Morning Wrap: ASX 200 to tumble, Nvidia wipes out US$280bn in market cap, Oil and copper prices slide

Apologies for the technical issues with the wrap today - all updated and working now. Brace yourself for a painful session. There wasn't a bullish catalyst in sight overnight – with major US benchmarks down sharply, Nvidia marked the largest one-day market cap drop on record, renewed China growth concerns, a sharp selloff across several key commodities including copper and oil.

Let's dive in.

S&P 500 SESSION CHART

S&P 500 trends lower to finish at worst levels (Source: TradingView)

OVERNIGHT MARKETS

• Major US benchmarks finished lower, with S&P 500 and Nasdaq marking worst sessions since 5 August

• Nvidia (-9.5%) marked largest daily drop since April 2024, shed $280bn in market cap, the largest one-day market cap drop on record

• Oil prices down ~5% amid China demand worries, potential Libya production restart and expectations for OPEC+ to start backing off output cuts

• Big story for today – Broad range of downward drivers including China growth worries driving softness in commodities, US ISM manufacturing remained in contraction in August, negative September seasonality and big tech weakness 

• Morgan Stanley's Wilson says strong jobs data could fuel gains, but signs of hard landing present big downside risk to S&P 500 (BBG)

• Key Chinese stock gauge fell below a closely watched threshold as concerns deepen over the country's financial sector (BBG)

• Goldman Sachs exits copper long position; trims price forecast by US$5,000 a tonne on weak China demand (BBG)

• US$75bn added to US ETFs in August, on pace for record annual inflow (BBG)

• Investors start to add to shorts of select AI-related names amid questions of AI viability, valuation (BBG)

SEASONALITY

• Second half of September has historically been the worst two-week trading period of the year, according to Goldman Sachs

• Since 1990, S&P 500 performance from the Tuesday following Labour Day Weekend until the end of the month averages -1.0%, says Jefferies

• Over the last five years, the S&P 500 has average -4.2% in September

• Over the past six presidential cycles, the S&P 500 has averaged -4.3% during the two-month lead up to election day, according to Wells Fargo

• During this time, Real estate and Tech were the biggest underperformers while defensives like Staples, Healthcare and Utilities held up the best

STOCKS

• Intel looking to scrap unnecessary businesses and revamp capital spending (RT)

• Tesla China sales have best month of the year in August (RT)

• Morgan Stanley ramping up efforts to win back hedge fund business (FT)

• Volkswagen weighs shutting factories in Germany and cutting jobs, cites "very serious situation" facing European auto industry (FT)

• BYD to pause plans for factory in Mexico until after US election amid possible trade tensions (BBG)

POLITICS & GEOPOLITICS

• China warns of retaliation against Japan over further chip restrictions as US allies under growing pressure (BBG)

• Israel PM Netanyahu rejects demands to agree to hostage deal, vowing no compromise on long-term military presence along Egypt-Gaza border (FT)

ECONOMY

• US August ISM Manufacturing printed 47.2 vs. 47.5 consensus, marking the fifth consecutive month of contraction amid falling new orders (RT)

• Swiss inflation falls to 1.1% in August, supporting the case for another rate cut (BBG)

• South Korean inflation eases to 2.0%, backing rate cut case (BBG)

ASX TODAY

• Since 2014, the ASX 200 (total return) has only finished higher in September on two occasions – 2019 (+1.8%) and 2016 (+0.5%) – and down 2.2% on average

• The last four Septembers have been quite poor – 2023 (-2.8%), 2022 (-6.2%), 2021 (-1.9%) and 2020 (-3.7%)

• Megaport institutional shareholder slashes stake – 4.5% or $60m worth of stock sold at $7.75 a piece or a 4.5% discount to the last trade price (AFR)

• Queensland Government confirms discussions to provide support to The Star (The Aus)

WHAT TO WATCH TODAY

Resources and Technology are set to sell off sharply while defensives such as Staples, Real Estate and Utilities might outperform on a relative basis. The resource-related overnight ETFs were hit hard, notably Copper Miners (-7.5%), Uranium (-6.4%), Rare Earths/Strategic Metals (-4.6%) and Gold Miners (-3.5%). So expect a sizeable gap down for local miners and energy stocks.

BROKER MOVES

• Ampol upgraded to Buy from Hold; target remains $33 (JEF)

• Graincorp downgraded to Hold from Add; target up to $9.45 from $9.38 (MORG)

• Jumbo Interactive downgraded to Neutral from Outperform; target cut to $14.75 from $17.45 (MQG)

• MinRes downgraded to Hold from Add; target cut to $39 from $53 (MORG)

• Northern Star initiated Buy with $17.50 target (BP)

Stocks trading ex-dividend: 

• Wed 4 Sep: Pacific Current Group (PAC) – $0.23, Praemium (PPS) – $0.01, Shaver Shop (SSG) – $0.055, Newmont (NEM) – $0.265, Pro Medicus (PME) – $0.22, Seek (SEK) – $0.16, Lifestyle Communities (LIC), Helia Group (HLI) – $0.15, Clearview Wealth (CVW) – $0.017, Medibank (MPL) – $0.09, Whitehaven Coal (WHC) – $0.13, Sonic Healthcare (SHL) – $0.63, Universal Store (UNI) – $0.19, Objective Corp (OCL) – $0.08, Servcorp (SRV) – $0.13, Praemium (PPS) – $0.01, Shaver Shop (SSG) – $0.01, Pacific Current Group (PAC) – $0.23

• Thu 5 Sep: Reliance Worldwide (RWC) – $0.038, Ironbark Capital (IBC) – $0.013, Laserbond (LBL) – $0.008, Nib Holdings (NHF) – $0.14, Veem (VEE) – $0.008, Beacon Lighting (BLX) – $0.038, Monash IVF (MVF) – $0.025, SDI (SDI) – $0.019, Woodside (WDS) – $1.018, GTN (GTN) – $0.017, Helloworld (HLO) – $0.06, Origin Energy (ORG) – $0.275, Schaffer Corp (SFC) – $0.45, Sky Network (SKT) – $0.109, Amcor (AMC) – $0.19, Fleetwood (FWD) – $0.025, Resimac (RMC) – $0.035, Kina Securities (KSL) – $0.034, Monadewlphous Group (MND) – $0.33

• Fri 6 Sep: Summerset Group (SNZ) – $0.088, Smartgroup (SIQ) – $0.175, Cryosite (CTE) – $0.05, AUB Group (AUB) – $0.59, G8 Education (GEM) – $0.02, Generation Development (GDG) – $0.01, Aussie Broadband (ABB) – $0.04, Wisetech Global (WTC) – $0.092

• Mon 9 Sep: Objective Corp (OCL) – $0.09, Viva Energy (VEA) – $0.067, CSL (CSL) – $2.203, Hub24 (HUB) – $0.195, Super Retail Group (SUL) – $0.87, Australian Finance (AFG) – $0.04, Perseus Mining (PRU) – $0.037

Other ASX corporate actions today: 

• Dividends paid: Magellan Financial Group (MFG) – $0.357

• Listing: Raptor Resources (RAP)  

• Earnings: None

• AGMs: None

Economic calendar (AEST):

• 9:00 am: Australia AI Group Industry Index (AUG)

• 11:30 am: Australia GDP Growth (Q2)

• 11:45 pm: Canada Interest Rate Decision (ests – 25 bp cut)

• 12:00 am: US JOLTS Job Openings