Morning Wrap: ASX 200 to rise, S&P 500 and Nasdaq dip on valuation concerns

ASX 200 futures are up 19pts (+0.21%) as of 8:30 am AEDT.

In a nutshell:

• Major US benchmarks broadly lower (S&P 500 -1.17%, Dow -0.53%, Nasdaq -2.04% and Russell 2000 (-1.78%)

• Palantir shares dip ~8% despite blowout Q3 earnings and Q4 guidance, weakness largely attributed to news that Michael Burry announced 5 million put options on the stock

• Bitcoin down ~6% and hovering the US$100,000 level, now down ~20% since 6-Oct record high and entering technical bear market territory

• Market weakness largely attributed to valuation concerns, with various Wall Street CEOs flagging a potential 10-20% pullback in the short-to-medium term

Let's dive in.

S&P 500 SESSION CHART

S&P 500 gapped down, tried to bounce but closed near session lows (Source: TradingView)

OVERNIGHT MARKETS

• Major US benchmarks broadly lower, tried to bounce in early trade but ended around session lows

• Today’s key drivers: Palantir (-8%) dipped despite blowout results and guidance, big meltdown in crypto markets with Bitcoin down ~9% in the last two sessions and entering a technical bear market as prices now down 20% since 6-Oct record of US$126,272, Michael Burry also opened massive puts against Nvidia and Palantir, overall market weakness largely chalked up to valuation concerns and breadth breakdown (e.g. plenty of consumer facing stocks in bear market territory)

• Strategists warn of a ~10-20% market drawdown within 24 months (CNBC)

• Japan's Finance Minister issues urgent warning on currency movements as yen nears weakest level since February (BBG)

STOCKS

• Palantir tops Q3 revenue and EPS expectations, bumper Q4 revenue guidance, cites accelerating demand for AI and data analytics product (CNBC)

• Anthropic forecasts much as $70bn in revenue and $17bn in cash flow in 2028 (TC)

• Apple preparing to enter the low-cost laptop market for first time with plans to launch product in first half of 2026 (YF)

• IBM to cut thousands of jobs to help focus business on higher-growth software and services segments (BBG)

• Tesla's China shipments fell ~10% in October as well as another steep monthly decline in sales across Europe (RT, BBG)

• SK Hynix shares rise 240% this year prompting Korea Exchange to issue an "investment caution" (BBG)

• Starbucks to sell majority stake in its China unit to Boyu Capital for $4bn (BBG)

• BP profit topped expectations as operational gains and increased oil and gas production offset lower prices (BBG)

• Nintendo ups Switch 2 sales forecast to 19m units by March and raises operating income outlook by 16% (BBG)

TARIFFS

• China warns US against crossing its four red lines, including Taiwan, democracy, political system and development path (BBG)

• China export restrictions contributing to rising fertilizer prices, diammonium phosphate hits three-year high (NK)

• Bessent plans to attend Supreme Court hearing on Trump's tariff policy, citing national security concerns (RT)

CENTRAL BANKS

• Fed Governor Cook says policy not on pre-determined path, labour market risks outweigh inflation risks (BBG)

• SF Fed's Daly says policymakers should keep an open mind about a possible December cut (BBG)

• Chicago Fed's Goolsbee not sure on December cut but bar for one is high (YF)

• RBA on hold as expected and remains cautious amid likely persistence of inflation pressures (BBG)

SHUTDOWN

• Signs of a potential end to record setting government shutdown emerge as Senate leaders discuss an off-ramp (AX)

• Senators increasingly optimistic they could reach bipartisan deal to end shutdown by end of this week (lWSJ)

• Nearly 500 tourism groups warn of a Thanksgiving travel crisis if the government shutdown continues (AX)

ECONOMY

• South Korea inflation accelerates by more than expected, reinforcing case for BOK to stand pat (BBG)

• Japan manufacturing activity shrinks at quickest pace in 19 months amid weak demand in autos, semiconductor sectors (RT)

• Indeed says its job postings index fell to the lowest level since Feb-21 in October (CNBC)

ASX TODAY

• Bain awarded exclusivity in talks for Perpetual’s wealth management unit (AFR)

• Bluescope CEO Mark Vassella to retire, effective February 2026, Tania Archibald named as replacement CEO, currently the CEO of the company's Australian steel products business (BSL)

• Medibank to acquire Better Medical from Livingbridge for $159m, funded from existing unallocated capital, to deliver EBITDA of ~6m for the six months ending 30-June-26 (MPL)

WHAT TO WATCH TODAY

• Carma IPO: This is a pretty hyped up IPO, successfully raised $100m for an indicative market cap of $370m. Its an online use car retailer and the hype comes from the success of overseas peers like NYSE-listed Carvana and Europe's Auto1. Currently loss making (-$34.9m in FY25) but revenue growing at a solid clip (forecast to rise from $71.4m in FY25 to $127.6m in FY26).

• ASX in no man’s land: Pretty ugly price action in the past few days, ASX 200 now down 2.7% in the last six sessions and a clean dip below the 50-day. Last week's hot CPI appears to have some more serious repercussions for the RBA and broader market (as opposed to those slightly hot prints that the market forgets a week later). The path of least resistance has flipped lower, same case for US as valuation concerns, weak breadth dynamics and AI scrutiny kick in. Though market pullbacks have previously all been very shallow, so will be interesting to see where things settle.

BROKER MOVES

• James Hardie upgraded to Buy from Neutral; target up to $36.50 from $33.00 (CITI) 

• Sovereign Metals downgraded to Neutral from Outperform; target cut to $0.65 from $1.00 (MQG)

Stocks trading ex-dividend: 

• Tue 4 Nov: None

• Wed 5 Nov: Naos Ex-50 Opportunities Company Ltd (NAC) – $0.015, Naos Small Cap Opportunities Company Ltd (NSC) – $0.013, Wesfarmers (WES) – $0.40

• Thu 6 Nov: Cobram Estate Olives (CBO) – $0.045, Westpac Bank (WBC) – $0.77, Wam Global Ltd (WGB) – $0.065

Other ASX corporate actions today:       

• Dividends paid: Gowing Bros (GOW), Tasmea (TEA)  

• IPOs: Carma (CMA) at 11:00 am

• AGMs: Nanosonics (NAN) 

• Earnings: None

Economic calendar (AEDT):

• 9:00 am: Australia Ai Group Industrial Index (Oct)

• 12:45 pm: China RatingDog Services PMI (Oct)

• 2:00 am: US ISM Services PMI (Oct)