Morning Wrap: ASX 200 to rise, Dow soars to all-time highs, Nasdaq tanks as chip stocks tumble

In a nutshell:

• Wall Street split ahead of the July 4 market holiday, the Dow closed at a record high while the Nasdaq slid on a semiconductor rout

• US June payrolls rose just 57,000 versus about 115,000 expected and unemployment fell to 4.2%, trimming Fed rate-hike bets

• Tesla Q2 deliveries beat with 480,126 vehicles up 25%, but shares fell about 7.5% in a sell-the-news move

• Gold prices surged on easing Fed hike expectations, now back above US$4,100 vs. lows of US$3,944 three days ago

Let's dive in.

• Major US benchmarks mixed, the Dow up 1.1% to a record high while the S&P 500 finished flat and the Nasdaq continued to slip as a chip rout dragged tech lower

• Very strong session for value and defensives, with Healthcare, Staples, Utilities and Materials all up more than 2%, Equal-weight S&P 500 outperformed cap-weighted index by 70 bps

• Semiconductors extended a sharp two-session flush, the SOXX index down 11.6% in the last two sessions, Applied Materials (-7.3%), Micron (-5.4%), Intel (-5.2%), AMD (-4.2%) and Nvidia (-1.3%) led declines

• Short-dated Treasury yields dropped after the jobs miss, the 2-year yield down 4 bps to 4.13%, off recent highs of 4.23% but still elevated

• US dollar slid against every developed-market currency as the weak payrolls print pared bets on a near-term Federal Reserve rate hike

• Gold surged back above US$4,100, rebounding from an eight-month low as the soft jobs data and weaker oil trimmed expectations for further Fed tightening    

• Fed funds futures moved to price less than a 50% chance of a September rate hike, down from about 67% before the June payrolls report 

• South Korean stocks led Asian losses as AI-linked selloff hit semis amid hyperscaler spending fears, KOSPI tumbled 7.8% (BBG)

• OpenAI in talks to give US government 5% stake in company (FT)

• China's new Zai GLM-5.2 is nearing OpenAI and Anthropic performance while costing far less (RT)

• Apple in talks to purchase chips from Chinese memory makers, looks to diversify suppliers after raising prices (BBG)

• Apple preparing upgraded iPad Pro and redesigned entry-level MacBook Pro for planned arrival in 2027, plans to launch five new iPhone models (BBG)

• Tesla Q2 deliveries rose 25% to 480,126 vehicles, beating the roughly 406,600 consensus, but shares fell about 7.5% in a sell-the-news reaction, the stock's worst day in nearly a year (CNBC)

• SAP says it will cut hiring and travel to save costs while investing more in AI and competition (BBG)

• SK Hynix invests $64.4bn in new South Korean chip plants (RT)

• Iran and US conclude indirect talks focused on Strait of Hormuz and financial relief, no signs whether differences bridged (RT)

• Iran's joint military command warns all Hormuz oil tankers to use approved routes or face forceful response (APN)

• Five supertankers carrying 10m barrels of Saudi oil exit the Hormuz as Aramco shifts to spot pricing for faster Asia sales (RT)

• Iran's oil exceeds 20m barrels offshore as it searches for buyers before a 60-day US window expires (BBG)

• UAE oil exports already at pre-war levels, aided by pipeline flows and stealth transit through Strait of Hormuz (BBG)

• Central bankers in Sintra see Fed Chair Warsh as a new ally, easing fears of US retreat from global cooperation (RT)

• ECB officials split on need for further rate hikes as inflation eases post-Iran conflict (BBG)

• BoE Bailey says rate cuts off the table this year, warns households yet to feel full impact of Iran war (BBG)

• Japan PM aide Nagahama says BOJ should raise rates moderately to correct excessive yen weakness (RT)

• Weak yen seen bolstering case for BOJ to hike interest rates earlier, October odds rising (BBG)

• US nonfarm payrolls increased 57,000 in June vs. 110,000 ests, softest headline print since Feb-26, unemployment rate eased to 4.2% from 4.3% (BBG)

• South Korea June CPI rose 3.2% year-on-year, up from 3.1% in May and the fastest since December 2023, as oil product prices jumped 24.7% and added 0.93 percentage point to the headline rate (RT)

• UK business confidence fell to its lowest since late 2022, the ICAEW index dropping to -14.6 in the three months to June (RT)

• Swiss inflation slowed to 0.5% year-on-year in June from 0.6% in May, the first easing in eight months, as cheaper flights, heating oil and diesel showed lower energy costs feeding through (BBG)

• BMC Minerals major holder BMC UK cut its stake to 53.93% from 64.68% via an $84m underwritten block trade of 29.5m CDIs at $2.85, completed 2-Jul; L1 Capital emerges with 12.05% (BMC)

• Boss Energy produced 1.41m lbs uranium in FY26, meeting revised guidance; skips the interim scoping study to go straight to a feasibility-level outcome at Honeymoon, now due end-August vs end-September (BOE)

• Genesis Minerals reports FY26 gold production of 285.4koz, within guidance, and Q4 of 70,767oz; holds $520m cash and lifts FY27 exploration spend to $80-90m from $40-50m (GMD)

• Vault Minerals delivers FY26 gold production of 336,540oz, meeting guidance, Q4 up 14% q-o-q to 89,338oz; KoTH Stage 2 71% complete and ahead of schedule, finishing FY26 with $842m cash and bullion, no debt and fully unhedged (VAU)

• Fed hike bets ease, US dollar down: The likelihood of two 25 bp Fed hikes by year end eased to 26.6% (from 31.9% prior to the employment data), one hike is firmly the base case with odds rising to 42.2% (from 39.0%). The lower US 2-year yield, lower VIX and falling US dollar is a fairly positive outcome for global markets, driving that broadening rally and commodity bounce dynamic overnight.

• Commodities: A sizeable bounce for gold, which drove the NYSE-listed Gold Miners ETF up 4.4%. Copper, which has sold off far less than most commodities, had a fairly muted session, up just 0.3%.

• Defensives on the rise: S&P 500 Healthcare index (+2.7%) rallied to all-time highs, while Staples, Utilities and Materials (all been relatively rangebound this year) all gained more than 2%. This should provide a strong lead for local defensives, many of which have been the best performing sectors in recent weeks (e.g. Healthcare up 18% since 3-Jun, Staples up 14.8% since 18-May even after current three-day skid).

• Fortescue downgraded to Sell from Neutral; target cut by 11% to $16.90 (Goldman Sachs)

Stocks trading ex-dividend: 

• Fri 3 Jul: Clime Investment Management (CIW) – $0.003, KKR Credit Income Fund (KKC) – $0.017

• Mon 6 Jul: None

• Tue 7  Jul: None

• Wed 8 Jul: A2 Milk (A2M) – $0.228

Other ASX corporate actions today:       

• Dividends paid: Dividends paid: AFT Pharmaceuticals (AFP), ALS (ALQ), Fisher & Paykel Healthcare (FPH), Gullewa (GUL), Orica (ORI)

• Earnings: Collins Foods (CKF)

• IPOs: AI Opportunities Trust (AIX) at 11:00 am AEST

• AGMs: None

Economic calendar (AEST):

No major economic announcements.