Morning Wrap: ASX 200 to slip, S&P 500 falls on trade fears, Gold prices whipsaw

ASX 200 futures are down 15pts (-0.16%) as of 8:30 am AEDT.

In a nutshell:

• Major US benchmarks broadly lower but off worst levels, a relatively defensive session where Energy, Staples, Health Care and Real Estate stocks managed to finish higher

• High-profile US corporate earnings missed the market, with Netflix and Texas Instrument shares down 10% and 5.6% respectively

• Pickup in US-China trade tensions as Trump considers curbs on US software

Let's dive in.

S&P 500 SESSION CHART

S&P 500 gapped up, trended higher to close at best levels (Source: TradingView)

OVERNIGHT MARKETS

• Major US benchmarks broadly lower but off worst levels

• S&P 500 down 0.53% vs. intraday low of -1.18%, traded broadly in-line with its Equal-weight index

• Today’s key drivers: A potential escalation in US-China trade tensions as Trump considers software curbs, disappointing earnings from high-profile names like Netflix (-10.0%) and Texas Instruments (-5.6%)

• Global fundies return to Japanese bond and equity markets on new government's reflationist promises (RT)

• Dollar has outperformed peers this month on safe haven tailwind, upside risk to Friday's CPI report (BBG)

• Private secondary market volumes jump as investors try to get into pre-IPO AI companies (BBG)

• Sell-side views mixed on whether China market pullback presents buying opportunity (BBG)

STOCKS

• Netflix shares down 10% after Q3 operating income missed by ~11%, some disappointment with underwhelming top-line growth acceleration implied by Q4 guidance and the lack of FY26 guidance (BBG)

• Texas Instruments shares dip 5.6%, Q3 revenue and sales beat, guidance soft with gross margins 250 bp below analyst expectations weighed by tariffs and slower recovery of analog chip market (BBG)

• Meta planning to cut ~600 jobs from AI division (NYT)

• Amazon's plan to automate 75% of its operations will save $4bn a year, according to Morgan Stanley (CNBC)

• PrimaLend files for bankruptcy, adding to recent scrutiny surrounding subprime auto lending space (BBG)

• Kering's Gucci brand sales down 14% in Q3, though better than feared (RT)

• Reddit suing multiple AI firms over allegations they scraped data via Google with intention of reselling (BBG)

• Apple significantly reducing iPhone Air production orders while ramping up manufacturing for iPhone 17 models (NK)

• OpenAI announces ChatGPT Atlas, a new AI-powered web browser coming soon (AX)

• Meta secures a $27bn financing deal with Blue Owl Capital for its largest data centre project, retaining 20% equity (RT)

• Western Alliance Bancorp's Q3 profit increased over 27%, with net interest income up 7.7% (BBG)

• L'Oréal's sales growth in China turned positive in the third quarter amid demand for high-end products (BBG)

• Adidas lifted its earnings forecast for the year amid robust demand for retro sneakers (BBG)

• Barclays announced $670m buyback, driven by strong income, despite facing one-off charges impacting profits (RT)

• Heineken warns of lower profit growth as beer sales drop 4.3% amid inflationary pressures and weak demand (BBG)

TARIFFS

• US considering curbs on exports to China made with US software including laptops, jet engines, among others as retaliation for recent rare-earth moves (RT)

• US may reduce India tariff rate to 15-16% vs 50%, Trump says again India to cut down Russian crude purchases (BBG)

• Japan's new PM plans to present trade package to US, including pickups and soybeans (RT)

CENTRAL BANKS

• Economists predict BOJ to raise rates by at least 25bps soon (RT)

• Investors lifting bets on BoE rate cuts, now forecasting a 75% likelihood of a December cut to 3.75% (RT)

GEOPOLITICS

• EU and Ukraine draft 12-point plan to resist Russia's war demands (BBG)

• White House halts Trump-Putin summit amid Russia-Ukraine deadlock (AX)

ECONOMY

• New Japan PM orders fresh package of economic measures to ease inflation burden on households (BBG)

• UK inflation remained at 3.8% in September as falling food prices offset rising auto fuel costs (Bloomberg)

ASX TODAY

• Alcoa secures long-term energy contract and announces $60m investment in US aluminium smelter (AAI)

• Alcoa reports Q3 adjusted EBITDA of $270m (vs. $264m ests), reaffirms FY alumina production of 9.5-9.7Mt (AAI)

• Inghams Group ‘discreetly’ testing interest from prospective buyers, sources note that JBS and Mitsubishi could be potential suitors (The Aus)

• Qualitas holder Redrocks ACS launches 30m share block trade at $3.62 per share, held a 22.4% prior to the block sale (AFR)

• Telix doses first patient in SOLACE trial for metastatic bone pain (TLX)

• Treasury Wine Estates Chairman John Mullen discloses purchase of 76,000 shares, lifts beneficial holdings by 36.4% to 285k shares (TWE)

WHAT TO WATCH TODAY

• Gold: Wild session for gold after Tuesday’s massive selloff, prices bounced off session lows of -2.90% to close slightly lower. Likewise, VanEck Gold Miners ETF (GDX) closed slightly higher, off session lows of -3.1%, bouncing off the 50-day moving average. Hard to say where things go after such a volatile move.

• Aluminium: Prices have pushed to the highest level since June 2022, now up 4.5% in the past month and 9.4% year-to-date. This could put names like South32 and Alcoa in the spotlight.

• Risk-off: A relatively weak overnight lead, with only defensive sectors and energy trading higher. Market treading carefully as US shutdown likely to continue, high-profile reporters names missing high bar, potential re-escalation in US-China trade tensions.

BROKER MOVES

• 29Metals upgraded to Outperform from Neutral; target up to $0.55 from $0.48 (MQG)

• Aeris Resources upgraded to Outperform from Neutral; target up to $0.70 from $0.60 (MQG) 

• Aeris Resources downgraded to Hold from Buy but target up to $0.52 from $0.35 (BP)

• Autosports Group upgraded to Buy from Neutral; target up to $4.20 from $3.15 (UBS)

Stocks trading ex-dividend: 

• Thu 23 Oct: None

• Fri 24 Oct: None

Other ASX corporate actions today:       

• Dividends paid: Latitude Group (LFS), Ridley Corp (RIC) 

• Earnings: None

• IPOs: None

• AGMs: ASX (ASX), Auckland International Airport (AIA), Bapcor (BAP), BHP (BHP), Brambles (BXB), Cochlear (COH), Deterra Royalties (DRR), Insurance Australia (IAG), Perpetual (PPT), South32 (S32), Super Retail Group (SUL)

Economic calendar (AEDT):

No major economic announcements.