Morning Wrap: ASX 200 to rise, S&P 500 higher on Nvidia gains, China's stimulus plan disappoints

ASX 200 futures are trading 15 points higher, up 0.18%, as of 8:30 am AEDT.

Major US benchmarks finished higher amid a broad-based rally (ex-Resources), commodity prices sold off sharply after China's muted stimulus announcement, US Q3 earnings season kicks off this week and analysts expect companies to report the strongest EPS growth since the first quarter of 2022 and how will local miners perform after yesterday's pullback?

Let's dive in.

S&P 500 SESSION CHART

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

OVERNIGHT MARKETS

• Major US benchmarks finished higher and near best levels

• Overnight strength reversed yesterday’s weakness driven by the latest Fed rate path repricing and geopolitical overhang

• Today’s big story – Commodities sell off across the board as China’s NDRC briefing provided few details on further stimulus

• Q3 earnings season kicks off this week – Companies expected to report the biggest EPS growth since 1Q22, breath of companies reporting growth expected to widen to ~72% and capex spend set to broaden beyond Magnificent 7

• China market rally starts to cool as traders questioned Beijing's resolve to add more stimulus (FT)

• Emerging markets, industrial metals and commodities drop amid lack of China stimulus announcement (BBG)

• Hedge funds and retail investors pile into Chinese stocks, but asset allocators and multinationals remain wary (BBG)

• US-based China ETFs get bumper inflows with US$5.2bn in new assets in the past week on bullish momentum (RT)

• Resilient outlook for Japan earnings may sustain equity market gains towards year-end (BBG)

• Oil falls over 5% intra-day amid uncertainty over Israeli retaliation and lacklustre China stimulus (YH)

STOCKS

• US banks brace for lowest income from lending in almost two years (FT)

• Pepsi trims FY24 organic revenue growth, flags North American performance as “subdued” (RT)

• Honda says it's open to altering its EV roadmap if demand for pure battery cars continues to wane (BBG)

• Hindenburg discloses short position in Roblox, alleges inflated metrics and harm to children (RT)

• Meta rolling out new gen AI tools to help advertisers create and edit videos more easily (BBG)

• Samsung warns over Q3 profits and apologises for disappointing performance as it struggles in AI chips (RT)

CENTRAL BANKS

• ECB to cut rates by 25 bps in both October and December (RT)

• Fed's Bostic says labor market has slowed but is not weak; inflation still quite a ways above the 2% target (BBG)

• NY Fed President Williams signals support for 25bp November rate cut with economy positioned for soft landing (FT)

• Fed's Kugler says US jobs market cooling but still resilient; keen to avoid drastic weakening of jobs market (RT)

• ECB's Nagel open to October rate cut citing progress on inflation and weaker German economic prospects (RT)

• RBA minutes show board comfortable with current policy settings, note scenarios where rates may need to rise or fall (BBG)

POLITICS & GEOPOLITICS

• Hezbollah missiles hit Israel's Haifa on anniversary of 7-Oct attack (RT)

• Harris rules out bilateral talks with Putin on ending war in Ukraine (FT)

• China puts provisional tariffs on European brandy after EU okays duties on Chinese EVs (BBG)

• US officials say Israel has not briefed US on Iran retaliation plans; targeting energy facilities likely a top option (NBC)

ECONOMY

• Hurricane Milton could cause as much as US$175 billion in damages, according to early estimates (CNBC)

• China's NDRC expresses confidence in reaching economic goals but nothing on major stimulus (BBG)

• Japan wage growth softens, Q3 private consumption tracking marginally positive (BBG)

• Germany industrial production for August beats estimates but Q3 slowdown still in the cards (BBG)

• Australian consumer confidence jumps amid hopes of rate cuts (MW)

ASX TODAY

• Atlantic Lithium granted mine operating permit for the Ewoyaa Lithium Project in Ghana (A11)

• Sigma Healthcare holder HMC Capital lowers holding to 10.6% from 12.2% (SIG)

WHAT TO WATCH TODAY

• QBE Insurance: QBE suffered a 2.4% dip on Tuesday amid Hurricane Milton concerns. The North American region accounts for over 30% of the group's GWP.

• Post NDRC: The local resource sector sold off heavily on Tuesday after China's NDRC missed market expectations of more stimulus. A few resource names held up better than others (e.g. Rio Tinto -0.15%, Sandfire Resources -0.1%, Nickel Industries -0.5%) while names like Fortescue (-5.3%), MinRes (-3.9%) and South32 (-2.7%) tumbled but finished off worst levels. It will be interesting to see if the dust can settle. Or maybe the resource rally is done and the market will rotate back into defensives and/or banks.

BROKER MOVES

JPMorgan downgraded Australian lithium miners with the view that lithium prices have bottomed but the recent rally was premature.

• Catalyst Metals initiated Buy with $3.90 target (BP)

• Hub24 initiated Buy with $65.80 target (CG)

• IGO downgraded to Underweight from Neutral; target cut to $4.50 from $5.40 (JPM)

• Liontown retained Underweight; target cut to $0.40 from $0.65 (JPM)

• MinRes downgraded to Neutral; target up to $50 from $49 (JPM)

• Netwealth initiated Buy with $27.75 (CG)

• Pilbara Minerals retained Neutral; target up to $3.05 from $2.85 (JPM)

• Sandfire Resources downgraded to Neutral from Overweight; target up to $11.10 from $10.50 (JPM)

• South32 downgraded to Neutral; target remains $3.80 (JPM)

• Webjet Group initiated Buy with $1.05 target (GS)

Stocks trading ex-dividend: 

• Wed 9 Oct: Naos Emerging Opportunities (NCC) – 4.44%

• Thu 10 Oct:  Duxton Water (D2O) – 2.68%, Wam Active (WAA) – 3.31%

• Fri 11 Oct: Turners Automotive Group (TRA) – 1.28%, Wam Research (WAX) – 4.17%

• Mon 14 Oct: Civmec (CVL) – 2.82%, Clime Capital (CAM) – 1.67%, Star Combo Pharma (S66) – 2.64%

• Tue 15 Oct: Cadence Capital (CDM) – 3.97%, Cadence Opportunities Fund (CDO) – 3.95%, Harvey Norman (HVN) – 2.46%, United Overseas Australia (UOS) – 0.92%, Wam Microcap (WMI) – 3.40%, Washington H Soul Pattinson (SOL) – 1.57%

Other ASX corporate actions today: 

• Dividends paid: Briscoe Group (BGP), Count (CUP), Duratec (DUR), Inghams Group (ING), News Corp (NWS), News Corp (NWSLV), NRW (NWH), Perseus Mining (PRU), Southern Cross Electrical Engineering (SXE), Wesfarmers (WES)

• Listing: None

• AGMs: REA Group (REA)

Economic calendar (AEDT):

• 4:00 pm: Germany Balance of Trade (Aug)

• 4:00 am: US FOMC Minutes