Morning Wrap: ASX 200 to rise, S&P 500 shrugs off early weakness, Virgin IPO in focus

In a nutshell:

• Major US benchmarks shrugged off early weakness to close higher and at best levels

• No major spillover in the Middle East after US military strikes over the weekend, Iran retaliation has underwhelmed expectations

• Fed Governor Bowman says it may be appropriate to cut rates as soon as next month if inflation continues to hold current levels or trend lower

Let's dive in.

S&P 500 SESSION CHART

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

OVERNIGHT MARKETS

• Major US benchmarks finished broadly higher and at best levels

• Middle East tensions dominated headlines, but stocks still rallied as no meaningful spillover from US military strikes over the weekend

• Iran’s retaliatory efforts has come in the form of targeting US bases in the region, which have underwhelmed expectations of greater escalation

• Brent crude slides 9.1% to US$67 a barrel due to the lack of actual oil disruptions and steady traffic through the Strait of Hormuz 

• Geopolitical shocks have historically led to a 6% drawdown in the S&P 500 over three weeks, but losses typically recovered in another three weeks, says Deutsche Bank

• Markets also bolstered by further dovish Fedtalk, with Governor Bowman suggesting they could cut rates as soon as July

• Hedge fund leverage hits 5-year high as speculators lift positions before US strikes on Iran (RT)

STOCKS

• Tesla shares jump most in two months on Robotaxi rollout (BBG)

• Zuckerberg aggressively hiring AI talent for Meta's Superintelligence lab (WSJ)

• Walmart's PhonePe plans to file for an IPO, seeking to raise US$1.5bn, with a US$15bn valuation (BBG)

CENTRAL BANKS

• Fed Governor Bowman says it would be appropriate to cut rates as soon as next month if inflation remains near its current level or continues to move closer to target (FT)

GEOPOLITICS

• President Trump to meet with his national security team to assess threats of Iranian retaliation following weekend US strikes against key nuclear facilities (AX)

• Iran launches missile attacks on US base in Qatar (AP)

• US airstrike on Iranian nuclear facility Fordow delivered "a great deal of damage", but the full extent is not yet known (BBG)

• White House stresses limited nature of strikes, but warns Iran against retaliation, Trump calls for peach with Iran (RT)

• Vance says US won't send ground troops to Iran (AX)

• Israel plans to continue bombing Iran, assessing US strikes' impact, while preparing for extended military action (FT)

• Trump plans to meet leaders from Japan, South Korea, Australia, and New Zealand at NATO summit (NK)

TARIFFS 

• Chinese manufacturers seeking new buyers as US trade tensions impact exports, with increased shipments to Europe, Southeast Asia (FT)

• Vietnam top leader to travel to US in coming weeks to try and carve out trade deal (BBG)

ECONOMY

• US June PMIs came in at 52.8, a two-month low but above 52.0 consensus, input prices and selling prices both rose at rates not seen since Jul-22 (BBG)

• Eurozone Composite PMI held at 50.2 in June, slightly below market expectations, with services back above 50 but manufacturing remaining in contraction for a 36th straight month (BBG)

• UK PMIs rose to 50.7 in June, up from 50.3 in May and above market expectations, pick up in output growth, helping ease worries of an economic contraction in Q2 (BBG)

• Japan manufacturing PMI rose to 50.4 in June, up from 49.4 in May, but demand remains soft (BBG)

ASX TODAY

Be sure to check out our Live Blog for the latest coverage and analysis for company announcements, market movements and economic updates.

• Cogstate lifts FY25 guidance, expects profit before tax of $12-14m vs. $7.1m in FY24 (CGS)

• Collins Foods reports FY25 revenue up 2.1% to $1.51bn, underlying EBITDA flat at $228.5m, underlying NPAT down 14.8% to $51.1m, fully franked dividend of 15 cents per share (CKF)

• Virgin’s IPO should ‘trade well’, according to JPMorgan, with its analysts saying the stock is ‘priced to fly’ (AFR)

WHAT TO WATCH TODAY

• Virgin IPO: Probably one of the most high-profile IPOs we've seen since Guzman Y Gomez. Lots of chatter about a heavily oversubscribed IPO, and fundies saying it trades at a 27% discount to Qantas. Its also listing on a day where Brent fell ~9% overnight, which is typically a tailwind for airlines. Virgin will debut at 12:00 pm AEST, with the IPO priced at $2.90 a piece. Let's see how this trades (Virgin Australia Share Price - VGN)

• Oil prices smashed: Brent crude rallied as much as 4.1% on Monday, and still trading up around 1.0% by the time our market closed. Prices started to aggressively unravel overnight and finished the session down 8.8% to US$70.3 a barrel or the lowest since 12 June. This should drive a sharp pullback for energy stocks and possibly a tailwind for Qantas.

BROKER MOVES

• Bubs Australia initiated with 20 cent target (SP)

Stocks trading ex-dividend: 

• Tue 24 Jun: None

• Wed 25 Jun: None

• Thu 26 Jun: None

• Fri 27 June: Arena REIT (ARF) – $0.046, Centuria Capital Group (CNI) – $0.052, Centuria Industrial REIT (CIP) – $0.041, Centuria Office REIT (COF) – $0.025, Charter Hall Long Wale REIT (CLW) – $0.063, Charter Hall Retail REIT (CQR) – $0.124, Charter Hall Social Infrastructure REIT (CQE) – $0.038, Digico Infrastructure REIT (DGT) – $0.109, Homeco Daily Needs REIT (HDN) – $0.021, National Storage REIT (NSR) – $0.056, Region Group (RGN) – $0.07, Rural Funds Group (RFF) – $0.029, Waypoint REIT (WPR) – $0.041

Other ASX corporate actions today: 

• Dividends paid: None

• Earnings: Collins Foods (CKF)

• IPOs: 

  • 12:00 pm: Virgin Australia (VGN)

  • 1:00 pm: Greatland Resources (GGP)

• AGMs: None

Economic calendar (AEST):

• 6:00 pm: Germany Business Confidence (Jun)

• 10:30 pm: Canada Inflation (May)

• 12:00 am: Fed Chair Powell Testimony