Morning Wrap: ASX 200 to slip, Gold soars to all-time high + A2 Milk, Suncorp and Bluescope results

Major US benchmarks finished higher on Friday to log the best week since November 2023, gold prices cross US$2,500 for the first time, Orora is under the scope of several US private equity firms, A2 Milk misses FY24 earnings expectations, Bluescope reports a broad miss and more results to come!

Let's dive in.

S&P 500 SESSION CHART

S&P 500 tries to bounce but gives back some of its gains into close (Source: TradingView)

OVERNIGHT MARKETS

• Major US benchmarks finished higher in a relatively quiet session

• S&P 500 and Nasdaq rallied for a seventh strength session

• US weekly recap: Nasdaq +5.2%, S&P 500 +3.9%, Dow +2.9% and Russell 2000 +2.9%

• Today’s big story – Nothing much. Same old catalysts including growing soft landing optimism (US July detail sales, jobless claims beat), VIX falling back below 15, acceleration of share buybacks, hedge funds returning to the Yen carry trade

• Gold rallied to a new all-time high and closed above US$2,500 for the first time

• Of the 93% of S&P 500 companies that have reported Q2 earnings – 79% have beaten consensus EPS expectations (vs. 77% five-year average) but only 60% have surpassed consensus sales expectations (vs. 69% five-year average)

• Traders price in ~92 bp of Fed rate cuts in 2024, down from more than 100bp prior to retail sales, jobless claims data (Bloomberg)

• Systematic funds bolstering long positions as markets stabilise (Bloomberg)

• US stocks record seventh straight week of inflows (Bloomberg)

• Hunt for cash sees money-market fund assets hitting fresh record thanks to further flight-to-quality flows (Bloomberg)

• Japanese stocks post biggest weekly advance in more than four years (Bloomberg)

• Yen carry trade finding favour again among hedge funds with shorts rising 30 to 40% in past week (Bloomberg)

STOCKS

• Revolut leans towards US listing (Bloomberg)

• JD.com jumps 8% as Q2 earnings soared 74%, boosted by price cuts that drew in cost-conscious consumers (Bloomberg)

CENTRAL BANKS

• Fed Chair Powell to address Jackson Hole Symposium next Friday with speech on economic outlook (Reuters)

• RBA Governor Bullock again dismisses prospect of near-term rate cut (Bloomberg)

POLITICS & GEOPOLITICS

• Harris leads Trump 49%-45% in latest poll (Washington Post)

• US-Israel discussions aiming to end Gaza war (Bloomberg)

• Japan to apply foreign trade regulations to chipmaking equipment in bid to secure supply chains (Bloomberg)

• Tech curbs by US to be eased in boost to security pact with UK and Australia (FT)

ECONOMY

• Taiwan revises down 2024 GDP forecast, expecting smaller increase in exports but still positive on overseas AI demand (Bloomberg)

• UK July retail sales beat estimates, driven by soccer spending and discounts (Reuters)

• US July housing starts of 1.23m vs. 1.35m consensus and lowest since May-20, decline was driven by Hurricane Beryl  (Reuters)

ASX TODAY

• A2 Milk reports FY24 NPAT growth up 7.7% to $167.6m (A2M)

• Ampol reports 1H24 EBITDA drop of 7.7% (ALD)

• Bluescope Steel delivers FY24 underlying EBIT of $1.34bn (BSL)

• Orora's packing solutions likely under the eye of US private equity, attention is turning to Clayton, Dubilier & Rice as the likely buyer (The Aus)

• Iron ore plunge, driven by China weakness, weighing on share price of global miners BHP, Rio Tinto, Vale and Fortescue (FT)

• James Hardie working towards acquisition in the US (AFR)

• MyState, Auswide agree to binding regional bank merger (AFR)

• Regis Resources may be forced to consider changes to the development of its McPhillamys project after Federal Environmental Minister makes partial declaration protecting Aboriginal heritage site near Blayney (AFR)

• South32 to incur more than $171m in repair costs for Groote manganese mine after Cyclone damage (AFR)

• Suncorp reports 11.7% Group NPAT growth for FY24 (SUN)

• Westpac reports Q3 unaudited NPAT of $1.8bn, up 6% vs. first-half average (WBC)

WHAT TO WATCH TODAY

ASX 200 set to start the week on a weaker tone. The sector to watch this morning is gold after bullion prices crossed US$2,500 for the first time. Some of the key reports and consensus numbers for today include:

• A2 Milk: Reported a broad miss against Citi estimates. FY24 EBITDA margin up 2 bps to 14.0% vs. 15.7% expected. NPAT up 7.7% to $167.6m but 4.7% below estimates.

• Bluescope Steel: Citi looking for FY24 revenue of $19.35bn, NPAT of $895m and total dividend of 50 cents per share (BSL reported early this morning and it looks like a broad miss)

• Iress: Macquarie expects 1H24 revenue of $311.8m, underlying NPAT of $26.4m and no dividend.

• Suncorp: Citi ests including FY24 reported profit of $1.31bn, EPS (fully diluted) of 100.9 cents and total dividend of 76 cents per share

BROKER MOVES

• Aristocrat Leisure downgraded to Overweight from Buy but target increased to $56 from $47.20 (Jarden)

• Domain downgraded to Hold from Buy; target cut to $3.40 from $3.96 (Jefferies)

• Latin Resources downgraded to Speculative Hold from Buy; target cut to $0.23 from $0.40 (Bell Potter)

Stocks trading ex-dividend: 

• Mon 19 Aug: Seven Group (SVW) – $0.30, Ryder Capital (RYD) – $0.05, Euroz Hartleys (EZL) – $0.03

• Tue 20 Aug: Computershare (CPU) – $0.42, Magellan Financial (MFG) – $0.357

• Wed 21 Aug: AMP (AMP) – $0.02, Commonwealth Bank (CBA) – $2.50

• Thu 22 Aug: JB Hi-Fi (JBH) – $1.83

• Fri 23 Aug: Amotiv (AOV) – $0.22

Other ASX corporate actions today: 

• Dividends paid: None

• Listing: None  

• Earnings (large cap): Audinate (AD8), Ampol (ALD), Bluescope Steel (BSL), Cleanaway (CWY), Downer (DOW), Deterra Royalties (DRR), GPT Group (GPT), GWA Group (GWA), Iress (IRE), Nanosonics (NAN), Reece (REH), Suncorp (SUN), Viva Energy (VEA), Yancoal (YAL) 

• AGMs: None

Economic calendar (AEST):

• 4:00 pm: UK Retail Sales (Jul)

• 10:30 pm: US Building Permits (Jul)

• 12:00 am: US Consumer Confidence (Aug)