Morning Wrap: ASX 200 to rise, Dow closes at all-time highs, Nasdaq slips amid defensive rotation

ASX 200 futures are up 18pts (+0.20%) as of 8:30 am AEDT.

In a nutshell:

• Major US benchmarks mostly higher, closed near session highs

• Strong breadth, with the Equal-weight S&P outperforming the cap-weighted index by ~30 bps and Dow rallied 1.18% to all-time highs

• Nvidia pulled back on Softbank sale, AMD CEO highlights a massive medium-term growth runway and the US government shutdown is one step closer to ending

Let's dive in.

S&P 500 SESSION CHART

S&P 500 recovered from early weakness, closed near session highs (Source: TradingView)

OVERNIGHT MARKETS

• Major US benchmarks mostly higher, finished near session highs

• Strong breadth, with Dow closing at all-time highs and Equal-weight S&P 500 outperforming official benchmark by ~30 bps

• Rotation dynamics taking place, with defensive and cyclical pockets of the market outperforming, sectors like Healthcare, Staples, Real Estate and Resources all up more than 1%

• Deutsche Bank says earnings growth momentum carrying over into Q4 (BBG)

• Carry trade helps drive US dollar rebound from September lows, further supported by sharp drop in volatility (BBG)

• Japan 30-year bond auction draws softer demand as PM Takaichi pushes ahead with stimulus package (BBG)

• Investors shift from growth to value stocks in China amid profit-taking after tech rally (SCMP)

STOCKS

• AMD forecasts annual revenue growth of more than 35% over the next 3-5 years amid strong data centre demand (BBG)

• Google says it will invest €5.5bn in German data centers and operations (BBG)

• FedEx says it expects profit this quarter to improve vs. a year ago (YF)

• SoftBank sells entire stake in Nvidia for $5.8bn to fund Masayoshi Son's AI ventures, Nvidia shares slip 2.9% (BBG)

• Anthropic said to be on track to turn a profit much faster than OpenAI (WSJ)

• CoreWeave downgrades full year revenue guidance due to delays fulfilling customer contract (BBG)

• Tesla sales in China fell to 26,006 vehicles in October marking lowest figures in three years (RT)

• LVMH plans to open major stores in China in December and is considering further expansion (BBG)

• Sony raises operating profit forecast for year ending March 2026, supported by music and imaging divisions (RT)

• Elliott Investment Management builds stake in Toyota Industries arguing proposed privatisation price is too low (BBG)

TARIFFS

• AI Cold War reshapes global dynamics as America leads while China pushes for sweeping advancements (WSJ)

• China plans to ease rare earth and restricted materials flow to the US excluding military-tied companies (WSJ)

• Mexico's planned China tariffs delayed until at least December amid backlash from private sector (BBG)

CENTRAL BANKS

• BoE's Bailey says benefits to QE to significantly or fully offset costs in longer-term (FT)

SHUTDOWN

• Senate passes funding bill to reopen government (BBG)

• Trump supports bipartisan deal to end US shutdown (BBG)

• Flight disruptions expected to continue post-shutdown as airlines warn recovery won't be immediate (WP)

ECONOMY

• US September jobs report expected to be released shortly after government reopens though October's may never be released (QZ)

• Trump downplays criticism of proposed 50-year mortgage saying it helps Americans afford monthly home payments (BBG)

• UK unemployment rises above expectations, raises bets on BoE interest-rate cut next month (BBG)

• Australia consumer confidence highest in 7 years outside pandemic, business conditions strongest since 2024 (BBG)

ASX TODAY

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• Domino’s franchisees pushing for fee reductions, Australian Association of Franchisees letter states that the average store today is making the same annual dollar amount as 2009 (AFR)

• MinRes launches sale process for Bald Hill lithium mine (The Aus)

• SGH again seeking M&A opportunities or boosting existing stakes in Seven West Media and Beach Energy (The Aus)

• TerraCom 90m share block trade crosses at 8 cents (vs. 8.7 cent close), represents ~11% of the company (TER)

WHAT TO WATCH TODAY

• Defensive/cyclical rotation: The outperformance of defensive/cyclical sectors overnight is a good sign of a broadening rally. Dow strength also a better lead in for the local market (than the S&P).

• Energy: Energy stocks have surprisingly been surging as of late (e.g. Woodside up ~19% since 21-Oct and trading at the highest since Jul 2024). Starting to see some strength come back into the unloved sector.

• Commodities: The Bloomberg Commodity Index (tracks ~25 commodities spanning agriculture, precious metals, base metals and energy) is up 11.7% year-to-date and just broke out to the highest since January 2023. Could be a telling sign for the broader resource market.

BROKER MOVES

• Bendigo Bank downgraded to Underweight from Equal-weight; target cut to $10.00 from $10.60 (MS)

• Megaport upgraded to Overweight from Neutral; target up to $16.70 from $14.50 (JPM)

Stocks trading ex-dividend: 

• Wed 12 Nov: ResMed (RMD) – $0.064, Acorn Capital (ACQ) – $0.028, Dominion Income Trust (DN1) – $0.591

• Thu 13 Nov: ANZ (ANZ) – $0.83, Dicker Data (DDR) – $0.11, Future Generation Australia (FGX) – $0.036

• Fri 14 Nov: TPG Telecom (TPG) – $0.09

Other ASX corporate actions today:       

• Dividends paid: None

• Earnings: Aristocrat Leisure (ALL)

• IPOs: None

• AGMs: Beach Energy (BPT), Domino’s Pizza (DMP), Flight Centre (FLT), Netwealth Group (NWL)

Economic calendar (AEDT):

• 11:30 am: Australia home loan growth (Q3)