Morning Wrap: ASX 200 to rise, S&P 500 slips despite upbeat bank results

ASX 200 futures are up 74 pts (+0.83%) as of 8:30 am AEDT.

In a nutshell:

• Major US benchmarks mixed, with the S&P 500 and Nasdaq lower

• Defensives and small caps outperformed, with the Dow higher and Russell 2000 logging a fresh all-time high

• US banks broadly beat expectations, Telix upgrades its FY guidance and Bank of Queensland reports its full-year results

Let's dive in.

S&P 500 SESSION CHART

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

OVERNIGHT MARKETS

• Major US benchmarks mixed but off worst levels

• Breadth was solid, with the Equal-weight S&P 500 (+0.83%) outperforming the official benchmark by 99 bps

• A rather volatile session, with an initial gap down, early session bounce and weakness heading into the close

• US-China trade tensions remain volatile, confrontational Trump post on Truth Social drove broad weakness towards market close

• BofA says record 54% of global fund managers now believe AI stocks are in a bubble, reflecting rising valuation and financing concerns (BBG)

• Basked of most shorted US stocks up 57% so far in 2025, largest gain for cohort since 2020 (FT)

• Debasement trade playing out globally as currencies slide amid political turmoil and soaring deficits, precious metals surge (BBG)

• Bond strategists see persistently high longer-term yields as debt/deficit worries offset Fed cuts (RT)

• Silver rallies to record amid potential of a London short squeeze (BBG)

• IEA forecasts record oil oversupply, projecting a 4 million barrels per day excess next year (BBG)

STOCKS

• JPMorgan, Goldman Sachs, Citi and Wells Fargo report Q3 earnings, all beat consensus revenue and EPS expectations on standout capital markets/investment banking performance, though share price reactions mixed (BBG)

• Walmart partnership with OpenAI to allow customers to shop through ChatGPT using instant checkout feature (AX)

• GM to take $1.6 billion charge related to EV pullback (CNBC)

• Citi says its use of AI has freed up 100,000 hours of weekly capacity for software developers (YF)

• Goldman Sachs to cut more staff this year to drive cost savings (BBG)

• LVMH Q3 earnings top forecasts driven by improved demand in China (YF)

• Google plans to invest around $15bn in an AI infrastructure hub in southern India over five years (BBG)

• Samsung's Q3 earnings beat reinforces positive sentiment towards memory chip demand (YH)

• Ford to temporarily cut production of at least five popular models following fire at aluminum supplier (WSJ)

TARIFFS

• US trade representative Greer says new 100% tariff on China depends on Beijing's next move (CNBC)

• China sanctions US subsidiaries of South Korean shipping giant and threatens further retaliatory measures on shipping industry (BBG)

• China's rare earth magnet companies had faced tighter scrutiny on export applications even before last week's move by Beijing to expand control over the critical minerals (RT)

• Trump seeks to publicly ease tensions with China to calm markets while privately maintaining pressure on Beijing (WSJ)

CENTRAL BANKS

• Powell says economy largely where it was in September, data before shutdown suggests better-than-expected growth, no big surprises from this speech (BBG)

• ECB's Lagarde says she can't declare an end to interest-rate cuts (BBG)

• ECB's Villeroy says bank's next move more likely a cut than a hike (BBG)

• RBA says services and housing inflation pose upside risks to Q3 CPI (BBG)

ECONOMY

• UK unemployment rose to 4.8% in August, the highest since May 2021, while wage growth slowed to 4.4% in the private sector (BBG)

ASX TODAY

• 5E Advanced Materials ships 20 tons of boric acid from US-based facility, delivered to potential customers for evaluation as part of ongoing engagement with downstream users in energy, defence sectors (5EA)

• ASX to speed up IPOs and broaden index eligibility as it seeks to encourage more listings amid competition from Cboe (BBG)

• Bank of Queensland reports FY25 cash NPAT of $383 vs. $375-385m guidance and $374m ests (BOQ)

• BHP considering reopening defunct copper mines in the US in response to “more supportive attitude towards mining” from Trump (AFR)

• Fortescue to cut hundreds of employees at Fortescue Zero, affecting several hundred employees in the UK (The Aus)

• GenusPlus Group awarded ~$60m of power infrastructure contracts with Fortescue (GNP)

• Telix reports Q3 revenue of $206m vs. $205.1m ests, upgrades 2025 revenue guidance to $800-820m vs. prior $770-800m, ADRs up 5.2% overnight (TLX)

WHAT TO WATCH TODAY

• Mixed resources: A rather soft overnight session for copper and gold, both miner ETFs (COPX and GDX) lower but off intraday lows. Interesting to see Uranium (URA) up 2.6% overnight, marking another fresh multi-year high. Haven't seen much newsflow in the uranium space, though themes like investment funds buying physical uranium, AI energy demands, supply headwinds from Cameco/Kazatomprom all supportive of recent uptrend. A volatile overnight session for rare earths/critical metals, with MP closing 3.7% higher, off session lows of -6.8%.

• Defensive bounce: Dow and Russell 2000 higher overnight, with sectors like Staples, Industrials, Financials and Real Estate all up more than 1.0%. It feels like we see defensives rally and tech/growth selloff one day, and vice versa the next.

BROKER MOVES

• Paladin Energy downgraded to Hold from Buy; target remains $9.10 (BP)

• Paladin Energy reinstated Outperform with $11.25 target (MQG)

Stocks trading ex-dividend: 

• Wed 15 Oct: Cadence Capital (CDM) – $0.03, Cadence Opportunities Fund (CDO) – $0.07, Horizon Oil (HZN) – $0.015, Perenti (PRN) – $0.043, United Overseas Australia (UOS) – $0.005, Wam Research (WAX) – $0.05

• Thu 16 Oct: Gowing Bros (GOW) – $0.03, K & S Corporation (KSC) – $0.08, Wam Microcap (WMI) – $0.053

• Fri 17 Oct: FFI Holdings (FFI) – $0.125

Other ASX corporate actions today:       

• Dividends paid: Duratec (DUR), Garda Property Group (GDF), Liberty Financial Group (LFG), Qantas Airways (QAN), Shine Justice (SHJ), Sims (SGM)

• Earnings: Bank of Queensland (BOQ)

• IPOs: None

• AGMs: Australian United Investment Co (AUI), Commonwealth Bank (CBA), Origin Energy (ORG), Orora Group (ORA), The Lottery Corp (TLC)

Economic calendar (AEST):

• 11:30 am: China Inflation (Sep)