Morning Wrap: ASX 200 to rally, S&P 500 logs best day since 2022 + QBE, Life360, Nick Scali earnings

Major US benchmarks jumped overnight, with the Nasdaq and S&P 500 both up more than 2% after jobless claims data fell more than expected. Most key sectors and stocks trended higher to close the overnight session at best levels.

August reporting season ramps up with results from Newscorp, Life360, QBE Insurance, Nick Scali and REA Group.

Let's dive in.

S&P 500 SESSION CHART

S&P 500 gaps up, trends higher and closes near best levels (Source: TradingView)

OVERNIGHT MARKETS

• Major US benchmarks bounced strongly overnight and finished near best levels

• S&P 500 logged its best daily performance since November 2022

• Indices reversed Thursday’s weakness but still down 3-5% since last Wednesday

• Big Tech saw solid gains across the board, led by Nvidia +6.1% and Meta +4.2%

• Market rally largely driven by oversold dynamics plus better-than-expected US jobless claims data which helped push back against recent recession fears

• Analysts note that corrections are not uncommon and buying into ~5% pullbacks has historically been profitable 

• JPMorgan says three-quarters of the global carry trade now removed (Bloomberg)

• Latest selloff in US tech stocks starting to tempt some buyers to brave volatility (Reuters)

• ETFs break through previous record for monthly flows in July (FT)

• JPMorgan says lack of Fed urgency puts equities at severe risk if growth shows more signs of slowing (Bloomberg)

• European natural gas prices rally for third day over possible Ukraine war-disruption fears (Bloomberg)

STOCKS

• Apple could charge users up to US$20 for AI product features, analysts say (CNBC)

• Warner Bros announces US$9.1bn impairment of its TV networks (Bloomberg)

• Google and Meta struck secret deal targeting Instagram ads to teenagers on YouTube (FT)

• Cargill to undergo major structural changes after earning miss (Reuters)

• Under Armour shares pop 19% on better-than-expected Q2 earnings, receives margin boost from selling apparel at full price and lower inventory (Reuters)

CENTRAL BANKS

• BOJ minutes show members indicate support for further rate hikes but stress need for gradual approach (Bloomberg)

• RBA Governor Bullock says won't hesitate to hike again if needed (Bloomberg)

• India held rate unchanged at 6.5%, striking cautious tone (Bloomberg)

POLITICS & GEOPOLITICS

• Trump vows to fill up US Strategic Oil Reserve, move seen boosting oil demand (FT)

• Russian-Ukraine fighting on Russian side of border enters third day (Reuters)

ECONOMY

• US weekly jobless claims posted 233,000 vs. 240,000 consensus and down from prior week’s 250,000, calming market fears of a recession (Reuters)

• JPMorgan sees 35% chance of US recession by year-end (Bloomberg)

ASX TODAY

• Life360 Q2 2024 results (360)

• News Corp 4Q24 results (NWS)

• Nick Scali FY24 results (NCK)

• QBE half-year 2024 results (QBE)

 WHAT TO WATCH TODAY

ASX 200 set for a very strong open today. But really – has the dust settled or is this just an oversold bounce (with more choppy price action to come)? Encouragingly, the overnight session was the complete opposite of yesterday, where most things rallied and finished at best levels.

Heaps of results are coming out this morning, here are the ones of interest:

• AMP (yesterday): Big first-half 2024 earnings beat, where underlying NPAT was 17% ahead of consensus, dividend was in-line due to a smaller payout ratio and cost outlook was upgraded from $690m to $660m. Will it see another strong follow through day?

• Newscorp: Q4 EPS of $0.17 vs. $0.16 consensus, adjusted EBITDA up 11% year-on-year to $380m, growth driven by higher residential revenues at REA Group

• Life360: Q2 adjusted EBITDA of $11m vs. $5.7m consensus, global MaU net adds of 4.3m to approximately 70.6m vs. 69.5m consensus, full-year adjusted EBITDA guidance upgrade to $36-41m vs. prior guidance of $30-35m. The above consensus numbers will likely see a sizeable gap up for Life360 – Will it gap up and trend higher ... or chop around?

• QBE Insurance: Reports first-half adjusted NPAT of $777m vs. $840m consensus, statutory NPAT of $802m vs. $698.7m consensus, gross written premiums in-line with guidance, issues interim dividend of 24 cents per share

• Nick Scali: FY24 net profit after tax of $82.1m vs. $81m consensus, most financial metrics in-line or slightly ahead of analyst expectations. Final dividend of 33 cents per share brings full-year payout to 68 cents vs. Macquarie ests of 60.9 cents. Trading update outlined written sales order growth for Jun-Jul of -1.2% and mixed outlook commentary. Nevertheless, the small earnings beat and strong dividend should drive some positive flows

• REA Group: FY24 core NPAT of $460.5m vs. $465m consensus, final dividend of 120 cents per share or full-year dividend of 207 cents (vs. Macquarie ests of 197 cents). A bit of a mixed result where the bottom line was slightly below market expectations but dividend slightly ahead.

BROKER MOVES

• AMP upgraded to Overweight from Equal-Weight; target up to $1.48 from $1.29 (Morgan Stanley)

• Audinate upgraded to Buy from Hold; target cut to $11 from $18 (Jefferies)

• Charter Hall Long WALE REIT upgraded to Neutral from Underweight; target remains $3.60 (Morgan Stanley)

• Credit Corp upgraded to Outperform from Neutral; target remains $18.01 (Macquarie)

• Endeavour Group downgraded to Neutral from Overweight; target cut to $5.80 from $6 (JPMorgan)

• Mirvac upgraded to Outperform from Hold; target up to $2.04 from $2.02 (CLSA)

• Reliance Worldwide downgraded to Underperfom from Neutral; target cut to $4.40 from $4.50 (BofA)

• Transurban upgraded to Neutral from Underweight but target cut to $12.40 from $12.70 (Jarden)

Stocks trading ex-dividend: 

• Fri 9 Aug: Djerriwarrh Investments (DJW) – $0.08, Alcoa (AAI) – $0.107

• Mon 12 Aug: None

• Tue 13 Aug: None

• Wed 14 Aug: Australian Foundation Investment Co (AFI) – $0.145, Resmed (RMD) – $0.057

• Thu 15 Aug: Kovest (KOV) – $0.40, Reckon (RKN) – $0.025, Pacific Smiles (PSQ) – $0.07, Rio  Tinto (RIO) – $2.70 

Other ASX corporate actions today: 

• Dividends paid: None

• Listing: None  

• Earnings: QBE Insurance (QBE), Life360 (360), REA Group (REA), Nick Scali (NCK) 

• AGMs: None

Economic calendar (AEST):

• 11:30 am: China Inflation Rate (Jul)

• 10:30 pm: Canada Unemployment Rate (Jul