Morning Wrap: ASX 200 to rise, US futures jump on China-US trade talks, Gold slumps

ASX 200 futures are up 16pts (+0.19%) as of 8:30 am AEST.

In a nutshell:

• Major US benchmarks traded slightly lower last Friday, amid concerns that the good news has already been priced in and increasingly fading rate cut expectations

• Equity market futures spiked on Monday after reports of "substantial progress" for US-China trade talks, after two days of talks in Switzerland

• The trade talks have also pushed gold prices ~1.5% lower on Monday, as well as small gains for oil and copper

Let's dive in.

S&P 500 SESSION CHART

S&P 500 slightly lower amid choppy trade (Source: TradingView)

OVERNIGHT MARKETS

• Major US benchmarks finished slightly lower after a relatively rangebound and choppy session

• S&P 500 and Nasdaq both finished lower for the week, after two-straight week of gains

• Stocks relatively flat despite more reports about a potential US-China tariff de-escalation, with multiple reports noting Trump’s plans to cut China tariffs below 60%

• Concerns that trade and earnings news has already been priced in, with the S&P 500 trading back at 21x forward earnings

• US weekly recap: Russell 2000 (+0.12%), Dow (-0.16%), Nasdaq (-0.27%), S&P 500 (-0.47%)

• Sidelined cash holdings continue to grow despite equity market rebound, some pros buying after deep cuts to positioning (BBG)

• Bond market steepening flashes signs of trouble despite equities rebound (WSJ)

• US stock rebound is likely over, despite trade negotiations, says BofA's Hartnett (BBG)

• Asian investors rush to hedge against dollar volatility, fueling upward pressure in local currencies (FT)

STOCKS

• Saudi Aramco reports fall in Q1 profits, cuts dividend by $10bn (FT)

• Nvidia plans to release downgraded version of H20 chips to maintain China presence after tightening of export controls (RT)

• TSM sales jumped 48% in April, driven by electronics firms' efforts to acquire essential components before tariffs kick in (BBG)

• Adobe to offer a 70% discounted package of its products to the government after DOGE review (BBG)

EARNINGS

• First-quarter S&P 500 earnings up 13.4% compared to market expectations of 7.2%, according to FactSet

• Of the 90% of S&P 500 companies that have reported, 78% have beaten consensus earnings expectations, above the 77% one-year and five-year averages of 77%

• Companies are reporting earnings that are 8.5% above expectations, above the 6.1% one-year positive surprise rate but below the five-year average of 8.8%

• Sales are coming in 0.7% above expectations, below both the one-year and five-year averages of 0.9% and 2.1% respectively

• CENTRAL BANKS

• Fed Governor Barr says US tariff policies will likely lift inflation, lower growth and raise unemployment later this year (CNBC)

• Trump resumes attacks on Powell, says he "doesn't have a clue" (RT)

TARIFFS

• Trump says "total reset" negotiated and much agreed to in talks with China on Saturday, officials to meet again Sunday (NYT)

• Trump says 145% tariffs on China will be coming down, saying Beijing would be willing to make concessions (BBG)

• US seeking to secure the removal of China's export restrictions on rare earths in upcoming trade talks (BBG)

• Trump's trade deal with UK doesn't offer other nations clear road map to follow (AX)

• UK will purchase $10bn of Boeing planes as part of new UK-US trade deal (RT)

• Lutnick says trade negotiations with South Korea, India and Japan could take significantly more time than UK (BBG)

ECONOMY

• China's exports up 8.1% in April, with a 21% drop in shipments to the US but soaring sales in other markets such as India, Asia and Europe (BBG)

• China's April CPI shows third-straight month of deflation, pressures expected to continue or get worse amid trade war (BBG)

ASX TODAY

• Dyno Nobel agrees to sell Fertilisers Distribution business to Ridleys for $375m ($250m cash upfront and $125m deferred) (DNL)

  • Ridley Corp shares have been halted pending capital raise and M&A (RIC)

• FleetPartners Group 1H25 NPAT of $38.9m vs. guidance of $37.5–39.5m, Board has declared an on-market buyback of up to $25.3m for 2H25 (FPR)

• Webjet investor BGH Capital said to be looking to acquire a 5% stake, ends up with 1.8% as sellers said to be looking for a higher price, bidder looking to buy a blocking stake before a takeover bid is announced (The Aus)

WHAT TO WATCH TODAY

• China trade-talk rally: S&P 500 and Nasdaq futures have opened around 1.2-1.5% higher after the US and China both reported "substantial progress" after two days of talks in Switzerland, according to Bloomberg. While the actual progress remains light on details, the article notes "He Lifeng complimenting the US side’s professionalism and US Trade Representative Jamieson Greer suggesting that trade clashes between the two sides may be overrated." This could see the market catch a strong bid this morning.

• Moving parts: The US-China trade de-escalation could also unravel some of the tariff winners like gold (with spot prices opening ~1.3% lower on Monday) as well as rare earths.

BROKER MOVES

• Catalyst Metals upgraded to Buy from Hold; target up to $7.05 from $6.30 (BP)

• Goodman Group upgraded to Buy, target cut to $36 from $36.80 (UBS)

Stocks trading ex-dividend: 

• Mon 12 May: Future Generation Global (FGG) – $0.037, Naos Ex-50 Opportunities (NAC) – $0.015, Naos Small Cap Opportunities (NSC) – $0.013, Dominion Income Trust (DN1) – $0.579, National Australia Bank Ltd (NAB) – $0.85

• Tue 13 May: ANZ (ANZ) – $0.83

• Wed 14 May: None

• Thu 15 May: Autosports Group (ASG) – $0.035, 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: Cosol (COS)

• Earnings: Dyno Nobel (DNL)

• IPOs: None

• AGMs: Waypoint REIT (WPR)

Economic calendar (AEST):

No major economic announcements.