Morning Wrap: ASX 200 to tumble, Wall Street pullback accelerates, Small caps retreat

ASX 200 futures are trading 87 points lower, down 1.09% as of 8:30 am AEST.

Major US benchmarks continued to slip overnight, with the Nasdaq struggling to bounce from its worst session since 2022. The ECB kept rates unchanged as expected, Biden tests positive for Covid, Australian June jobs data tops analysts forecasts and a few broker notes of interest.

Let's dive in.

S&P 500 SESSION CHART

S&P 500 dips off intraday from a positive open (Source: TradingView)

OVERNIGHT MARKETS

• Major US benchmarks extended yesterday’s declines to finish near worst levels

• Small cap Russell led to the downside after recent outperformance – On Tuesday it was trading almost 4.5 standard deviations above its 50-day moving average

• Mixed performance from Big Tech, with Meta (+3.0%) and Nvidia (+2.6%) while Apple, Alphabet and Amazon all finished around 2% lower

• US bond yields and US dollar both bounced from around five-month lows

• US small cap stocks back in vogue as so-called "Trump trade" seen favouring smaller domestic companies (Reuters)

STOCKS

• Amazon Prime Day event saw Americans spend record US$14.2bn, up 11% (CNBC)

• California registrations of Tesla vehicles fell 24% year-on-year in Q2 (Reuters)

• TSMC reports big Q2 net profit jump, hikes revenue outlook (Bloomberg)

• Netflix expected to have added fewest number of subscribers in five quarters (Reuters)

• Nokia sees double-digit fall in Q2 profit, lowest since 2015 as 5G slum persists, expects to see better second half (Bloomberg)

CENTRAL BANKS

• ECB keeps rates unchanged, in-line with expectations, provides few indicators about September decision (Reuters)

• Lagarde says ECB September rate cut meeting remains 'wide open" (Bloomberg)

• Top Fed officials say central bank getting closer to being able to cut rates (Reuters, FT)

POLITICS & GEOPOLITICS

• Biden faces intensified pressure from Democrats to step aside while sick with Covid (Bloomberg)

• JD Vance proclaims "America First" at RNC speech, rails against Wall Street and corporate America (Bloomberg)

• Biden cancels an additional $1.2bn in student debt for public servants (Bloomberg)

• Trump national security adviser says Taiwan needs to boost defense significantly (Reuters)

• France's Macron preparing for the possibility of caretaker government with limited powers for months (Bloomberg)

ECONOMY

• US initial jobless claims rise to 243,000 vs. 229,000 consensus amid summer auto plant shutdowns, Hurricane Beryl (Reuters)

• Japan export growth slows amid weak Chinese demand (Bloomberg)

• Australian jobs growth much stronger than forecast, with employment up by 50,200 roles vs. 20,000 consensus, raising odds of August RBA rate hike (Bloomberg)

ASX TODAY

• Alumina shareholders vote in favour of Aloca scheme (AWC)

• Australian Clinical Labs 20.3m share block trade crosses at $2.25, representing 10% of the company – Ethical partners was the seller as the fund is closing doors and returning funds to clients (AFR) 

• Capitol Health enters into merger implementation deed with Integral Diagnostics (CAJ)

• Michael Hill International expects FY24 EBIT to be $14-16m vs. $14m consensus (MHJ)

• Ramsay Health Care may look to reduce stake in Ramsay Générale de Santé and move to a minority position (The Aus)

• Yancoal reports Q2 coal production of 8.2Mt, down 4% year-on-year, stable average realised coal prices and reaffirms FY guidance (YAL)

 WHAT TO WATCH TODAY

Expect a bit of a heavy session for local equities – Weak lead from Wall Street, every S&P 500 sector finished lower except energy, risk off tone with yields, US dollar and VIX all ticking higher overnight etc.

• Accent Group: Trading update revealed a massive beat on Thursday, with 2H24 like-for-like sales up 4.1% year-on-year compared to Citi forecasts of just 1.0%. For the full year, LFL sales were up 1.7% vs. Citi's -4.4% forecast. The company also announced the closure of 17 underperforming Glue Stores, which might be well-received by analysts (cutting loss making assets). The stock opened the Thursday session up 0.5% and finished 10.2% higher. It's now receiving a bunch of broker upgrades.

• Yancoal: I don't have any consensus data re today's Q2 update. Yancoal ($9bn market cap) continues to print cash, lifting its quarterly cash position by $318 million to $1.55 billion (this was after paying $429m in dividends on 30 April). There was a rather interesting comment from the CEO in the report, saying "Having no interest-bearing loans, a large net cash position and robust operating margins provides us with the capacity to pursue suitable growth opportunities as they arise."

BROKER MOVES

• Accent Group upgraded to Overweight from Market-Weight; target up to $2.50 from $2.10 (Wilsons)

• Accent Group upgraded to Overweight from Neutral; target increased to $2.28 from $2.05 (Jarden)

• Corporate Travel Management downgraded to Hold from Accumulate; target cut  to $13.16 from $14.91 (Ord Minnett)

• Evolution Mining downgraded to Neutral from Overweight; target cut to $3.75 from $4.05 (UBS)

• Genesis Minerals downgraded to Neutral from Buy; target up to $2.25 from $2.15 (UBS)

• Sandfire upgraded to Overweight from Neutral; target up to $9 from $7.40 (Jarden)

• Qube downgraded to Overweight from Buy; target increased to $4.0 from $3.7 (Jarden)

Companies trading ex-dividend: 

• Fri 19 July: Plato Income Maximiser (PL8) – $0.006

• Mon 22 July: None

• Tue 23 July: None

• Wed 24 July: None

• Thu 25 July: None

• Fri: 26 July: None

Other ASX corporate actions today: 

• Dividends paid: Red Hill Minerals (RHI) – $1.50, Charter Hall Social Infrastructure REIT (CQE) – $0.04

• Listing: Ordell Minerals at 11:00 am

• Earnings: Xpon Technologies (XPN) 

• AGMs: None

Economic calendar (AEST):

• 9:30 am: Japan Inflation Rate (Jun)

• 4:00 pm: UK Retail Sales (Jun)