Morning Wrap: ASX 200 to rise, Chip sector rally lifts the S&P 500 + Fed hints at possible rate cut

ASX 200 futures are trading 17 points higher, up 0.21% as of 8:30 am AEST.

Major US benchmarks finished higher as chip stocks rallied, Powell says a rate cut 'could be' on the table at the next meeting, gold prices surge as Middle East tensions escalate, Microsoft shares dip on mixed Q4 results and a massive capex outlook, and Eurozone inflation unexpectedly ticks higher.

Let's dive in.

S&P 500 SESSION CHART

S&P 500 gaps up and finished near session highs (Source: TradingView)

OVERNIGHT MARKETS

• Major US benchmarks finished higher but ended a little bit off session highs

• Tech bounce attempt in focus amid several dynamics including i) upbeat takeaways from latest round of earnings; ii) Microsoft missed Azure growth expectations but highlighted expectations for a reacceleration in the second half; iii) Microsoft’s aggressive capex was viewed as a positive for semiconductor stocks and iv) Reuters report that a new US rule on foreign chip equipment exports to China will exempt key allies

• More than 55% of S&P 500 companies have now reported, with Q2 earnings growth rates running at 10.2%, with over 78% of companies beating consensus expectations

• US 2-year falls below 4.30% for the first time since February, 10-year back below 4.10%

• Brent crude snapped three-day losing streak, up 3.8% on ramp in Middle East tensions 

• Gold is within 1% of all-time highs on Powell’s remarks, geopolitical tensions

• US oil inventories fall for fifth consecutive week (Oilprice.com)

STOCKS

• Microsoft reported mixed Q4 results, including an unexpected 1 percentage point slowdown in Azure growth to 30%, underwhelming September quarter Azure growth of 28-29% and larger-than-expected capex ramp to US$19bn from US$14bn in the prior quarter (Bloomberg, FT)

• AMD revenue guidance tops expectations with company raising forecast for AI accelerators (Bloomberg)

• Intel to cut thousands of jobs in bid to reduce costs (Bloomberg)

• Nvidia shares have shed more than US$750bn in market cap across recent selloff (FT)

• Samsung's net profit tops forecasts as higher memory prices and demand for HBM chips drives chip unit higher (Bloomberg)

• CrowdStrike hit with shareholder class action lawsuit over IT outage (Bloomberg Law)

• Delta Airlines CEO confirms massive IT outage cost company US$500m and plans to seek damages (CNBC)

CENTRAL BANKS

• Powell says rate cut ‘could be’ on table at Fed’s next meeting (Bloomberg)

• Rate futures pricing in 95% chance of September cut after latest FOMC announcement, up from 89% before release (Reuters)

• BOJ hikes interest rates and flags more to come, reveals JGB taper details (Bloomberg)

POLITICS & GEOPOLITICS

• Harris draws level with Trump in race for the White House (Bloomberg)

• Middle East tensions escalate after Hamas leader Ismail Haniyeh killed in Iran and Israel strikes Beirut (Bloomberg)

• Assassination of Hamas leader upsets ceasefire hopes, raises fears of a regional Mideast war (Reuters)

• Ukraine passes law allowing suspension of foreign debt payments (Reuters)

• US rule on foreign chip equipment exports to China to exempt some allies like Netherlands, Japan and South Korea (Bloomberg)

ECONOMY

• Eurozone inflation sees surprise uptick to 2.6% in July vs. 2.4% consensus (Bloomberg)

• China manufacturing PMI loses further momentum, services stall (Bloomberg)

• Australian underlying inflation eases, raises RBA rate cut bets (Bloomberg)

• Japan industrial production weakens on fall in auto output, retail sales beat (Bloomberg)

ASX TODAY

• ARN Media and Southern Cross Media merger prevented by Kerry Stokes (The Aus)

• Experience Co reports unaudited Q4 underlying EBITDA of $2.4m vs. $3.2m a year ago amid disruptions including unfavourable weather conditions across Australia (EXP)

• Poseidon Nickel reported Q2 after-hours, flagged $1.4m cash or less than one estimated quarter of funding available, currently running processes on various assets to raise funds (POS)

• Westpac reportedly looking to divest retail auto loan back book (The Aus)

 WHAT TO WATCH TODAY

ASX set for another strong session. Several overnight ETFs like Copper Miners, Uranium and Gold rallied overnight. But it's worth noting that most of our stocks moved first (e.g. on Wednesday – SFR +4.0%, PDN +3.0% and NST +1.4%). That said, the strong overnight lead in should still see some positive flows for these sectors, especially for gold.

• Quiet morning: The market was hit with a massive influx of announcements on yesterday, as 31-Aug is the last day/cut off for quarterly reports.

• Rio Tinto follow-up: Rio Tinto rallied 2.4% on Wednesday after reporting an operationally strong first-half (calendar year) result. The dividend was a little soft (177UScps vs. 179UScps) but all other financial metrics tracked in-line or slightly ahead of consensus. Let's see if this drives any 'day two' buying.

BROKER MOVES

• PointsBet upgraded to Buy from Overweight; target remains $0.85 (Jarden)

• SiteMinder downgraded to Overweight from Buy; target cut to $5.85 from $6.02 (Jarden)

Companies trading ex-dividend: 

• Thu 1 Aug: Several ETFs trade ex-dividend over the next two days. See a full list here 

• Fri 2 Aug: None

• Mon 5 Aug: PRL Global (PRG) – $0.05, Perpetual Credit Income Trust (PCI) – $0.007

• Tue 6 Aug: BKI Investment Company (BKI) – $0.04

• Wed 7 Aug: Amcil (AMH) – $0.03, Mayfield Group (MYG) – $0.02, Pacific Smiles (PSQ) – $0.07

Other ASX corporate actions today: 

• Dividends paid: None

• Listing: None  

• Earnings: Pinnacle Investment Management (PNI)

• Quarterlies: ResMed (RMD), SSR Mining (SSR)

• AGMs: None

Economic calendar (AEST):

• 11:30 am: Australia Balance of Trade (Jun)

• 11:45 pm: China Caixin Manufacturing PMI (Jul)

• 9:00 pm: UK Interest Rate Decision 

• 12:00 am: US ISM Manufacturing PMI (Jul)