Morning Wrap: ASX 200 to rise, S&P 500 retreats from record, China rally loses momentum

Major US benchmarks eased from record highs, Chinese stocks are losing momentum as market looks for more stimulus to boost economic growth, oil prices pull back on potential supply improvements from Libya, OpenAI says massive data centres could use as much power as entire cities and Soul Patts delivers a 24th consecutive year of dividend increases.

Let's dive in.

S&P 500 SESSION CHART

S&P 500 lower, finished off worst levels (Source: TradingView)

OVERNIGHT MARKETS

• Major US benchmarks were mostly lower but closed off worst levels

• Weaker performance followed a higher finish on Wednesday that saw the S&P 500 post its 41st record high of the year

• Utilities and Tech outperformed, largely thanks to gains from Nvidia (+2.1%)

• Nothing really new today as markets wait for the start of Q3 earnings. Overnight pullback underpinned by combination of overbought conditions, China stimulus scepticism and continued ramp in geopolitical tensions  

• WTI crude erased this week’s gains on easing Libya supply concerns and lingering China demand worries (RT) 

• Swaps market pricing in ~75 bp of Fed rate cuts in final two meetings of 2024 (BBG)

• China stock market rally loses momentum as scrutiny over Beijing's latest stimulus package kicks in (BBG)

STOCKS

• Nvidia creeping back toward US$3tn market cap as CEO Jensen wraps up selling (FORB)

• OpenAI pitches Biden administration on huge data centers needed for more advanced AI models (BBG)

• Bain says AI market will surge to near US$1tn by 2027 as quick adoption disrupts companies and economies (BBG)

• Google CEO says antitrust trials could be ongoing issue for many years (BBG)

CENTRAL BANKS

• Sweden's Riksbank cuts rates by 25 bps as expected, but flags potential for 50 bps move by end-2024 (BBG)

• ECB's Knot signals gradual rate cuts ahead, sees natural level around 2% (BBG)

• SNB Chief may pull surprise move at tomorrow's rate decision (BBG)

• BoE's Greene says she prefers "cautious" approach to cutting interest rates (BBG)

POLITICS & GEOPOLITICS

• Harris to push new incentives to boost domestic manufacturing in Pittsburgh (FT)

• Tariffs become Trump's miracle cure he claims will solve a lot of issues (Axios)

• Israeli strikes on Hezbollah continues, killing senior commander Qubaisi (RT)

• Biden's China car-tech ban to be powerful new weapon against Chinese EVs (RT)

ECONOMY

• Increasing attention for US East Coast and Gulf Coast strike commencing 1-Oct, ports potentially impact ~40% of US shipping volumes (RT)

• US new home sales fell less than expected, median house price drops 4.6% to US$420,600 from year ago (RT)

• China cuts medium-term lending rate in-line (BBG)

• Economists doubtful China's latest stimulus measures will be enough to end its economic slump (FT)

ASX TODAY

• Computershare reaffirms FY EPS guidance in annual report (CPU)

• Hanwha ends discussions regarding its bid to acquire Austal, citing that Austal has made it difficult to carry out due diligence prior to a binding takeover bid (AFR)

• KKR and Skip Capital win $3bn race to buy 74.25% stake in Queensland Airport (AFR)

• Step One Clothing founder Greg Taylor selling $30m worth of shares at $1.70 or a 9.3% discount to its last traded price (AFR)

• Star Entertainment lenders sign off on debt agreement estimated to be worth up to $350m, company now expected to released FY24 results as early as Thursday (AFR)

• Washington H Soul Pattinson delivers 24th consecutive year of dividend growth (SOL)

WHAT TO WATCH TODAY

• Resource pullback: Demand doubts linger over China's stimulus package. Its interesting to see that most iron ore names like BHP and Fortescue finished near session highs on Wednesday. While copper names like Sandfire faded early strength (up 2.4% from session high of 4.5%). A lot of resources stocks are trying to bottom. So let's see where the dust settles after the recent spike.

• Energy weakness: Energy was the worst performing S&P 500 sector overnight after Libya's factions agreed on process for picking central bank governor. A resolution to its central bank crisis could restore significant oil supply, according to Reuters.

BROKER MOVES

• Core Lithium downgraded to Sell from Neutral; target cut to $0.08 from $0.10 (JARD)

• Fletcher Building upgraded to Outperform from Hold; target up to $3.30 from $3 (CLSA)

• Premier Investments upgraded to Overweight from Neutral; target up to $34.50(JPM)

• Light & Wonder upgraded to Buy from Neutral; target cut to $166 from $169 (UBS)

Stocks trading ex-dividend: 

• Thu 26 Sep: Vulcan Steel (VSL) – $0.118, Shine Justice (SHJ) – $0.04, PRL Global (PRG) – $0.03, Garda Property Group (GDF) – $0.018

• Fri 27 Sep: Tasmea (TEA) – $0.04, Dexus Industria REIT (DXI) – $0.041, Dexus Convenience Retail REIT (DXC) – $0.051, Rural Funds (RFF) – $0.029, Arena REIT (ARF) – $0.046, 360 Capital Mortgage (TCF) – $0.05, Charter Hall Social Infrastructure REIT (CQE) – $0.037, Charter Hall Long Wale REIT (CLW) – $0.063, Centuria Office REIT (COF) – $0.025, Centuria Industrial REIT (CIP) – $0.041, Comms Group (CCG) – $0.003, Coventry Group (CCG) – $0.003, Lindsay Australia (LAU) – $0.028

Other ASX corporate actions today: 

• Dividends paid: Accent Group (AX1), Air New Zealand (AIZ), Amcor (AMC), Ampol (ALD), Ariadne Australia (ARA), Cue Energy Resources (CUE), Dusk Group (DSK), Engenco (EGN), EVT (EVT), FFI (FFI), FOS Capital (FOS), IDP Education (IEL), IGO (IGO), Insurance Australia Group (IAG), Medibank Pvt (MPL), Mayfield Childcare (MFD), Netwealth Group (NWL), Northern Star Resources (NST), Prime Financial Group (PFG), Pro Medicus (PME), Ramsay Health Care (RHC), Rio Tinto (RIO), SRG Global (SRG), Telstra Group (TLS), Universal Store (UNI)

• Earnings: Washington H Soul Pattinson (SOL), Brickworks (BKW), Develop Global (DVP)

• Listing: None

• AGMs: None

Economic calendar (AEST):

• 4:00 pm: Germany Consumer Confidence (Oct)

• 10:30 pm: US Durable Goods Orders (Aug)

• 10:30 pm: US GDP Growth Rate (Q2)

• 11:20 pm: Fed Chair Powell Speech