bros Discovery (BBG)

• Amazon to invest $3bn in India by 2030 to scale AI, expand operations and boost exports (RT)

• Oracle shares have dipped ~33% since September amid AI skepticism over heavy spending and strained balance sheets (BBG)

• SpaceX seeking to raise significantly more than $30bn, targeting valuation of $1.5tn, though IPO timing could slip to 2027 (BBG)

• Cracker Barrel downgrades sales guidance, flagging weaker customer traffic, higher discounting amid fallout from logo controversy (FT)

• Palantir will provide AI assistance to US Navy to accelerate submarine production, deal worth $448m (BBG)

TARIFFS

• China holds 'emergency meetings' with tech giants to decide whether to let them buy Nvidia H200 chips (TI)

• Trump permitting Nvidia H200 exports to China signals major tech policy shift and tests thaw in US-China ties (BBG)

• Taiwan invokes national security law to shield TSMC trade secrets after executive defected to Intel (NYT)

FED DECISION

• Fed cuts rates by 25 bps to 3.50-3.75% as widely expected

• Three dissents were recorded with Miran calling for a 50 bp cut, while Goolsbee and Schmid preferred to keep rates unchanged

• Fed’s latest SEP showed 25 bps of cuts in 2026, though four officials see at least three 25 bp cuts for 2026

• SEP forecasts featured 4.4% unemployment in 2026 (unch vs. last est), PCE inflation easing to 2.4% (vs. prior 2.6%) and GDP growth upgraded to 2.3% vs. prior 1.8%

• Fed to begin Treasury purchases on 12 December, QE will start at $40bn per month and continue at an elevated pace for a few months until deemed adequate

• CME Fedwatch tool now pricing in ~76% likelihood of a hold in January vs. 70% a day ago

CENTRAL BANKS

• Trump say he has a good idea of Fed chair selection, looking at a couple of people (BBG)

• Hassett sees 'plenty of room' to cut rates, but says he won't yield to political pressure (WSJ)

• ECB's Simkus and Villeroy says no further rate cuts needed at next week's meeting (BBG)

• Traders price greater than 50% chance of ECB rate hikes in 2026 after Schnabel's hawkish comments (BBG)

ECONOMY

• China inflation highest since January, but factory-gate deflation unexpectedly widens (BBG)

• IMF upgrades China growth outlook, calls for stronger reforms to rebalance economy away from export and investment dependence (BBG)

ASX TODAY

• Flight Centre to acquire UK cruise agency Iglu for £100m upfront and up to £27m in performance-based earnouts, deal expected to be EPS accretive in FY26, with FY26 underlying profit before tax guidance upgraded to $315-350m from prior $305-340m guidance (FLT) 

• Rio Tinto progressing non-core asset sales, promotional materials expected to go out before Christmas (The Aus)

• St Barbara’s Simberi Gold Project now 20% owned by PNG state nominee Kumul Mineral Holdings for $100m, Lingbao Gold Group to acquire a further 50% for $370m (SBM)

WHAT TO WATCH TODAY

• Some strength, at last: A strong overnight session despite some sectors like Utilities, Staples, Tech and Real Estate closing relatively flat. Encouraging to see Russell 2000 and Equal-weight S&P rip to all-time highs. A few overnight ETFs (mostly those tied to the economy) like Homebuilders (+3.0%), Steel (+2.9%), Copper Miners (+2.3%) and Airlines (+2.0%) higher. ASX 200 has been loitering around the 200-day, so today should mark an encouraging bounce from an uneasy position.

• St Barbara: The above transaction highlights the challenges with operating in dicey jurisdictions. SBM has effectively sold 60% of Simberi for $470 million, valuing 100% of the project at ~$800m. Not a horrific outcome. This was announce right before market close on Wednesday, with the stock closing 10.8% higher.

• IPOs: Two resource-related IPOs today, haven't had a closer look at them. Recent explorers have all been pretty well received (EV8, SNM, BHL, RRE, PC2 etc.) although some have the tendency to fade day one gains. On the flip side, biotech/tech-related IPOs have all flopped pretty badly (SLD, CMA, NXN, EPI, 6KA).

BROKER MOVES

• Cleanaway Waste Management initiated Buy with $3.15 target (GS)

• IGO downgraded to Sector Perform from Outperform but target up to $6.50 from $5.50 (RBC)

• Ramelius Resources upgraded to Sector Perform from Underperform; target up to $3.50 from $2.60 (RBC)

Stocks trading ex-dividend: 

• Thu 11 Dec: Premier Investments (PMV) – $0.50, Solvar (SVR) – $0.025

• Fri 12 Dec: Dalrymple Bay Infrastructure (DBI) – $0.061, Metcash (MTS) – $0.085, Sandon Capital (SNC) – $0.005

Other ASX corporate actions today:       

• Dividends paid: Graincorp (GNC)

• Earnings: None

• IPOs: Exulant Mining (10X), Moonlight Resources (ML8)

• AGMs: Myer (MYR), Westpac (WBC)

Economic calendar (AEDT):

• 11:30 am: Australia Unemployment Rate (Nov ests: 4.4%)