Morning Wrap: ASX 200 to rise, S&P 500 and Nasdaq slip, Alphabet and Tesla slide on earnings

In a nutshell:

• Major US benchmarks finished narrowly lower as Big Tech weakness and rising oil offset Energy gains ahead of the first Magnificent Seven results

• Alphabet and Tesla headlined Q2 earnings, with Alphabet beating on revenue and Google Cloud surging 82%, while Tesla topped revenue but missed on profit and margins

• Oil jumped to a one-month high as the US struck Iran for an 11th straight night and Trump threatened Iranian infrastructure over the Strait of Hormuz

Let's dive in.

• Major US benchmarks gave back early gains to finish slightly lower

• Losses across most megacaps weighed on the index, with notable declines for SpaceX (-6.7%), Meta (-2.5%), Microsoft (-1.8%)  and Tesla (-1.3%), though Nvidia (+2.3%) managed to rise

• Brent up 4.2% to US$95.49 a barrel, now up 34% since 1-Jul, placing upward pressure on bond yields (US 10-year up 11 bps in the last three sessions and on the cusp of trading at the highest since Jan-25)

• US 30-year bond yield has traded above 5% for nearly 20% of this year’s sessions, the most since 2007 (BBG)

• BofA urges clients to buy US momentum stocks following recent profit taking (BBG)

• USD/Yen hits 163 level for first time since 1986 (NK)

• Big investors buying beaten-down Japan government bonds as rising yields attract some traders but worries persist about fiscal outlook (FT)

• Goldman Sachs flagged about $489bn of AI-related debt issued this year, with hyperscalers Microsoft, Amazon and Meta accounting for roughly 40% of the total, per the strategist note (YF)

• Q2 S&P 500 earnings are on track to grow about 24.7% year-on-year, well above the five-year average of 16.4% and a second straight quarter above 20% (YF)

• US forces carried out an 11th consecutive night of strikes on Iran, hitting military operations centres, maritime capabilities, aircraft hangars, drone storage and logistics sites (CNBC)

• Trump threatened to destroy one Iranian bridge or power plant, including sites in or near Tehran, for every ship Iran fires on in the Strait of Hormuz (CNBC)

• Iran responded by warning it would strike US-linked infrastructure and energy facilities across the region if Washington carried out the threat (CNBC)

• Rubio said Iran was not serious about talks and had violated last month's memorandum within two weeks, vowing the US would keep protecting Hormuz shipping, speaking at ASEAN (CNBC)

• Lebanon and Israel set to hold their next round of ​US-brokered talks on 4-Aug in Italy (TI)

• US refiners are ramping up diesel production to near-record levels amid global shortage (BBG)

• Alphabet Q2 FY26 revenue up 24% to $119.8bn, ~2.5% ahead of ests, with Google Cloud up 82% and a near $99bn gain on Anthropic and SpaceX stakes lifting net income, shares down 3.1% after hours (CNBC)

• Tesla Q2 FY26 revenue up 26% to $28.24bn on record 480,126 deliveries, beating ests, but non-GAAP EPS of $0.33 missed ~$0.55 ests as operating margin fell to 1.4%, shares down 4.1% after hours (TK)

• IBM Q2 FY26 revenue up 1% to $17.2bn, matching its 14 July pre-announcement, with the company now guiding to constant-currency revenue growth of 4-5% for the year (IBM)

• Super Micro jumped more than 20% after saying it expects its 2026 gross margins to double, extending a rally driven by a record order backlog at the AI server maker (YF)

• AT&T rose more than 4% after Q2 adjusted EPS of 65 cents beat 59 cents ests on strong postpaid phone and broadband additions, though revenue of $31.6bn slightly missed (CNBC)

• OpenAI raises its projected spending on computing infrastructure to ~$750bn through 2030 (Quartz)

• Reddit slid about 9% after the Wall Street Journal reported the company had discussed cutting off Google's access to its content for artificial intelligence training (CNBC) 

• Trump set to impose fresh 10% levy on dozens of nations by Friday, sources say (BBG)

• Trump said generic drug imports will stay tariff free for two years from 1 August, then face a 100% duty from August 2028 and 200% a year later (BBG)

• India is seen as most exposed, supplying nearly half of US generic medicines, which make up more than 90% of American prescriptions and are mostly produced in India, Europe and China (CNBC) 

• BoJ officials said to be open to faster rate hikes than consensus as weak yen boosts upside inflation risks (BBG)

• China's June spending plunged 11.9%, the most since October, suggesting further fiscal tightening as growth slows (BBG)

• Japan exports and imports in June grew fastest since November 2022, boosted by semiconductor equipment and a weak yen (CNBC)

• UK June CPI eases to 2.6% vs. 2.8% in the prior month and 2.7% ests, softest levels since Mar-25 due to lower fuel and food prices (BBG)

• Washington H. Soul Pattinson has hired PwC to advise on a potential sale of its Australian horticulture portfolio, rebranded as Redlands, which could fetch several hundred million dollars (The Aus)

• Helloworld Travel CEO Andrew Burnes says the group withdrew a $1.00/sh offer for Webjet made in Sep-25 after receiving no response, later returning with a lower ~$0.90/sh bid that was disclosed but never eventuated. Now pushing for two board seats and holds a 20.1% stake (AFR)

• Macquarie Group Q1 trading update at AGM shows MAM net profit contribution down year-on-year, with AUM $748.0bn (+4% q/q). BFS and MacCap contributions up y/y, CGM substantially up. CET1 ratio 13.8%. Outlook flat-to-positive across divisions, though BFS margins seen lower on mix (MQG)

• Macquarie Group CEO and MD Shemara Wikramanayake to retire effective 6-Nov, with Head of Banking and Financial Services Greg Ward appointed successor from 7-Nov (MQG)

• Macquarie Group to face holder questions over carbon financing, with pension funds backing a Market Forces resolution demanding more detail on financing of emissions-increasing projects (AFR)

• James Hardie Industries guides Q1 net sales $1.45-1.48bn vs prior $1.32-1.35bn and $1.32bn ests, a beat of ~11%. AEBITDA $399-407m vs prior $354-375m and $366.1m ests, up ~10%, driven by better-than-expected Siding & Trim sell-through (JHX)

• Paladin Energy upgraded to Neutral from Underweight; target lowered to $9.10 from $9.20 (JPMorgan)

• Paladin Energy upgraded to Buy from Neutral; target lowered to $11.70 from $12.60 (UBS)

• Wesfarmers downgraded to Underweight from Equal-weight; target up to $79.00 from $78.70 (Morgan Stanley)

Stocks trading ex-dividend: 

• Thu 23 Jul: Plato Income Maximiser (PL8) – $0.006

• Fri 24 Jul: Spheria Emerging Companies (SEC) – $0.011

• Mon 27 Jul: None

• Tue 28 Jul: None

• Wed 29 Jul: None

Other ASX corporate actions today:       

• Dividends paid: Qube Holdings (QUB)

• Earnings: None

• IPOs: Ceretas (CTS) at 12:00 pm

• AGMs: Macquarie Group (MQG) at 10:30 am

Economic calendar (AEST):

• 11:30 am: Australia Unemployment Rate (Ests: Unch at 4.4%)

• 10:15 pm: ECB Interest Rate Decision (Ests: Hold at 2.40%)