Morning Wrap: ASX 200 to tumble, S&P 500 dives as shutdown ends and Fed rate cut bets fade

ASX 200 futures are down 139pts (-1.60%) as of 8:30 am AEDT.

 In a nutshell:

• That is not a typo

• Major US benchmarks dipped, though no specific driver behind the relatively broad risk-off move

• Potential drivers include US October and CPI data may never be released, three Fed policy makers said they are more concerned about inflation, Verizon announced plans to cut 15,000 jobs, AI sentiment volatility and new US government funding bill only extends deadline to 30 January 2026

Let's dive in.

S&P 500 SESSION CHART

S&P 500 gapped down, trended lower to close near worst levels (Source: TradingView)

OVERNIGHT MARKETS

• Major US benchmarks smashed and closed near worst levels

• Equal-weight S&P 500 ahead of cap-weighted index by 53 bps

• S&P 500 and Dow still positive for the week, up a respective 0.10% and 1.00%, though Nasdaq and Russell 2000 now negative

• Relatively broad risk-off session, with equities, gold and bitcoin trading lower, bond yields higher and VIX spiking to a near one-month high

• No specific factor behind the move, though plenty of potential drivers including White House flagging October jobs and CPI data may never be released, hawkish Fedspeak dampening December rate cut odds, Verizon announced a massive layoff of ~15,000 employees and persistent AI sentiment volatility

• Hedge funds are still dumping stocks while retail investors keep up the buying (CNBC)

• US stocks on track for worst day in months as AI sentiment continues to grow shaky (AP)

• Market odds for December rate cut drop to ~50% amid divide at Fed and inflation concerns (RT)

• Traders accumulating bullish Treasury options amid expectation delayed data will show economic weakness (BBG)

• Analysts predict US small-caps may outperform as earnings growth accelerates and valuations attract corporate deals (BBG)

• China manufacturing stocks rebound as Beijing intervenes to curb overproduction and excessive price competition (NK)

STOCKS

• Palantir CEO Karp warns the cost of building some AI technology may not be worth the value it delivers (YF)

• Verizon to reportedly announce its biggest job cut in history of around 15,000 employees (NW)

• Facebook Marketplaces rolls out improved checkout process, Meta AI integrations (TC)

• Anthropic plans to invest $50bn in new US data centers, partnering with Fluidstack to enhance computing power (FT)

• US developers bombarding utilities with inflated growth plans, leading to so-called 'phantom' data centers (FT)

• Cisco upgrades FY revenue guidance, citing AI-related demand for its networking products (RT)

• Burberry's sales increased as demand improved in the China region (BBG)

TARIFFS

• EU to propose plan on next phase of US trade agreement, covering tariffs, market access, digital trade (BBG)

CENTRAL BANKS

• Fed's Hammack says interest rate policy should remain restrictive amid concerning inflation (RT)

• Fed's Daly says it's too soon to decide on cutting rates in December (BBG)

• Boston Fed's Collins favors holding rates steady to balance inflation and labor market risks (BBG)

• NY Fed's Perli says Fed won't have to wait long to begin asset purchases amid rising overnight funding costs (BBG)

• Economists still forecast a 25 bps Fed rate cut next month to support a weakening labor market (RT)

SHUTDOWN

• Trump signs into law stopgap funding bill to reopen government (BBG)

• White House orders federal employees back as government reopens (BBG)

• Another shutdown threat looms as most federal government operations continue on autopilot until 30-Jan 2026 (PLT)

ECONOMY

• Number of subprime borrowers missing car loan payments in October rises to highest on record (RT)

• UK GDP growth almost flat in Q3 due to a Jaguar Land Rover cyberattack and tax hike fears (BBG)

• UK housing market weakened in October as buyer demand slipped amid tax increase worries (RT)

• Stronger-than-expected Australian jobs data further erodes RBA rate cut prospects (BBG)

• China activity data forecast to show economy weakened further in October (BBG)

ASX TODAY

It's tumbleweeds out there! No major company announcements have been released so far.

WHAT TO WATCH TODAY

• Food for thought: Markets are starting to unravel, with the ASX hit by high inflation and strong jobs data, effectively hosing down rate cut expectations for the foreseeable future. Wall Street also weighed by a wall of worries, including AI volatility, hawkish Fedspeak, data vacuum, temporary stopgap funding bill and aggressive job cuts from blue chip companies. A rather bearish overnight session, with plenty of stocks tumbling intraday, with no bounce in sight. Still, Q3 earnings season was incredibly strong, Fed rate cuts are still on the horizon and the data centre buildout is far from over. A rather conflicting set of data points, but the spike in volatility does call for some near-term caution.

BROKER MOVES

• Computershare upgraded to Buy from Neutral; target up to $40.00 from $39.50 (GS)

• Lynas upgraded to Outperform from Neutral; target remains $17.00 (MQG)

Stocks trading ex-dividend: 

• Fri 14 Nov: TPG Telecom (TPG) – $0.09, Whitefield Income (WHI) – $0.006

• Mon 17 Nov: L1 Long Short Fund (LSF) – $0.035, Macquarie Group MQG) – $2.80, Plato Income Maximiser (PL8) – $0.006

• Tue 18 Nov: Tamawood (TWD) – $0.105, WAM Active (WAA) – $0.003, WAM Income Maximiser (WMX) – $0.003

• Wed 19 Nov: None

• Thu 20 Nov: None

• Fri 21 Nov: N1 Holdings (N1H) – $0.003

Other ASX corporate actions today:       

• Dividends paid: Autosports Group (ASG), Charter Hall Long WALE REIT (CLW), Cromwell Property Group (CMW), Waterco (WAT)

• Earnings: None

• IPOs: None

• AGMs: Lendlease (LLC) 

Economic calendar (AEDT):

• 12:30 pm: China House Price Index (Oct)

• 1:00 pm: China Industrial Production, Retail Sales, Fixed Asset Investment (Oct)