Morning Wrap: ASX 200 to rise, Powell's 'Goldilocks' speech + Is BNPL making a comeback?

US stocks were mostly higher after Powell's balanced Jackson Hole speech, oil prices fall for a second consecutive week, shares in US-listed BNPL Affirm surge almost 30% on better-than-expected results, uranium spot prices cruise past US$58/lb to levels not seen since April 2022 and the key takeaways from Jackson Hole.

Let's dive in.

S&P 500 SESSION CHART

S&P 500 recovers from session lows to close near best levels (Source: TradingView) 

MARKETS

• S&P 500 higher, finishes near best levels from session lows of -0.46%

• WTI crude up 1.4% overnight but marks its second weekly loss

• Powell in Jackson Hole: No explicit near-term policy signals, reiterates that Fed needs to see more progress on inflation, flagged upside risks to growth

• Flurry of additional Fedspeak that reiterated similar views: More to do on inflation, upside risks to growth and hopes for a soft landing 

• Bullish focus points for the week: Powell did not flag upside risks to current rates and did not push back 2024 rate cut expectations, Nvidia’s blowout earnings and guidance, positioning no longer a headwind, Fed may have to pause QT to protect against reserve declines

• Bearish focus points for the week: Upward pressure on yields, Nvidia selling off despite blowout results, US and Eurozone PMIs coming in softer-than-expected in August while flagging elevated levels of inflation and underwhelming China support measures  

• AAII bullish sentiment fell 3.6 percentage points to 32.3% for week ended 23 August, below the historical average of 37.5% for a second consecutive week

• BofA’s Flow Show report says global equities saw US$6.1bn of outflows, with US$7.6bn leaving US equities for a third straight week of outflows

• Magnificent Seven lose momentum, broader market rally needs to pick up (FT) 

• Oil falls for a second week as Iran speculation sways quiet market (Bloomberg)

STOCKS 

• Disney closes at lowest in nearly nine years as investors turn bearish (Reuters)

• Gap reports mixed second quarter and decline in sales across all brands (CNN)

• Affirm shares surge as quarterly results top expectations thanks to higher gross merchandise volume and strong guidance (CNBC)

CENTRAL BANKS

• Powell's speech adds more doubt to future rate outlook (Bloomberg)

• ECB's Lagarde warns of long-term inflation risks (FT)

• Two Fed officials tentatively embrace bond yield jump (Reuters)

• ECB's Nagel says much too early to consider rate hike pause (Bloomberg)

• ECB's Centeno says downside risks for economy are materialising (Bloomberg)

• Bank of Japan will keep current policy until at least July 2024 (Reuters)

CHINA

• China stimulus rally lasts just 10 minutes, showing trader gloom (Bloomberg)

• China plans to cut stamp duty on stocks by up to 50% (Reuters)

• China issues guidance on easing home mortgage rules (Xinhua)

ECONOMY

• US consumer sentiment falls more than expected in August (Reuters)

• German faces grim outlook as business confidence worsens (Bloomberg)

• UK consumer confidence rebounds after softer inflation signals (Bloomberg)

• Tokyo inflation slows in August, stays above BOJ target (Reuters)

Jackson Hole: A Balanced Powell

The Powell speech was a bit of a nothing burger. Here are some of the key points:

• Proceeding with caution: "Given how far we have come at upcoming meetings, we are in a position to proceed carefully as we assess the incoming data and the evolving outlook and risks."

• Currently restrictive: "We see the current stance of policy as restrictive, putting downward pressure on economic activity, hiring and inflation ... But we cannot identify with certainty, the neutral rate of interest and thus there's always uncertainty about the precise size level of monetary policy restraint."

• Weights further hikes: "As is often the case, we are navigating by the stars under cloudy skies. In such circumstances, risk management considerations are critical ... We will proceed carefully as we decide ... We will keep at it until the job is done."

Market's reactions:

• Rate hike expectations: The likelihood of another 25 bp hike in September was relatively unchanged at 19.5% (from 20% on 25 August)

• ING Economics: "September is set for a pause, but robust growth means the door remains ajar for a further potential hike. Markets see a 50-50 chance of a final hike while we think rates have most probably peaked."

• Goldman Sachs: “Chair Powell’s speech ... noted that the FOMC will ‘proceed carefully’ ... We continue to expect that the FOMC will ultimately decide that further policy tightening is unnecessary, making the hike at the July FOMC meeting the last of the cycle.”

Sectors to Watch: Uranium, Tech and More

Markets are beginning to stabilise after a bond yield and China-driven selloff. But the question remains: Is this strength just a dead cat bounce or will buyers step up to support a continued rally (or at the very least a sideways market).

As for sectors to watch: Not the most exciting session. Most of the overnight ETFs we track were higher, led by Tech and Resources (minus gold and lithium that finished lower). Below are perhaps two more interesting sectors to pay attention to.

BNPL: US-listed BNPL Affirm had its fourth largest gain ever of 28.8%. The company beat both quarterly revenue and earnings expectations as "GMV came in better than the outlook we provided in May" thanks to "strong demand at two of our enterprise platform partners," said CEO Max Levchin. Gross merchandise volumes rose 25% year-on-year to US$5.5bn while revenue was up 22% to US$446m. Could this bring some life back into local BNPL names like Zip (ASX: ZIP)?

Uranium: Uranium prices pushed past US$58/lb last week, rallying to levels not seen since April 2022 amid persistent supply risks and bullish long-term demand. This strength followed through for uranium equities, with the Global X Uranium ETF up 1.8% overnight and marking its highest weekly close since September 2022.

Global X Uranium ETF weekly chart (Source: TradingView)

ASX corporate actions occurring today:

• Trading ex-div: Coronado Global (CRN) – $0.005, Challenger (CGF) – $0.12, Hansen Technologies (HSN) – $0.05, Domino’s Pizza (DMP) – $0.426, Santos (STO) – $0.136, Australian United Investment Co (AUI) – $0.20, Aurizon (AZJ) – $0.08, Pinnacle Investment (PNI) – $0.204, Diversified United Investment (DUI) – $0.09

• Dividends paid: Waypoint REIT (WPR) – $0.04 

• Listing: None

Economic calendar (AEST):

• 11:30 am: Australia Retail Sales