Morning Wrap: ASX 200 to rise, gold stocks set to tumble, S&P 500 snaps 6-day losing streak

Major US benchmarks attempted to bounce overnight from their worst week of the year, gold prices suffered a rare tumble, UBS downgraded 6 megacap US tech stocks, Tesla continues to aggressively cut EV prices and Wesfarmers is running the ruler over Ramsay Healthcare.

Let's dive in.

S&P 500 SESSION CHART

S&P 500 opens higher, closes off best levels (Source: TradingView)

MARKETS

• S&P 500 higher, breaks six-day losing streak but closes off session highs of 1.44%

• S&P 500 has experienced its biggest pullback since the regional banking crisis in Mar-23

• Lack of further escalation in the Middle East, improved second-half of April seasonality and lower bar for big tech earnings viewed as supportive for a bounce attempt 

• Gold down almost 3%, marking its worst day since Feb-23

• Recent drawdown still only 5.5% compared to last year’s 10.2% correction and the 16% average intra-year drawdown since 1928 (The Market Ear)

• Big Tech under increasing pressure to deliver on AI contribution to revenues and profits (Bloomberg)

• UBS downgrades Big 6 tech stocks on weakening earnings momentum (Bloomberg)

  • “... Investors attribute the run in mega cap stocks to animal spirits and the impact of AI; however, our work indicates that surging earnings momentum .. fueled this upside. Unfortunately, this momentum is collapsing, with Big 6 EPS growth expected to decline from 42% to 16% over the next year ...”

• Strategists split on if US companies can deliver on robust earnings forecasts for this year (Bloomberg)

• Friday's pullback in US stocks to test dip buyers (Reuters)

• Energy sector receives upgrade from Citi amid geopolitical tensions (CNBC)

ASX TODAY

• ASX 200 to extend gains as Middle East tensions ease, bond yield run up takes a breather and strong lead in from Wall Street

• The market is bouncing from oversold conditions while bond yields remain uncomfortably high (i.e. US 2-year Treasury yield sits at 4.97%) – More data is needed to see if this is a genuine low or just an oversold bounce

• Gold stocks set to sell off sharply, NYSE-listed Newmont down 4% overnight and VanEck Gold Miners ETF down 4.5%

• Premier Investments raises Myer stake to 31.37% from 28.79% (PMV)

• Telstra to conduct strategic review on Telstra Health (AFR)

• Wesfarmers considering bid for Ramsay Health Care (The Aus)

• Westpac says first-half FY24 NPAT to be reduced by $164m due to notable items including unrealised fair value gains and losses on economic hedges (WBC)

INTERNATIONAL STOCKS

• Tesla follows up US price cuts with similar moves for other major markets including China and Germany (Bloomberg)

• Tesla cuts newly-formed US ads team (Bloomberg)

• Nike reveres course amid stalling innovation and competitive pressure from rivals (WSJ)

• Clothing store, Express, files for Chapter 11 bankruptcy, to close 100 stores (CNBC)

• Delta hikes staff salaries by another 5%, starting wage now at US$19 per hour (CNBC)

• TikTok getting ready for legal battle against US after House passes divest-or-ban bill (FT)

CENTRAL BANKS

• ECB officials worried Fed-style dot plot would invite political pressure (Reuters)

• ECB's Villeroy says oil uncertainty won't stop June rate cut (Bloomberg)

• SNB raises required reserves for banks to 4% vs 2.5% to reduce payouts (Bloomberg)

GEOPOLITICS

• China braces to become punchbag at US election (Bloomberg)

• US Commerce Secretary says Huawei's latest phone shows China behind US in cutting-edge chip technology (Bloomberg)

ECONOMY

• China's benchmark lending rates kept unchanged in April (WSJ)

Companies trading ex-dividend: 

• Tue 23 April: Naomi Cotton (NAM) – $0.01 

• Wed 24 April None

• Thu 25 April: None

• Fri 26 April: None

• Mon 29 April: Acrow (ACF) – $0.029

Other ASX corporate actions today: 

• Dividends paid: None

• Listing: None

Economic calendar (AEST):

• 9:00 am: Australia Manufacturing and Services PMI (Apr)

• 5:30 pm: Germany Manufacturing and Services PMI (Apr)

• 6:30 pm: UK Manufacturing and Services PMI (Apr)