Morning Wrap: ASX 200 to rise, S&P 500 and Nasdaq slide as AI trade unwinds, Commodity prices tumble

In a nutshell:

• Major US benchmarks lower amid a tech and resources-led selloff, which started in Asian markets (KOSPI tumbled 10%) and flowed through to Europe/Wall Street

• A Bank of America note called for three Fed hikes in 2026, with markets now pricing out cuts entirely

• Commodity prices were mostly down around 1-2% when the ASX closed on Tuesday, but selling accelerated overnight, with sharp declines for copper (-3.7%), aluminium (-3.0%), gold (-1.9%) and more

Let's dive in.

• Major US benchmarks lower, came off worst levels into the close as the Dow clawed back to flat while tech and semis stayed heavily sold

• Memory names led the rout, NYSE Semiconductor index down 7.8% and the DRAM ETF off 14%, with much of the unwind driven by high concentration, inflows exhaustion, regulatory backlash surrounding leveraged ETFs and profit-taking ahead of highly anticipated Micron earnings tomorrow

• Breadth was still solid, with a clear rotation into Staples, Healthcare and Real Estate (all up more than 1%), Dow closed fractionally lower and Equal-weight S&P 500 (-0.34%) outperformed by 110 bps

• Selloff began in Asia, South Korea's KOSPI plunged 10% as overseas investors dumped chip stocks on overheating signals, bleeding into Europe and US futures

• Momentum unwind seems to be more about positioning and market structure, as opposed to fundamental headwinds, though still plenty of AI-related scrutiny surrounding open-source competition, capex ROI, SK Hynix shifting production from HBM4 to DRAM, potential memory price weakness in 2027

• Broad commodity exodus, silver (-5.2%) closed at lowest since Dec-25, copper (-3.7%) at a one-month low, aluminium (-3.0%) lowest since late-Mar, gold (-1.9%) still holding above US$4,000, Brent (-1.5%) to US$76.99 

• BofA reversed its call to three quarter-point Fed hikes in 2026, lifting its terminal rate view to 4.25% to 4.5% on sticky inflation and resilient jobs (YF) 

• South Korea's watchdog says government was too fast approving leveraged funds tied to chip stocks (RT )

• Barclays, Stifel both raise S&P 500 price to 7800 on earnings strength (RT)

• Evercore says Big Tech stocks will return to investor favor following upcoming earnings (BBG)

• Global M&A could hit $4tn in 2026 as deals exceed $5bn drive nearly half the total, AI reshapes dealmaking (CNBC)

• FedEx Q4 FY26: Revenue up 12.5% year-on-year to $25bn, beating ~$24bn ests, adjusted EPS $6.31 beat ~$5.96 ests, shares down ~6% after hours (BBG)

• Micron down 13% ahead of tomorrow’s earnings, caught in the broader memory selloff despite a 300%-plus run this year (CNBC)

• AMC Entertainment tumbled nearly 24% after announcing a $200m raise via 95.25m shares sold to institutional investors to cut debt (TS)

• Oracle cut 13% of its workforce (~21,000) in fiscal 2026 amid AI-driven restructuring (BBG)

• SpaceX attracts a massive ~$89bn of orders for its first investment-grade bond sale (BBG)

• Moody's gives SpaceX investment-grade Baa1 despite negative free cash flow, skeptics question debt-heavy growth (BBG)

• Iranian officials say no plans to allow international inspectors to assess damaged nuclear facilities (WP)

• Iran and Oman are negotiating framework for jointly managing navigation in the Strait of Hormuz (RT)

• Traffic picks up as more ships visibly signal plans to cross Strait of Hormuz (BBG )

• Gulf oil tanker rates nearly double as resumption of exports out of Middle East takes hold (RT)

• Trump is pushing for a 15% to 20% minimum tariff on all EU goods, the Financial Times reported, pressuring the euro lower in European trade (FT)

• BofA now expects three Fed hikes in 2026 in September, October and December, reversing its prior steady-rates base case after hawkish remarks from new chair Kevin Warsh (CNBC)

• Deutsche Bank also turned hawkish, projecting two quarter-point hikes this year, while CME FedWatch now puts September hike odds near 73% (YF)

• Chicago Fed's Goolsbee says with employment steady, he's watching whether inflation persists or fades (RT)

• ECB's Lane says euro zone inflation may stay above 2% for some time even if Middle East peace comes (RT)

• US flash composite PMI rose to 52.2 in June from 51.5, the strongest private-sector growth since January, with manufacturing output the best in six years (S&P)

• Eurozone June flash composite PMI rose to 49.5, beating 49.1 expected, as the downturn eased and input price inflation cooled to a February low (S&P)

• Germany's flash composite PMI fell to 48.0 from 48.8, missing 49.9 expected, as services contracted faster at 46.8 (S&P)

• UK June flash services PMI dropped to 48.7 against 50.1 expected, pointing to a sharp loss of economic momentum (S&P)

• 3P Learning block trade crosses at 32.97 cents per share, totalling 16.2m shares or ~6% of the company (3PL)

• IFM Global Infrastructure Fund voting power in Atlas Arteria exceeds 50%, current takeover offer will remain extended to 7-Jul-26 (ALX)

• Aus CPI: Inflation print at 11:30 am, with markets expecting May headline inflation to hit 4.4% year-on-year vs. 4.2% in the prior month. Trimmed mean CPI also expected to tick higher to 3.5% from 3.4%. Recent string of weak Australian economic data (GDP miss, unemployment jumped to 4.5%, April inflation print slightly cooler-than-expected etc.) has driven the Australian 2-year yield down 35 bps since mid-May to a fresh three-month low of 4.45%. So another high stakes print that could materially shift RBA hold/hike expectations.

• Resource weakness continues: A very heavy overnight session for all-things resource-related. This drove heavy selling across miners, with overnight ETFs like Copper Miners (-6.3%), Rare Earths/Strategic Metals (-5.6%), Silver Miners (-5.4%) and Gold Miners (-4.6%) trading sharply lower.

• Defensive pivot: A clear overnight pivot into defensives/value, with Staples, Healthcare, Real Estate and Utilities higher on Wall Street.

• A2 Milk initiated Buy with NZ$9.60 target (Goldman Sachs)

• Lovisa initiated Neutral with $23.60 target (Goldman Sachs)

• Sandfire Resources downgraded to Neutral from Outperform; target remains $21 (Macquarie)

• Treasury Wine Estate initiated Neutral with $5.20 target (Goldman Sachs)

Stocks trading ex-dividend: 

• Wed 24 Jun: None

• Thu 25 Jun: None

• Fri 26 Jun: Centuria Capital (CNI) – $0.052 
  

Other ASX corporate actions today:       

• Dividends paid: None

• Earnings: None

• IPOs: None

• AGMs: None

Economic calendar (AEST):

• 11:30 am: Australia Inflation