Morning Wrap: ASX 200 to rise, S&P 500 has best day in six weeks ahead of US election results

ASX 200 futures are trading 55 points higher, up 0.67%, as of 8:30 am AEDT.

Buckle up and get ready for some volatility – Major US benchmarks rallied and closed near best levels as investors positioned for election results, which will begin flowing through around 11 am AEDT. The ASX 200 is set to follow and open higher but the local sharemarket has historically averaged a 1.8% intraday range on US election days.

Let's dive in.

S&P 500 SESSION CHART

S&P 500 trended higher to close at best levels (Source: TradingView)

OVERNIGHT MARKETS

• Major US benchmarks rallied and finished near best levels, with all sectors higher

• Another relatively quiet session in wait for election results, underlying themes that propped the market higher include latest economic data offering more soft landing support (ISM services, China services PMI and South Korea inflation)

• Global markets brace for US election volatility as Americans hit the polls (WSJ)

• Ratio of put to calls on VIX jumped to highest since 2020, reflecting bets volatility will fade post-election (BBG)

• US stock market is unlikely to head into a bear market in the next 12 months, says Goldman Sachs (BBG)

• Trump win poised to benefit financials, gold, and managed care insurers; Harris to benefit EVs, homebuilders, discounters (YH)

• China stocks rallied to one month high as positive headlines boost investor sentiment (BBG)

• China stimulus rally boosts Q3 corporate earnings (BBG)

STOCKS

• US election will have big consequences for companies spanning energy, cars and pharmaceuticals (FT)

• SMCI audit woes raising risk of potential delisting and removal from S&P 500 (BBG)

• Yum Brands reports unexpected fall in worldwide sales amid KFC's struggles in US (RT)

• Apple considering push into smart glasses (Bloomberg)

• Palantir Technologies raises 2024 sales forecast again on robust AI take up, shares soar 23.5% (RT)

• Q3 earnings in Europe at halfway mark show investors reward beats but fret about China (RT)

CENTRAL BANKS

• RBA holds cash rate as underlying inflation still too high (BBG)

• RBNZ warns of risk that economy could weaken significantly amid rising unemployment (BBG)

US ELECTION

• First polling stations will close at 10 am AEDT on Wednesday, with results expected 11 am AEDT (CNBC)

• 80 million or about half of all voters in 2020, casted an early vote in 2024 (WP)

• Trump and Harris make their final pitch in Pennsylvania, where polls show them in dead heat (AX)

• Trump threatens Mexico with tariffs of up to 100% (WP)

ECONOMY

• China services PMI expands at quickest pace in three months (RT)

• US trade deficit surged to nearly a 2-1/2-year high in September as businesses boosted imports (RT)

• US October ISM Services PMI printed 56.0 vs. 53.8 consensus and highest since Jul-22 due to strength in employment and supplier deliveries sub-indices (RT)

• South Korea October CPI prints 1.3%, the softest since January 2021 (RT)

• Chinese premier Li expressed confidence Beijing can pull off an economic recovery (BBG)

ASX TODAY

• Companies do not seem too keen to announce any price-sensitive news on US election day

• Suncorp publishes slides for investor strategy update, reaffirms FY underlying insurance trading ratio of 10-12%, proceeds from sale of Suncorp Bank expected to be returned to shareholders around the end of 1Q25 (SUN)

WHAT TO WATCH TODAY

• US election: The results will start trickling out before noon so expect some intraday volatility. In the past 8 US election days, the ASX 200 has averaged an intraday range of 1.8% (from session low to high). The largest was a 5.19% swing in 2016 and the smallest was a 0.57% in 1996.

• Commodities: Several commodities bounced overnight to 1-3 week high after experiencing a sharp pullback in early October. The most notable bounces came from Nickel and Copper Miners. This could see some strength for local names like Nickel Mines and Sandfire Resources.

BROKER MOVES

• Domino’s Pizza downgraded to Underweight from Neutral; target cut to $30.60 from $34 (JPM)

• Objective Corp downgraded to Neutral from Buy; target up to $17 from $159 (UBS)

• St Barbara upgraded to Outperform from Neutral; target remains $0.49 (MQG)

Stocks trading ex-dividend: 

• Wed 6 Nov: ResMed (RMD) – 0.15%

• Thu 7 Nov: Cobram Estate Olives (CBO) – 1.79%, Westpac Bank (WBC) – 2.38%

• Fri 8 Nov: Acorn Capital Investment (ACQ) – 3.14%

Other ASX corporate actions today: 

• Dividends paid: United Overseas Australia (UOS), Elanor Commercial Property Fund (ECF)

• Listing: None

• AGMs: Domain Holdings (DHG), Domino’s Pizza (DMP), Fortescue (FMG), IGO (IGO)

Economic calendar (AEDT):

• 8:00 am: Australia Ai Group Industry Index (Oct)