Morning Wrap: ASX 200 to rise, S&P 500 recovers 2025 losses + CBA, Aristocrat Leisure results

ASX 200 futures are up 18pts (+0.21%) as of 8:30 am AEST.

In a nutshell:

• S&P 500 now trading slightly higher year-to-date, recovering from a 17% drawdown

• Cooler-than-expected US inflation print boosted risk appetite

• Commonwealth Bank reports a relatively in-line Q3 result, Aristocrat misses profit estimates

Let's dive in.

S&P 500 SESSION CHART

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

OVERNIGHT MARKETS

• Major US benchmarks finished mostly higher, closing near best levels

• S&P 500 now marginally positive year-to-date and within 4% of its 19-Feb record close

• Today’s gains was largely driven by heavyweight tech stocks, leaving the Equal-weight S&P 500 ~50 bps below the official benchmark

• Market continues to pivot from defensives (Health Care, Real Estate, Staples etc. all finished lower) to growth

• Cooler-than-expected US inflation print fueled risk appetite, though the market continues to expect only two 25 bp rate cuts by year-end

• US-China tariff cut fuels a return of the 'Buy America' (BBG)

• Goldman Sachs upgrades S&P 500 price target to 5,900, lowers US recession odds after US-China tariff cut (BBG)

• China stocks retreat as tariff truce led to concerns that policymakers are now less inclined to roll out new fiscal stimulus (BBG)

BOFA SURVEY

• BofA’s May Global Fund Manager Survey showcased downbeat but improving market sentiment (responses were ~75% complete before news of US-China trade talks)

• Respondents seeing weaker global growth improved to a net 59% vs. 82% a month ago

• Soft landing replaced hard landing as the consensus outlook

• Average cash levels were 4.5%, still below long-term averages but lower than last month

• Trade war triggering global recession remains the largest tail risk (flagged by 62% of respondents vs. a 15-year high of 80% last month)

• Allocation to US equities dropped to a net 38% underweight (two-year low), exposure to the US dollar also hit a 19-year low 

• Long gold remained the most crowded trade, having replaced long Mag-7 last month

STOCKS

• Nvidia announces partnership with Saudi Arabia, to build AI factories and send 18,000 AI chips (AP)

• Microsoft announces layoffs that will impact at least 6,000 employees or 3% of workforce (TV)

• Apple to unveil new AI tool to extend iPhone battery life (BBG)

• Bayer beats earnings estimates as new cancer and kidney drugs offset agriculture weakness (BBG)

• Coinbase shares surge over 20% after S&P Dow Jones added the company to the benchmark S&P 500 (CNBC)

CENTRAL BANKS

• Market pricing in three RBA rate cuts in 2025 compared to at least five being priced in prior to US-China tariff cut (BBG)

TARIFFS

• US-China deal pressuring Mexico and Vietnam to secure better deals with the US to maintain their "China-plus-one" strategy (RT)

• Car dealers shielded buyers from tariff price hikes in April (YF)

• China to adjust tariff rates on US goods from May 14, says finance ministry (RT)

• Trump says he may speak to China's Xi, claims Beijing agreed to remove non-tariff barriers (BBG)

• 90-day reprieve prompts some US companies to restart operations and begin shipping (BBG)

• Beijing removes Boeing plane ban following US-China trade talks (BBG)

• Chinese rare-earth exporters ask for official clarity on US exports (BBG)

• China and Brazil signed over 30 agreements for Chinese investments in Brazil (BBG)

US INFLATION

• April headline inflation up 0.2% MoM (vs. 0.3% ests) and up 2.3% YoY (vs. 2.4% ests)

• April core inflation up 0.2% MoM (vs. 0.3% ests) and up 2.8% You (in-line with ests)

• Month-on-month gains for rent was steady (up 0.3%), new vehicle prices unchanged, used cars fell 0.5%, airfares fell 2.8% (adding to March’s 5.3% drop and February’s 4.0% decline), April fell 0.2% and food prices eased 0.1% 

ECONOMY

• US-China truce to avert recession but not slowdown (BBG)

• UK retail sales surge to four-year high in April as Easter and good weather lift spending (RT)

• Australian consumer confidence steadies following election and widely expected rate cuts next week, but business sentiment negative (BBG)

ASX TODAY

• Aristocrat Leisure reports 1H25 normalised NPATA of $732.6m vs. $804m ests (8.9% miss), interim dividend of 44 cents per share vs. 42 cent ests (4.7% beat) (ALL)

• Block shares to rally after presentation at JPMorgan conference said the company believes the recent guidance downgrade, which assumes a softening in consumer spending not yet seen through April or early May, remains conservative (XYZ)

• Commonwealth Bank reports Q3 cash NPAT of $2.6bn, in-line with market expectations, net interest margins stable vs. 1H25 quarter average, CET1 ratio at 11.9% vs. 11.8% consensus (CBA)

• Insignia bidder Bain Capital unable to proceed with making a binding offer due to macro uncertainty, Insignia remains in discussions with CC Capital (IFL)

• Webjet receives unsolicited non-binding indication of interest from BGH Capital to acquire controlling interest at 80 cents cash per share (WJL)

WHAT TO WATCH TODAY

• Energy: Oil prices up around 2.5% overnight, driving the S&P 500 Energy Index up 1.3%. Lots of V-shaped moves for local energy names (WDS, BPT, KAR etc) but further oil price momentum should bring more life back to these beaten up stocks. Uranium also continued to trend higher overnight, up 2.0% to a near three-month high.

• Tech: The Nasdaq continued to post some strong gains, all-tech related indices and ETFs also sharply higher. This should drive further positive flows to local names like Appen, Wisetech, Xero etc.

• Defensive rotation: Woolworths (-3.6%), Coles (-3.3%) and Telstra (-2.6%) were aggressively sold off yesterday as investors pivoted out of tariff/economic-uncertainty winners. Let's see if this trend continues today.

BROKER MOVES

• Macmahon Holdings initiated Buy with $0.40 target (BP)

Stocks trading ex-dividend: 

• Wed 14 May: None

• Thu 15 May: Autosports Group (ASG) – $0.035, GQG Partners (GQG) – $0.041, Wam Alternative Assets (WMA) – $0.027, United Overseas Australia (UOS) – $0.02, Tamawood (TWD) – $0.11, Plato Income Maximiser (PL8) – $0.006

• Fri 16 May: Clime Investment Management (CIW) – $0.003, EZZ Life Science Holdings Ltd (EZZ) – $0.02

Other ASX corporate actions today: 

• Dividends paid: Red Hill Minerals (RHI), Washington H Soul Pattinson (SOL)

• Earnings: None

• IPOs: None

• AGMs: None

Economic calendar (AEST):

No major economic announcements.