Morning Wrap: ASX 200 to rise, S&P 500 and Nasdaq lower as chip selloff broadens, Oil prices surge

In a nutshell:

• Major US benchmarks finished lower, with tech, homebuilders, airlines and retail stocks leading the decline

• China's Moonshot unveiled its Kimi K3 model, triggering a global semiconductor selloff that pushed the chip index into a bear market on AI capex and pricing fears

• The US-Iran war escalated over the weekend with strikes on Kuwaiti oil and water infrastructure, with Brent up 4.0% last Friday and another 3.0% this morning to US$90.92 a barrel

Let's dive in.

• Major US benchmarks finished lower on Friday and closed near worst levels

• Energy (+1.16%) was the only sector to trade higher, weakness was broad-based, though Tech and growth led declines while defensive pockets of the market outperformed on a relative basis

• Big tech traded broadly lower, with notable declines for SpaceX (-5.4%), Meta (-2.7%), Tesla (-2.6%), Nvidia (-2.2%) and Alphabet (-2.1%)

• Philadelphia Semiconductor Index (-1.6%) entered a bear market, now down 21.6% from its 22-Jun high but still up ~62% YTD

• Brent settled ~4% higher to US$88.27 a barrel, now up almost 25% since the 1-Jul low

• Investors flagged upcoming results from Alphabet, Microsoft, Amazon and Meta as the key test of whether elevated AI capital spending can be justified (RT) 

• Moonshot AI's breakthrough sparks a "DeepSeek" style tech selloff, dragging AI and chip stocks lower on spending-spree doubts (BBG)

• TSMC worries about spending and profits drive Taiwan stocks into technical correction (BBG)

• Majority of US stock market debuts over past two months now trade below offer price as SpaceX retreat tempers IPO hype (BBG)

• US executives selling shares at the fastest pace in decades, signaling investor worries about market risk (BBG)

• Extreme turbulence in South Korea fueling fear among policymakers, prompting announcement of emergency measures to curb volatility (RT)

• Cost of protecting Oracle bonds against default jumped to new record high last Friday (BBG)

• Short positioning in SpaceX stock has jumped 10% in 10 days, while bond yields approaching junk territory and CDS widening (FT)

• US launched fresh strikes on Iran into Sunday, with explosions reported in Bandar Abbas and on Qeshm Island as the renewed bombing campaign entered its eighth night (CNN)

• Iran struck a Kuwaiti power and water desalination plant for a second straight day on Saturday, sparking a fire and knocking multiple generation units offline (CNN)

• Trump has been presented with options to expand the operation to loosen Iran's grip on the Strait of Hormuz, where only six vessels transited in a recent 24-hour window (CNN)

• Shipping data shows fewest daily transits through the Strait since May, most ships halted or turned back amid escalating attacks (RT)

• China's Moonshot unveiled Kimi K3, a 2.8 trillion-parameter open-weight model it says rivals top US systems, reviving DeepSeek-style fears over AI infrastructure returns (YF)

• Netflix drew a wave of Friday analyst price-target cuts after its Q2 result, notes flagged subscriber and engagement concerns (BBG)

• Oracle facing multibillion-dollar cost overruns and delays at AI data center projects (TI)

• SK Hynix CEO warns sustained high memory prices could unleash new competitors and geopolitical retaliation (KH)

• Big food stocks trading at biggest discount to market in two decades amid skepticism about turnaround strategies in the face of mounting cyclical and structural pressures (WSJ)

• Cleveland Fed Hammack says inflation is too high and the labour market is near maximum employment, arguing the Fed may need to raise rates (RT)

• BOJ may raise its growth forecast this month but keep rates unchanged after a 1995 high hike (BBG) 

• China government adviser calls for speeding up infrastructure investment projects already budgeted to stabilize economic growth (RT)

• US July consumer confidence jumps to 54.4 vs. 51.0 ests and 49.5 prior, now highest since Feb-26 amid lower fuel prices (BBG)

• China stimulus likely to revolve around accelerated bond issuance to boost infrastructure spending, but no 'big bang' support for consumption in the works (FT)

• Perpetual rejects Windflower's revised $22.07/share proposal, with the board finding it doesn't represent fair value in a change of control context and isn't in shareholders' best interests (PPT)

• Fletcher Building secures up to NZ$60m from the NZ government to keep Golden Bay Cement's Northland plant running, having committed to produce there until at least 2040 and invest at least NZ$150m over that period (FBU)

• Dalrymple Bay Infrastructure may look to acquire Abbot Point, with an opportunity said to have arisen following Brandon Craig's appointment as BHP CEO and potential restructuring of its steelmaking coal business and associated port infrastructure (The Aus)

• Endeavour Group downgraded to Underweight from Equal-weight; target cut to $3.00 from $3.20 (Morgan Stanley)

• Flight Centre downgraded to Neutral from Buy; target cut to $13.20 from $14.15 (Citi

Stocks trading ex-dividend: 

• Mon 20 Jul: None

• Tue 21 Jul: None

• Wed 22 Jul: None

• Thu 23 Jul: None

• Fri 24 Jul: None

Other ASX corporate actions today:       

• Dividends paid: Ricegrowers (SGLLV)

• Earnings: None

• IPOs: None

• AGMs: None

Economic calendar (AEST):

No major economic announcements.