Morning Wrap: ASX 200 to rise, S&P 500 and Nasdaq higher after cool CPI data, IBM shares crash 25%

In a nutshell:

• Major US benchmarks finished higher after cooler-than-expected US inflation eased near-term Fed rate-hike fears, though a record collapse in IBM capped the Dow

• IBM crashed 25%, its worst day on record after the company pre-announced its Q2 results, with revenues coming in well-below estimates on a shortfall led by software and infrastructure performance

• IBM management said “Discretionary IT spending is worsening and will likely be the main theme across most software companies,” also noting that clients faced “rapidly evolving, industry-wide cybersecurity concerns.”

• Oil held near a one-month high and the US began a naval blockade of Iranian ports as Iran struck two UAE tankers in the Strait of Hormuz

• Commodity prices traded broadly higher on the CPI print, driving strong gains for copper, lithium and gold equities overnight

Let's dive in.

• Major US benchmarks higher but off best levels

• Breadth was relatively weak, with the Equal-weight S&P 500 (-0.36%) underperforming the cap-weighted index by 74 bps

• Defensives on the back foot after the cooler-than-expected CPI print, Healthcare and Staples both down more than 1% after relatively strong gains in recent weeks

• Semis bounced after falling 4.7% on Monday, with notable gains for Micron (+4.9%), Nvidia (+4.0%) and AMD (+2.5%)

• Brent crude held a one-month high of ~US$85 a barrel, taking gains for the week beyond 10%

• Chip-sector volatility spiked, with the 50-day standard deviation of daily returns for the iShares Semiconductor ETF climbing to its highest since May 2020 as AI-name swings widened (CNBC) 

• Markets trimmed Fed tightening bets after the CPI, with September hike odds falling to 63% from better than 75% a day earlier, per CME FedWatch, while the funds target sits at 3.5% to 3.75% (CNBC) 

• Trump scrapped his proposed 20% Strait of Hormuz cargo toll a day after announcing it, saying he would instead pursue trade and investment deals with Gulf states (AP) 

• US military began enforcement of a naval blockade of all Iranian ports and coastal areas from 4pm US Eastern time, warning neutral vessels to leave the zone (AX)

• Iran struck two UAE tankers, with cruise missiles in Omani waters of the Strait of Hormuz, killing one crew member and wounding eight (AP)

• Jordan said it intercepted four Iranian missiles that entered its airspace and Bahrain sounded missile alert sirens three times early Monday (AP)

• Around 22 commercial vessels transited the Strait of Hormuz in 24 hours ahead of the blockade deadline, against roughly 110 daily crossings before the war (CNN)

• IBM shares cratered about 25% for their worst day on record, exceeding the 23.7% drop of October 1987, after a Q2 warning of revenue near US$17.2bn and operating EPS of US$2.93, both below consensus (CNBC)

• CrowdStrike soared 12% to all-time highs after IBM cited client focus on rapidly evolving cybersecurity concerns, lifting the broader security complex (CNBC)

• JPMorgan Q2 FY26 core net income US$16.9bn, EPS US$6.14 beat ests by ~5%, markets revenue up 35% and equities up 86%, shares rose 2.5% (AP)

• Goldman Sachs shares climbed 9% as the largest Dow gainer after posting its best quarterly performance on record, with net revenue up 39% to US$20.34bn and EPS of US$20.98 (TS)

• Citigroup Q2 FY26 EPS US$3.15 beat US$2.74 ests on its highest revenue in a decade, and the bank announced a US$30bn buyback and a 12% dividend increase, shares down 5.2% (RT)

• Bank of America Q2 FY26 EPS US$1.21 beat ests by ~7% and rose 34% year-on-year, on revenue up 15% to US$31.6bn as net interest income increased 9%, shares up 1.8% (MS)

• Lucid shares sank more than 50% intraday, the biggest drop in its history, after reports it was weighing bankruptcy or going private, before recovering after the company called the rumours completely false (BBG)

• DeepSeek reportedly in talks to raise $1.5bn at $71bn valuation, IPO in 2027 (TC)

• Flagged the difficulty of assessing inflation and labour-market effects from the rapid pace of AI investment

• Batted away repeated questions on Fed independence, saying he would pursue the statutory mandate and, if challenged by Trump, "I will do my job.

• On the softer June CPI, declined to declare "mission accomplished" and said there is still plenty of work to do, while pushing back on the idea the dual mandate forces a choice between prices and jobs

• Described AI as a supply shock arriving faster than he expected, and said he sees a balance sheet equilibrium point below the current level but above pre-GFC norms

• Favours more deliberate, circumspect communication without "hiding the ball," and said colleagues are open to the approach, with Senate Banking Committee testimony due tomorrow

• Core CPI flat at 0.0% month-on-month (vs +0.2% ests), with the annual rate cooling to 2.6% (vs 2.9% ests), the softest since Feb-26

• Headline CPI fell 0.4% month-on-month (vs -0.1% ests), taking the annual rate to 3.5% (vs 3.9% ests), the coolest since Mar-26

• Energy fell 5.7% in June after three months of gains, more than offsetting rises in shelter (+0.1%) and food (+0.2%)

• Core goods declined 0.1%, extending May's 0.1% fall, while core services were flat after May's 0.3% gain

• Softer components included car insurance (down 2.0%), apparel (down 0.6%) and used vehicles (down 0.2%), while airline fares slowed to +0.2% from +2.7% in May

• China's June export surge was partly driven by exporters front-running anticipated US tariff hikes, alongside booming global demand for AI hardware (CNBC)

• China exported a record US$412bn of goods in June, with exports up 27% year-on-year, the fastest pace since October 2021 and well above the 18.2% forecast (BBG)

• China's crude oil imports fell about 41% year-on-year in June to 29.3 million tonnes, reportedly the lowest level in nearly a decade (CNBC)

• Alligator Energy holder Sprott Inc. discloses 10.5% substantial holding (AGE)

• Alcoa reaches FID with the governments of Australia, Japan and the US to build a gallium plant co-located at its Wagerup alumina refinery in WA. Alcoa will construct and operate the plant to create a new supply source for critical mineral chains (AAI)

• Auckland International Airport reports June total Auckland traffic 1.32m, (4%) y/y. International pax 661k, (5%). Domestic pax 597k, +5%. Transit +14%. Queenstown total pax 184k, +6% (AIA)

• Experience Co. signs non-binding term sheet to divest its skydive business for $41.0m cash, retaining a 32.5% stake in a proposed $110.0m aviation-tourism venture (EXP)

• Orora the subject of PE bid speculation, with at least one firm said to be looking, the article pointing to Orora's ~(38%) share price fall since January (The Aus)

• Predictive Discovery agrees to subscribe for 16.6m Awalé shares at C$0.85 for C$14.2m, lifting its stake to ~12.3% from nil. Funded from cash on hand with no impact on Bankan funding (PDI)

• Rio Tinto lifts H1 copper equivalent production 3% y/y. Oyu Tolgoi H1 copper +31% with C1 cost guidance cut to US30-50c/lb from US65-75c/lb. Q2 global iron ore sales 89Mt, +5%. Q2 lithium +20% on Rincon ramp-up and first tonnes at Sal de Vida and Fénix 1B (RIO)

• Vulcan Energy Resources meets first strategic drawdown conditions on its €2.2bn ($3.9bn) Lionheart funding package following late-May Financial Close, with initial equity funds received from strategic equity partners (VUL)

• Copper and gold: Cooler-than-expected CPI drove bond yields and the US dollar lower overnight, placing upward pressure on commodity prices. Gold finished 1.3% higher to US$4,051 but off session highs of 2.95%. Likewise, copper up 1.49% to US$6.38/lb but rallied as much as 2.7% intraday. Nevertheless, still some solid gains across overnight resource-related ETFs, with notable gains for Copper Miners (+5.8%), Rare Earths/Strategic Metals (+3.7%), Gold Miners (+2.0%) and Uranium (+2.0%).

• Cybersecurity: We have no cybersecurity stocks on the ASX, but still very interesting to see names like Crowdstrike (+9.0%) and Palo Alto (+6.8%) surge on IBM's results commentary. The BetaShares Global Cybersecurity ETF is up 17% in the last twelve months, but if you bought the 13-Apr low, it's surged ~55%.

• Experience Co: Very keen to see how this small cap trades after signing a non-binding term sheet to sell its skydive business for $41m cash, a $5m vendor note and 32.5% equity stake in MergeCo valued at $19m ($65m total). The company has a market cap of just $60m, and the skydive business represented ~45% of Group revenues in 1H26.

• GQG Partners downgraded to Sell from Neutral; target cut to $1.40 from $1.91 (Goldman Sachs)

• Pexa Group downgraded to Neutral from Buy; target cut to $9.60 from $16.80 (Goldman Sachs)

Stocks trading ex-dividend: 

• Wed 15 Jul: None

• Thu 16 Jul: None

• Fri 17 Jul: Wam Income Maximiser (WMX) – $0.006

Other ASX corporate actions today:       

• Dividends paid: DPM Metals (DPM), Garda Property Group (GDF), Select Harvests (SHV)

• Earnings: None

• IPOs: None

• AGMs: None

Economic calendar (AEST):

• 12:00 pm: China GDP Growth

• 12:00 pm: China Industrial Production, Retail Sales and Fixed Asset Investment

• 10:30 pm: US PPI

• 11:45 pm: Bank of Canada Interest Rate Decision (Ests: Hold at 2.25%)