Morning Wrap: ASX 200 to snap three-day losing streak, US stocks slump on tech weakness

Major US benchmarks struggled after Microsoft, Nvidia and Alphabet sold off more than 2%. But luckily for the ASX, we're set to finish the week on a more positive note.

Let's dive in.

S&P 500 SESSION CHART

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

OVERNIGHT MARKETS

• Major US benchmarks lower and finished around worst levels

• Nasdaq and S&P 500 on track for weekly declines after five straight weeks of gains

• Megacap tech was the notable drag on benchmarks, led by Nvidia (-3.7%), Microsoft (-3.3%), Alphabet (-2.1%) and Meta (-1.5%)

• Tech under scrutiny after weaker-than-expected guidance from Salesforce, sparking concerns of AI competition

• Russell 2000 outperformed – perhaps hedge funds are de-grossing their Russell 2000 shorts and Nasdaq longs

• Bond yields take a breather after the recent bear steepening move that pushed the US 2-year yield to just under 5.0%

• Today's 80-minute glitch in printing Dow, S&P index levels had little overall impact on trading (Bloomberg)

• Record US market riding on questionable AI assumptions (Yahoo)

INTERNATIONAL STOCKS

• Salesforce guides for record low sales growth (Bloomberg)

• Nelson Peltz sells entire Disney stake after losing proxy battle (CNBC)

• Amazon receives FAA regulatory approval for expansion in drone delivery service (CNBC)

• BofA's Moynihan sees investment banking results on track, though net interest margins may be weaker than expected (Bloomberg)

CENTRAL BANKS

• NY Fed President Williams expects inflation to resume moderating in the second half of 2024 (NY Fed)

GEOPOLITICS

• Hamas says it is ready to reach agreement on ceasefire if Israel stops war (Reuters)

• Russia announces tax hikes on corporates and citizens, expected to add extra US$30bn to state budget next year (Reuters)

• EU set to delay decision on China EV tariffs (Reuters)

ECONOMY

• US economy grew at a slower pace in the first quarter than initially reported reflecting softer consumer spending on goods (Bloomberg)

• Spain inflation higher in May but disinflation expected to resume in summer (Bloomberg)

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ASX TODAY

• ASX 200 set to bounce after falling to a four week low on Thursday

• Nothing too interesting on the sector front – most commodity prices were a little weak overnight, megacap tech weakness could follow through for local names and bond yield breather could see some reprieve for yield-sensitive sectors

• Food for thought – Qantas shares rallied 2.7% on Thursday after Goldman Sachs said the company had "structurally improved earnings capacity not reflect in valuation" and slapped on a buy rating with a $8.05 target price. This is interesting because a US peer like American Airlines trades at an even cheaper PE multiple ... and it just downgraded its earnings outlook

• BHP confirms it will not make a firm offer for Anglo American after failing to convince its board (Reuters)

• HMC Capital submits bid to acquire stake in Symphony Infrastructure Partners (AFR)

BROKER MOVES

• Bega Cheese upgraded to Outperform from Underperform; target up to $4.65 from $4.0 (CLSA)

• Lottery Corp upgraded to Add from Hold; target up to $5.60 from $5.40 (Morgans)

• Pro Medicus upgraded to Hold from Sell; target up to $115 from $75 (Bell Potter)

• West African Resources initiated Speculative Buy with $3.10 target (Argonaut)

Companies trading ex-dividend: 

• Fri 31 May: None

• Mon 3 June: Newmont (NEM) – $0.268

• Tue 4 June: None

• Wed 5 June: Hancock & Gore (HNG) – $0.01, Infratil (IFT) – $0.017

• Thu 6 June: None

Other ASX corporate actions today: 

• Dividends paid: Acrow (ACF) – $0.02, Autosports Group (ASG) – $0.10, Kogan (KGN) – $0.075

• Listing: None

Economic calendar (AEST):

• 11:30 am: China Manufacturing PMI (May)

• 11:30 am: China Services PMI (May)

• 7:00 pm: Eurozone Inflation (May)

• 10:00 pm: India GDP (Q1)

• 10:30 pm: Canada GDP (Q1)

• 10:30 pm: US Core PCE (Apr)