Morning Wrap: ASX 200 to rise, S&P 500 extends win streak as defensive sectors outperform

ASX 200 futures are up 80pts (+0.96%) as of 8:30 am AEST.

In a nutshell:

• Major US benchmarks mostly higher on cooler-than-expected producer price print and slight bond yield retreat

• Nasdaq snaps a six day win streak, but still up more than 6% week-to-date

• Defensive sectors including Staples, Utilities and Real Estate outperformed overnight

Let's dive in.

S&P 500 SESSION CHART

S&P 500 higher, finished near best levels (Source: TradingView)

OVERNIGHT MARKETS

• Major US benchmarks mostly higher, closing near best levels

• Nasdaq snapped a six day win streak but still up more than 6% week-to-date

• Lots of moving pieces, including i) waning momentum behind US-China trade de-escalation; ii) dialed back short covering activity; iii) AAII bullish sentiment above 35% for the first time since late January; iv) cooler-than-expected PPI seems to be the main driver behind the fall in bond yields overnight 

• Stalled IPOs lured off the sidelines as tariff shock eases (BBG)

• US regulators preparing one of the biggest cuts to bank capital requirements in more than a decade (FT)

STOCKS

• Walmart US comps up 4.5% vs. 3.9% consensus, EPS beat by ~5%, reiterated full-year sales and profit guidance (BBG)

• Walmart says price hikes from tariffs could start this month as the company cannot absorb all tariff costs (CNBC)

• Coinbase says cybercriminals bribed support agents to steal customer data, may cost $400m to fix (CNBC)

• Starbucks is considering options for its China business, including possible stake sale, has contacted private equity firms to solicit views (BBG)

• Cisco guides profit above expectations, citing cloud customer demand (BBG)

• Amazon cuts 100 jobs from its devices team amid corporate job reductions (BBG)

CENTRAL BANKS

• Powell says higher real rates may reflect the possibility inflation may be more volatile going forward and we may be entering a period of more frequent and persistent supply shocks (FED)

• BOJ rate hike forecasts pushed back to Q4, though views largely split (RT)

TARIFFS

• EU seeking greater US tariff reductions than UK or China received (YF)

• US and Chinese trade negotiators met for talks in South Korea on Thursday following weekend de-escalation (BBG)

• Trump says India offered to drop tariffs on US goods, as Delhi negotiates deal to avert higher import taxes (BBG)

• Tariff cuts spark demand for China-made goods, risking supply chain bottlenecks and higher freight costs (RT)

• China to US cargo bookings surge in wake of tariff pause (RT)

• Trump asks Apple's CEO Cook to stop building plants in India (BBG)

• China's trade surplus with the EU hit a record $90bn in the first four months of this year, fueling concerns that EU may become a dumping ground for cheap Chinese goods (BBG)

ECONOMY

• US April Producer Prices fell 0.5% month-on-month vs. consensus for a 0.2% decline, core prices down 0.4% vs. consensus for a 0.3% increase (BBG)

• US April retail sales up 0.1% month-on-month vs. 0.2% consensus, impact of tariffs expected to be more evident over the coming months (BBG)

• UK Q1 GDP up 0.7%, beats expectations of 0.6%, but industrial production slumped in March (BBG)

• Australian employment jumped by 89,000 in April, the largest increase since February 2024, while the unemployment rate held steady at 4.1% (BBG)

ASX TODAY

• Appen guides to FY25 revenue of $235-260m vs. $248m consensus, expects positive full-year underlying EBITDA (APX)

• Fletcher Building says Australian Division will be de-established as a standalone division, ongoing restructuring to deliver NZ$15m in annualised cost savings (FBU)

• GPT Group forms new logistics JV with QuadReal Property Group, partnership will be seeded with $460m of logistics assets and GPT will sell down a number of balance sheet assets to retain a 20% co-investment interest (GPT)

• Monadelphous Group awarded new construction and maintenance contracts in various resources, energy and infrastructure sectors valued at $180m (MND)

• Perpetual launches wealth management unit sale process, sources suggest TA Associates and Oaktree have a strong interest, with first round bids due to start in June (The Aus)

• Rio Tinto invests $1.2bn to modernise century-old hydroelectric power plant in Quebec, marks its largest single investment in hydro since the 1950s, project to run until 2032 (RIO)

WHAT TO WATCH TODAY

• Futures point to big jump: S&P/ASX 200 futures pointing towards a near 1% jump. Not completely sure why. Could be a mix of bond yield retreat (back below 4.5%), a big outperformance in defensive sectors overnight (which holds more weight for the local market) and solid overnight economic data.

• Defensive shift: S&P 500 Utilities, Staples and Real Estate sectors rallied more than 1.8% overnight. We could see a similar defensive lean today as tech and growth takes a breather.

BROKER MOVES

• Alcoa Corp downgraded to Neutral from Buy; target remains $31 (UBS)

• Insurance Australia downgraded to Neutral from Buy; target up to $9.30 from $8.30 (UBS)

Stocks trading ex-dividend: 

• Fri 16 May: Clime Investment Management (CIW) – $0.003, Dicker Data (DDR) – $0.11, EZZ Life Science (EZZ) – $0.02

• Mon 19 May: Alcoa Corporation (AAI) – $0.109, Macquarie Group (MQG) – $3.90, Wam Global (WGB) – $0.065

• Tue 20 May: Sandon Capital Investments (SNC) – $0.014

• Wed 21 May: Amcor (AMC) – $0.20

• Thu 22 May: Aristocrat Leisure (ALL) – $0.44, Orica (ORI) – $0.25

Other ASX corporate actions today: 

• Dividends paid: Australian Unity Office Fund (AOF), Cromwell Property (CMW)

• Earnings: None

• IPOs: None

• AGMs: Gold Road Resources (GOR)

Economic calendar (AEST):

• 9:50 am: Japan GDP Growth (Q1)

• 10:30 pm: US Building Permits, Housing Starts (APR)

• 12:00 am: US Consumer Sentiment (MAY)