Morning Wrap: ASX 200 to rise, S&P 500 and Nasdaq rally on Fed hold hopes, Gold and copper bounce

In a nutshell:

• Major US benchmarks finished higher and near best levels, marking the strongest session since early August

• Bond yield eased but still sitting near the upper-end of recent ranges, Brent edged slightly higher to US$95.91 while Fed hike odds for September eased to 50-50 ahead of Friday's US payrolls and next week's CPI

• Nvidia agreed to buy Hugging Face for close to US$13bn, Broadcom's AI chip revenue tripled but soft guidance sent the shares lower 2.7%, Snowflake's beat-and-raise quarter powered a broad software rally

Let's dive in.

• Major US benchmarks finished higher and near session highs, with the S&P 500, the Dow and the Nasdaq having their best single sessions since 4 August

• S&P 500 up 1.56% in the last two sessions, recovering the entirety of the prior three-day pullback and now within 0.7% of its 13 August record close

• US 10-year yield retreated further to around 4.77%, down from Wednesday's 4.81% peak which was its highest reading since November 2023

• Gold added a second straight day of gains, up 1.9% to US$4,477/oz its sharpest advance since 19 August, lifted by the softer dollar and retreating yields

• The VIX fell for a second straight day to 14.3, down 12.7% since Tuesday unwinding the volatility bid that built through the global sovereign bond selloff earlier in the week

• The yen strengthened more than 1% to touch 156.15 per dollar, its firmest since 3 August, with traders weighing renewed intervention risk against Bank of Japan hike bets (CNBC)

• Dollar dropped to its lowest since May, falling almost 2% against the yen to a session low of 155.50, the greenback's biggest one-day loss against the currency since 30 July (CNBC)

• Average US high-grade corporate yields above 5.5%, the highest in more than two years, may push companies to lock in borrowing costs early, said Tom Murphy, head of investment-grade credit at Columbia Threadneedle (BBG)

• About US$1tn of high-grade bonds are trading at spreads unusually wide for their rating, more than double the level at the start of the year, on Bloomberg data (BBG)

• A sustained rise in oil prices could keep inflation concerns alive even if domestic data improves, making it harder for the Fed to stay on the sidelines (RT)

• The Stoxx Europe 600 ticked higher to end a three-session losing streak after touching a one-month low, with the DAX up 0.6% and the CAC 40 and FTSE 100 broadly flat (RT)

• Nvidia agreed to acquire open-source AI platform Hugging Face for US$12.9bn, its second-largest deal after the US$20bn Groq purchase, bringing 18m developers and 3m models into its ecosystem. Chief executive Jensen Huang pledged the platform stays open and will not require Nvidia compute. Shares rose about 2% (CNBC)

• Snowflake Q2 FY27 revenue $1.55bn, about 5% ahead of ests, adjusted EPS 62c vs. 45c ests, with third-quarter product revenue guided to $1.59bn against $1.5bn ests and shares closing up more than 16% (CNBC)

• Robinhood jumped 16.5%, its best session since 21 August, after Deutsche Bank analyst Brian Bedell flagged prediction markets as a structural growth channel for brokers. Bedell sees US company-KPI contract volume topping US$1tn by 2028 from virtually nothing today, exceeding sports volumes (CNBC)

• Tesla advanced 5.4% ahead of its Cybercab launch event in Austin after the close, extending a one-month gain near 18% while still sitting roughly 21% below where it started the year. Options traders bought calls at twice the rate of puts into the event (24/7)

• Meta Platforms rose 3% following the rollout of its Muse Spark 1.3 artificial intelligence model, one of the few mega-cap gainers driven by product news rather than the rates repricing (CNBC)

• Dell Technologies climbed 4.9% for a second straight session, building on quarterly results earlier in the week that topped ests on both lines and lifted the fiscal 2027 forecast on AI server demand (CNBC)

• Hewlett Packard guided to fiscal 2027 earnings growth of 16% to 20% against FactSet ests of 18.7%, with cash flow seen at a minimum of US$5bn versus ests of US$4.79bn (CNBC)

• Crusoe signed a five-year cloud contract with trading firm Jane Street worth about US$13bn, its highest-profile customer yet, with the private data-centre operator in talks to raise around US$3bn at a US$30bn valuation (BBG)

• Kuwait's army said it was confronting hostile missile and drone attacks from Iran, a day after President Donald Trump said renewed hostilities would not last too long (CNBC)

• Trump has settled on a dual approach combining economic pressure with the threat of a devastating escalation in force, having launched Operation Economic Outcast last week to cut Iran off from its remaining trade partners (AP)

• The isolation campaign has been slow to bite, with only one branch of an Egyptian bank in the UAE targeted so far, and analysts saying the measures must reach China, India and Russia to have real effect (AP)

• Saudi Arabia's national shipping company Bahri confirmed two Filipino seafarers were killed in an attack on its vessel SIDR while transiting the Strait of Hormuz on Monday night (CBS)

• Iran's Revolutionary Guard said two oil tankers caught fire after striking mines while crossing Hormuz outside a route designated by Iranian forces (CBS)

• The US military escorted 40 commercial vessels carrying 18m barrels of oil through Hormuz on Tuesday, a wartime high, against roughly 20m barrels a day before the conflict began (CNN)

• Major automakers urged Congress to enact a permanent ban on the sale, import and manufacture of Chinese connected vehicles, hardware and software before the current session ends on 3 January (RT)

• Senate Commerce legislation could ensnare Mercedes-Benz, because Chinese investors hold nearly 20% of the German carmaker, which is itself a member of the alliance pushing for the ban (CNBC)

• July's import surge came around a tariff changeover, with capital goods imports up 11.4% month-on-month to a record $140.3bn, the largest monthly increase since 1993 (RT)

• Fed governor Christopher Waller said he would be inclined to hold the policy rate at 3.50% to 3.75% in September if the August inflation report confirms price pressures are cooling, telling an audience he was willing to give disinflation a chance (CNBC)

• Waller added that a hot inflation print would push him to consider a hike, describing current policy as only slightly restricting aggregate demand and warning it may not take much acceleration to change his view (CNBC)

• Market-implied odds of a September hike fell to about 50% from 63.2% a day earlier on CME FedWatch data, leaving the 15-16 September decision effectively a coin flip (RT)

• New York Fed president John Williams said on Wednesday he had been encouraged by recent inflation data but wanted more evidence of decline before ruling out a move (AP)

• Vice President JD Vance said the Fed should cut rates to make housing more affordable, adding White House pressure days after Warsh hinted at the opposite (CNBC)

• Bank of Japan governor Kazuo Ueda signalled a hike is likely at the 17-18 September meeting, saying the board will set policy with upside price risks in mind (BBG)

• Two-year Japanese government bond yields climbed to 1.830% on Ueda's remarks, the highest since 1995, with money markets close to fully pricing a move this month (RT)

• Chinese government bond sales are expected to accelerate after a lull as authorities move to support a sluggish economy, with heavier issuance likely to force the PBoC into larger liquidity injections (BBG)

• US ISM services index rose 1.3 points to 55.4 in August against ests of 54.1, though the prices gauge jumped to 72.6 and employment stayed in contraction at 47.8, muddying the disinflation case Waller set out hours earlier (CNBC)

• China's RatingDog services PMI rose to 51.4 in August from a 22-month low of 50.4, beating 50.6 ests on domestic demand, though still the second-lowest reading in 14 months (TE)

• Australia's balance on goods narrowed by A$418m in July, according to ABS international trade data released Thursday morning (ABS)

It's crickets out there!

• The bounce back continues. Another solid session on Wall Street, with buying relatively broad-based outside Energy and Staples. Bond yields eased, most pulling back towards the upper bound of recent trading ranges. Still elevated, and still uncomfortable. At the same time, Brent is holding around the US$95 level and US diesel futures sit at all-time highs. Fed rate hike expectations remain volatile, with September now a coin flip between hold and hike. Year-end pricing has tilted towards one hike, at 42.3% from 37.7% a day earlier, while two hikes has slipped to 33.5% from 40.9%. Commodities caught a strong bid overnight, led by palladium (up 5.0%), silver (up 2.4%), gold (up 1.9%), copper (up 1.0%) and aluminium (up 0.7%). The iShares Expanded Tech Software ETF (up 3.4%) was the standout, helped by a strong result from Snowflake (up 16.5%).

Stocks trading ex-dividend: 

• Fri 4 Sep: Ampol (ALD) – $1.85, Aussie Broadband (ABB) – $0.036, Big River Industries (BRI) – $0.02, Comms Group (CCG) – $0.001, Eagers Automotive (APE) – $0.25, Embark Early Education (EVO) – $0.015, Generation Development Group (GDG) – $0.01, Hitech Group Australia (HIT) – $0.04, Viva Energy Group (VEA) – $0.077, Whitefield Industrials (WHF) – $0.052

• Mon 7 Sep: Adairs (ADH) – $0.06, Alkane Resources (ALK) – $0.02, Beam Communications Holdings (BCC) – $0.014, Enero Group (EGG) – $0.014, HUB24 (HUB) – $0.42, Michael Hill International (MHJ) – $0.02, Perseus Mining (PRU) – $0.09, Pro Medicus (PME) – $0.37, Super Retail Group (SUL) – $0.33, WT Financial Group (WTL) – $0.007

• Tue 8 Sep: AUB Group (AUB) – $0.71, Bluescope Steel (BSL) – $1.35, Channel Infrastructure NZ (CHI) – $0.051, Dusk Group (DSK) – $0.016, Mineral Resources (MIN) – $0.83, Motorcycle Holdings (MTO) – $0.07, News Corporation (NWS) – $0.099, News Corporation (NWSLV) – $0.099, Peet (PPC) – $0.065, Pepper Money (PPM) – $0.072, Perpetual Equity Investment Company (PIC) – $0.04, Regis Healthcare (REG) – $0.094, Saferoads Holdings (SRH) – $0.005, Smartgroup Corporation (SIQ) – $0.215

• Wed 9 Sep: Bhagwan Marine (BWN) – $0.003, Brambles (BXB) – $0.328, CSL (CSL) – $2.277, Evolution Mining (EVN) – $0.21, EVT (EVT) – $0.23, Genesis Minerals (GMD) – $0.05, Hearts and Minds Investments (HM1) – $0.1, IDP Education (IEL) – $0.06, IGO (IGO) – $0.05, IVE Group (IGL) – $0.09, LGI (LGI) – $0.014, Netwealth Group (NWL) – $0.21, Northern Star Resources (NST) – $0.3, Summerset Group Holdings (SNZ) – $0.027

Other ASX corporate actions today:       

• Dividends paid: GWA Group (GWA) – $0.085, Helia Group (HLI) – $0.16, Ignite (IGN) – $0.03, Microequities Asset Management Group (MAM) – $0.01 

• IPOs: None

• AGMs: None

Economic calendar (AEST):

• 10:30 pm: US non-farm payroll

• 10:30 pm: US unemployment rate

• 10:30 pm: Canadian unemployment rate