Morning Wrap: ASX 200 to slip, S&P 500 down for a fifth straight session + Helia, Inghams and Zip earnings

ASX 200 futures are down 12pts (-0.13%) as of 8:30 am AEST.

In a nutshell:

• Major US benchmarks finished mostly lower, with the S&P 500 and Nasdaq continuing to slip from record levels

• Weaker-than-expected Walmart earnings tanked the Staples sector, while an MIT study spooked returns on AI-related investments

• PMIs from the US, Eurozone and Australia are soaring

Let's dive in.

S&P 500 SESSION CHART

S&P 500 lower, closed near worst levels (Source: TradingView)

OVERNIGHT MARKETS

• Major US benchmarks mostly lower, closed near worst levels

• S&P 500 down for a fifth straight session, Nasdaq down five of the last six

• Today’s big story – A few incremental moving parts, Walmart earnings missed elevated expectations, hawkish Fedspeak, Mag-7 and AI-related stocks a little heavy amid stretched valuations (OpenAI CEO Altman warning AI may be in a bubble and MIT study indicating that 95% of organisations surveyed get no return on AI investment)

• Palantir's $73bn tumble pays short sellers $1.6bn profit (BBG)

• Long-dated JGB yields extend rally as data reinforces concerns about waning foreign demand (BBG)

STOCKS

• Walmart shares tumble 4.4% on Q2 earnings miss though positive takeaways include stronger-than-expected US comp growth (+4.6% vs. 4.0% ests), positive tariff trends and better US gross margins (BBG)

• Apple increased prices on its Apple TV+ streaming service to $13 a month, in its first hike since 2023 (CNBC)

• Anthropic nearing a deal to raise ~$10 billion in a new round of funding (BBG)

• Meta puts halt to AI hiring spree amid broader restructuring of the group (WSJ)

• FanDuel partners with CME for US prediction market launch amid controversy (IG)

• Xiaomi logs strong sales growth, but production struggles to keep up (NK)

• Commonwealth Bank reverses AI-driven job cuts after union pressure (BBG)

TARIFFS

• US and EU announce framework agreement, US to reduce auto tariffs from 27.5% to 15% after EU delivers legislation to lower its industrial tariffs and provide preferential market access to select US seafood and agricultural products (BBG)

• China's resistance to Nvidia H20 chips prompted by Lutnick remarks that authorities found offensive (FT)

CENTRAL BANKS

• Cleveland Fed's Hammack says if rate decision was tomorrow, she would not vote to cut, arguing inflation remains too high and has been trending upward (BBG)

• Kansas City Fed's Schmid flagged skepticism over September cut, saying Fed in a good spot, needs very definitive data to move rates lower right now (CNBC)

• Fed officials prioritise inflation risks over labor concerns amid tariff debate (BBG)

• Bank of Japan set to hike rates to 0.75% by year-end, says Reuters poll (RT)

ECONOMY

• US PMI accelerates to 55.4 vs. 54.5 ests, US business activity grew at fastest rate so far this year, hiring picked up with job creation at highest rate in three years (BBG)

• Eurozone PMI hits 15-month high as manufacturing breaks three-year slump (Reuters)

• Japan manufacturing activity shrinks at a slower pace amid recovery in output (RT)

ASX TODAY

Another massive day for earnings, and we’ll be covering all the key results as they drop. Follow our Live Blog for the latest company announcements, consensus numbers, market moves, and economic updates.

WHAT TO WATCH TODAY

• Gold: VanEck Gold Miners ETF (GDX) up 1.66% overnight to close at the highest level since November 2011. Interesting to see gold miners extend gains despite gold prices continuing to trade sideways around the mid US$3,330 level.

• Pullback dynamics: ASX futures pointing to a soft start after crossing 9,000 for the first time on record. Markets are a little extended. Though reporting season, much like the US (S&P 500 EPS growth of 11.7% vs. 4.9% ests), has shown some strong earnings growth.

• Day twos: Lots of massive bullish moves yesterday, with Brambles (+13.2% on broad beat), Super Retail Group (+12.3% on broad beat, GM smashed ests) and Codan (+10.6%, also broad beat and margin expansion). Though lots of rating downgrades coming through due to valuation (these charts are literally vertical). On the flip side, Sonic Healthcare (-12.8% on earnings and guidance miss) spent the whole day selling off.

BROKER MOVES

• Auckland International Airport downgraded to Neutral from Buy; target cut to NZ$8.10 from NZ$8.90 (CITI)

• Brambles downgraded to Neutral from Overweight but target up to $24.50 from $20.90 (JPM)

• Brambles downgraded to Neutral from Outperform but target up to $25.20 from $24.60 (MQG)

• Codan downgraded to Neutral from Outperform but target up to $27.15 from $17.00 (MQG)

• Goodman Group downgraded to Neutral from Buy but target up to $36.63 from $36.00 (UBS)

• Pepper Money upgraded to Buy from Neutral; target up to $2.40 from $1.75 (CITI)

• Peter Warren Automotive upgraded to Overweight from Equal-weight; target up to $2.30 from $1.40 (MS)

• Super Retail Group downgraded to Neutral from Overweight but target up to $18.00 from $16.70 (JPM)

Stocks trading ex-dividend: 

• Fri 22 Aug: ARB Corporation (ARB) – $0.50, ASX Ltd (ASX) – $1.121, Iress (IRE) – $0.11, Lendlease (LLC) – $0.17, Mystate (MYS) – $0.11

• Mon 25 Aug: Contact Energy (CEN) – $0.196, Hansen Technologies (HSN) – $0.05, Magellan Financial Group (MFG) – $0.469, Step One Clothing (STP) – $0.024

• Tue 26 Aug: AGL Energy (AGL) – $0.25, Challenger (CGF) – $0.15, Deterra Royalties (DRR) – $0.13, HMC Capital (HMC) – $0.06

• Wed 27 Aug: Amotiv (AOV) – $0.22, Bell Financial Group (BFG) – $0.03, Ooh!Media (OML) – $0.022, Telstra (TLS) – $0.095, The Lottery Corporation (TLC) – $0.085, Treasury Wine Estates (TWE) – $0.20

• Thu 28 Aug: Beach Energy (BPT) – $0.06, Ignite (IGN) – $0.035, REA Group (REA) – $1.38, Ventia Services (VNT) – $0.107, Woodside Energy (WDS) – $0.813

• Fri 29 Aug: Ampol (ALD) – $0.40, Carlton Investments (CIN) – $0.68, Fiducian Group (FID) – $0.247, Orora (ORA) – $0.05, Pengana International Equities (PIA) – $0.014, Platinum Capital (PMC) – $0.03, Shape Australia (SHA) – $0.125

Other ASX corporate actions today: 

• Dividends paid: HomeCo Daily Needs REIT (HDN), Transurban (TCL)

• Larger Cap Earnings: AMA Group (AMA), GQG Partners (GQG), Guzman Y Gomez (GYG), Helia Group (HLI), Inghams (ING), Latitude Group (LFS), Regis Resources (RRL), Zip (ZIP)

• Small-to-Mid Cap Earnings: Accent Group (AX1), BCI Minerals (BCI), Cobram Estate Olives (CBO), Cuscal (CCL), Credit Clear (CCR), Coast Entertainment (CEH), Cogstate (CGS), Dug Technology (DUG), Hipages (HPG), Michael Hill International (MHJ), Monash IVF (MVF), Rural Funds (RFF)

• IPOs: None

• AGMs: None

Economic calendar (AEST):

• 9:30 am: Japan Inflation (Jul)

• 12:00 am: Fed Chair Powell Speech