Morning Wrap: ASX 200 to rise, S&P 500 lower as tech stocks slump + Breville, Lottery Corp and Santos earnings

ASX 200 futures are up 20pts (+0.22%) as of 8:30 am AEST.

In a nutshell:

• S&P 500 and Nasdaq posted worst day since 1-Aug but more stocks manged to finish higher as weakness was largely concentrated towards tech

• Real Estate, Staples, Utilities and Healthcare stocks rallied overnight amid an unexpected rotation into defensive/value

• Massive day for FY25 results, with Breville, Cleanaway, Iluka, Magellan and more due to report

Let's dive in.

S&P 500 SESSION CHART

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

OVERNIGHT MARKETS

• Major US benchmarks mostly lower, finished near worst levels

• S&P 500 and Nasdaq posted worst sessions since 1-Aug

• Strong breadth as the Equal-weight S&P 500 outperformed the official benchmark by 106 bps

• Today’s big story: Massive rotation out of tech names like Nvidia (-3.5%), Broadcom (-3.5%), Tesla (-1.7%) and Microsoft (-1.4%), while value and rate-sensitive pockets of the market outperformed

• Retailers are the last to report Q2 earnings, with Home Depot a bright spot given accelerating comparable sales and reaffirmed full-year guidance

• Citadel says retail likely to slow buying in September before resuming later this year (BBG)

• US public pension funds set for 11-12% returns on market rally, according to S&P Global (BBG)

• Japan 20-year bond auction draws softer demand, investors cautious on longer-term debt (BBG)

• China ramps up short-term liquidity injection to stabilise bonds after recent yield backup (BBG)

• UK bond yields surge on inflation fears and budget pressures (RT)

STOCKS

• Home Depot Q2 earnings slightly miss but comparable sales growth accelerated from 0.3% in May to 0.5% in June and 3.3% in July, reaffirmed full-year guidance (BBG)

• Meta to announce downsizing to AI division with executives set to depart (NYT)

• Google proposes Play Store changes to avoid EU penalties and address regulator concerns (BBG)

• Nvidia developing B30A AI chip for China, based on Blackwell architecture, promising improved performance over H20s (RT)

• SoftBank agrees to invest $2bn in Intel, equal to a ~2% stake (FT)

• Starbucks to grant 2% raise to all salaried North American staff, aiming to improve sales (BBG)

• Palo Alto Networks lifts full-year guidance (BBG)

• European banks post biggest earnings surprise as loan growth picks up, provisions ease (BBG)

TARIFFS

• Bessent says US tariff revenues will rise substantially, with a focus on reducing debt (RT)

• US coffee buyers shun Brazilian beans after Trump's 50% tariff (BBG)

• India PM Modi praises "friend" Putin, Delhi looks to bolster China ties amid tensions with US (BBG)

• China's exports to Southeast Asia, Latin America and Middle East double, driven by US tariffs, economic slowdown (BBG)

GEOPOLITICS 

• Trump says US will help defend Ukraine but no troops to be deployed on the ground (WP)

• Israel is reviewing Hamas' response to a Gaza ceasefire proposal for a 60-day truce (RT)

• Ukraine offers to buy $100bn of US weapons financed by Europe in bid to win US security guarantees (FT)

ECONOMY

• S&P Global Ratings affirmed the US's AA+ rating, noting tariff revenues will mitigate fiscal impacts from recent legislation (BBG)

ASX TODAY

It’s a massive day for earnings, and we’ll be covering all the key results as they drop. Follow our Live Blog for the latest company announcements, consensus numbers, market moves, and economic updates.

WHAT TO WATCH TODAY

• Massive rotation: Rotation was the big overnight story, with big tech/growth under pressure, while capital flowed into sectors like Real Estate (+1.8%), Staples (+1.0%) and Utilities (+1.0%). No major catalyst behind the move.

• Day twos: Keen to see how some of yesterday's reporters trade/broker follow up. Notable beats include ARB Corp (+8.5%), Seek (+8.0%) and Monadelphous (+3.7%). While losers include CSL (-16.8%) and Reliance Worldwide (-6.7%), Will be interested to see how analysts respond to CSL (relatively in-line FY25 numbers, sizeable FY26 guidance miss, restructure and multi-year buyback).

• Yancoal: Reported 1H25 earnings, declared a 6.2 cent dividend (~1% yield) despite sitting on $1.8bn cash. Widely expected to deliver more. This time last year, the company skipped its dividend to pursue M&A, which drove a 14.5% one-day selloff.

BROKER MOVES

• Centuria Capital upgraded to Buy from Hold; target up to $2.40 from $1.80 (BP)

• Centuria Capital downgraded to Underperform from Neutral but target up to $2.04 from $1.79 (MQG)

• Deterra Royalties downgraded to Neutral from Overweight; target of $4.60 (DDR)

• Monadelphous upgraded to Hold from Sell; target up to $19.50 from $16.50 (BP)

• Reliance Worldwide downgraded to Neutral from Overweight; target cut to $4.35 from $5.25 (JPM)

Stocks trading ex-dividend: 

• Wed 20 Aug: Commonwealth Bank of Australia (CBA) – $2.60, FSA Group (FSA) – $0.035, Ryder Capital (RYD) – $0.055

• Thu 21 Aug: AMP (AMP) – $0.02, Brickworks (BKW) – $0.484, GWA Group (GWA) – $0.08, Insurance Australia Group (IAG) – $0.19, JB Hi-Fi (JBH) – $2.05, Washington H Soul Pattinson (SOL) – $0.59

• Fri 22 Aug: ASX (ASX) – $1.121, Iress (IRE) – $0.11, Lendlease (LLC) – $0.17

Other ASX corporate actions today: 

• Dividends paid: None

• Earnings: APA Group (APA), Alliance Aviation Services (AQZ), Arafura Rare Earths (ARU), Breville Group (BRG), Consol (COS), Clarity Pharma (CU6), Cleanaway Waste Management (CWY), Dexus (DXS), Emeco (EHL), EarlyPay (EPY), Experience Co (EXP), Harmoney (HMY), Hansen Technologies (HSN), Humm Group (HUM), Iluka Resources (ILU), Lynch Group (LGL), Lycopodium (LYL), Magellan (MFG), MLG (MLG), Retail Food Group (RFG), Stockland (SGP), Shape Australia (SHA), Superloop (SLC), Service Stream (SSM), Santos (STO), Step One Clothing (STP), Southern Cross Electrical (SXE), Transurban (TCL), The Lottery Corp (TLC), Vicinity Centres (VCX)

• IPOs: None

• AGMs: Aroa Biosurgery (ARX), Straker (STG)

Economic calendar (AEST):

• 9:50 am: Japan Balance of Trade (Jul)

• 4:00 pm: UK Inflation (Jul)

• 4:00 am: FOMC Minutes