Morning Wrap: ASX 200 to rise, S&P 500 posts first back-to-back loss since September

ASX 200 futures are trading 23 points higher, up 0.27%, as of 8:30 am AEDT.

Major US benchmarks finished little changed amid mixed corporate earnings and a continued uptick in bond yields, gold continued to march into unprecedented territory, Fletcher Building revenue tumbles amid 'prolonged' downturn and quarterly reporting/AGM season heats up.

Let's dive in.

S&P 500 SESSION CHART

S&P 500 little changed but off worst levels (Source: TradingView)

OVERNIGHT MARKETS

• Major US benchmarks finished mixed but off worst levels

• S&P 500 breadth was slightly negative, narrowly logged its first back-to-back decline since early September

• Relatively quiet session – Rising Republic sweep expectations a driver of higher yields, yield stabilisation provided some cushion from risk-off tone, earnings was a mixed bag with scrutiny on select cyclical names 

• Bond yields a touch higher after yesterday’s big push that saw the 10-year yield hit the highest since late July

• Global yield backup continues as investors mull prospect of slower Fed rate cuts (BBG)

• Traders reduce bearish dollar positions by most since 2021 in second week of October (BBG)

• S&P 500 exposure has reached levels that were followed by a 10% slump in the past says Citi (BBG)

• Thematic ETFs face third-consecutive year of outflows as investors flock to funds linked to broad market indexes (RT)

• Euro could drop as much as 10% vs US dollar if Trump and the Republicans win election says Goldman (BBG)

STOCKS

• GE Aerospace dips 9% despite earnings beat and guidance upgrade, still struggling with supply-chain constraints that have led to a decline in jet engine deliveries (RT)

• SAP shares hit all-time high on upbeat cloud business outlook, aided by cost-cutting and fewer hires (RT)

• Target announces price cuts on 2,000 items ahead of holidays (RT)

• Logitech lifts FY outlook as sales and profit expectations climb (RT)

CENTRAL BANKS

• San Francisco Fed's Daly doesn't see case for stopping rate cuts, adds rates “absolutely” still high and restraining the economy (BBG)

• Kansas City Fed's Schmid favours slower pace of rate cuts to sustain full employment and stable inflation (BBG)

POLITICS & GEOPOLITICS

• Trump, Harris neck and neck in seven battleground states (FT)

• Israel considering Egyptian proposal for a small-scale ceasefire with Hamas (NBC)

ECONOMY

• IMF raises 2024 economic growth forecasts for the US, Brazil and Britain, forecasts for China, Japan and Eurozone lowered, says wars and new trade conflicts pose a threat to global economy (RT)

ASX TODAY

• CSL flags late stage setbacks for certain therapies in R&D briefing, FDA had raised concerns regarding manufacturing of garadacimab and also noted studies/trials for three other products would be discontinued (CSL)

• Fletcher Building provides Q1 update in AGM – 1Q25 market volumes down 10-15%, September revenues down 12%, gross margin under pressure in highly competitive environment (FBU)

• Garda Property Group sells North Lakes industrial site to ESG fund for $114m (vs. $250m market cap), board plans to make one-off special distribution to shareholders (GDF)

• QBE faces court proceedings from ASIC amid allegations over misleading insurance pricing discounts offered to over 500,000 customers (QBE)

• Telstra Chair Craig Dunn discloses purchase of ~29k shares, Dunn beneficially owns ~125k shares following the transaction (TLS)

• Westpac notes FY24 NPAT to be reduced by $123m due to unrealised fair value gains and losses on economic hedges (WBC)

• Quarterly updates from – 29M, PRU, SBM, WAF and more

WHAT TO WATCH TODAY

• Gold – Prices rallied another 1.07% to a record US$2,748/oz (now up 5.4% in the last nine sessions). The VanEck Gold Miners ETF gained 2.0% overnight to close at the highest level since Oct 2012. This should drive further momentum for local gold names.

• Silver – Prices rallied 3.2% to US$34.8/oz, the highest since Oct 2012. Likewise, this should help local silver names like SS1, ADT and SVL tick higher.

BROKER MOVES

• Netwealth Group downgraded to Equal-weight from Overweight; but target up to $27.50 from $23.50 (JPM)

• Transurban resumed Neutral with $12.70 target (JPM)

• WiseTech upgraded to Outperform from Hold; target remains $121 (CLSA)

Stocks trading ex-dividend: 

• Wed 23 Oct: None

• Thu 24 Oct: None

• Fri 25 Oct: Bank of Queensland (BOQ) – 2.46%

• Mon 28 Oct: Alcoa Corp (AAI) – 0.17%

• Tue 29 Oct: Waterco (WAT) – 1.48% 

Other ASX corporate actions today: 

• Dividends paid: Perenti (PRN), Reece (REH)

• Listing: None

• AGMs: Codan (CDA), Ebos Group (EBO), Fletcher Building (FBU), Mystate (MYS), National Storage REIT (NSR), St Barbara (SBM), Tabcorp (TAH)

Economic calendar (AEDT):

• 11:45 pm: Bank of Canada Interest Rate Decision (Consensus: 50 bp cut)