Morning Wrap: Classic ASX 200 to fall despite S&P 500, Dow and Nasdaq rallying to fresh all-time highs

ASX 200 futures are down 39pts (-0.43%) as of 8:30 am AEDT.

In a nutshell:

• Major US benchmarks higher, all rising to fresh all-time highs

• S&P 500 up 1.23% but its Equal-weight counterpart up just 0.44%, suggesting most gains came from large tech stocks

• US-China trade de-escalation over the weekend driving markets higher, alongside seasonality tailwinds

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 higher, finished near best levels and all logged fresh all-time highs

• Equal-weight S&P 500 up only 0.44%, underperforming official benchmark by 79 bps, suggesting most gains came from large tech stocks

• Gold continues to unravel, with prices down ~3% overnight (and down 8.5% since 20-Oct)

• Today’s key drivers: US-China trade de-escalation after weekend headlines about a “framework” deal, optimism heading into this week’s Mag-7 results and seasonality tailwinds

• 26-Oct has historically marked the Q4 low for the S&P 500, with Citadel noting strong years heading into Q4 typically driver strong moves higher into year-end

• November is the best month for the S&P 500 and Dow since 1950, with the S&P up 70% of the time and an average gain of 1.9%, according to Stocktrader Almanac

• Gold back below US$4,000/oz with some traders expecting a deeper slump ahead (FT)

• Cost of hedging rises as traders brace for more volatility despite latest trade de-escalation (BBG)

• US-China trade deal optimism drives 10-year yields to 4.04%, highest in a week (BBG)

• Japan's Nikkei closes above 50,000 for first time, buoyed by expectations of substantial spending from new Prime Minister (BBG)

STOCKS

• OpenAI predicts significant GDP growth from AI infrastructure investment, viewing it as key to US reindustrialisation (AX)

• Energy Secretary announces $1bn partnership with AMD to build two supercomputers, AMD shares up 2.6% to fresh all-time high (RT)

• Qualcomm announces AI accelerator chips, putting it in competition with Nvidia and other big tech, shares surge 11.0% (CNBC)

• Apollo, KKR to inject $7bn into Keurig Dr Pepper to help fend off activist investor challenge (FT)

• US rare earth miner shares slump as officials expect China to delay export controls in trade deal (CNBC)

• Walmart plans consecutive Black Friday sales to attract early holiday shoppers, influencing retail discount strategies (AX)

• Amazon plans to invest $1.6bn in the Netherlands over the next three years, its largest Eurozone investment since 2020 (RT)

TARIFFS

• US-China negotiators reach preliminary consensus on key issues, paving way for Trump and Xi to lock in a deal later this week (BBG)

• US signs trade deals with Southeast Asian partners to diversify supply chains (RT)

• US importers are placing spring orders early amid tariff anxiety and uncertainty (RT)

• EU and China to hold trade talks this week to discuss rare earths restrictions, auto chips (BBG)

• Soybean prices surge as US-China trade negotiations progress, with China expected to make substantial purchases (BBG)

• Japan's new PM faces $550bn decision on continuing a deferential trade strategy with Trump (NYT)

• Brazil's President Lula stated that Trump "guaranteed" a trade deal between their countries, expecting swift progress (RT)

CENTRAL BANKS

• Bessent confirms Fed Chair list down to five, including Waller, Bowman, Hassett, Warsh, Rieder (CNBC)

• Fed plans second interest-rate cut to support jobs but inflation concerns may cause dissent (BBG)

• Early rate hike expectations for the BOJ are fading due to the volatile yen and a fragile US economy (BBG)

ECONOMY

• US companies resist raising prices despite rising costs, survey shows 65% expect flat prices ahead (BBG)

• Chinese industrial profits surge 21.6% in September, marking biggest gain in nearly two years (BBG)

• German business confidence spikes to highest since 2022, indicating economic recovery gathering momentum (BBG)

ASX TODAY

• AUB shares spike 12% around 3 pm on Monday after AFR article noted the company attracted takeover interest from EQT (AFR)

• Brazilian Rare Earths considered a takeover company by Lynas or a US rare earths company (The Aus)

• Mount Gibson Iron chairman Brett Smith discloses purchase of 170,000 shares (MGX)

• Ramelius Resources guides FY26 gold production of 185-205koz at AISC of $1,700-1,900, provides five year production and AISC outlook (RMS)

• Sovereign Metals says Kasiya Rutile-Graphite Project unaffected by Malawi raw minerals export ban (SVM)

WHAT TO WATCH TODAY

• Lithium/gold: Both overnight ETFs dipped, down 5.2% and 3.9% respectively. US-China trade de-escalation driving some weakness for key US-listed critical metal names like Lithium Americas (-10.5%) and MP Materials (-7.40%). Gold prices continued to unravel, now down 8.5% since last Monday, performance among key overnight gold names varied, with Newmont down 5.6%, Barrick (-1.9%) and Harmony Gold (-5.8%). Likely to see more weakness for local names, will be interesting to see if there is more downside ahead. Gold is still trading around ~4% away from its 50-day moving average.

• ASX futures lower: I know, I know. Classic US market higher and ASX futures lower. Mag-7 names all up 1-4%, and Equal-weight S&P 500 up just 0.44%, with US materials sector (-0.25%) overnight. Let's see how things take shape today.

BROKER MOVES

• A2 Milk upgraded to Overweight from Equal-weight; target up to $10.00 from $8.10 (MS)

• Domino’s Pizza downgraded to Underweight from Equal-weight; target cut to $14.60 from $15.55 (MS)

• Guzman Y Gomez initiated Outperform with $31.10 target (MQG)

• Perseus Mining upgraded to Outperform from Neutral with $5.50 target price (MQG)

Stocks trading ex-dividend: 

• Tue 28 Oct: None

• Wed 29 Oct: Bank of Queensland (BOQ) – $0.20, Waterco (WAT) – $0.08

• Thu 30 Oct: Acrow (ACF) – $0.03, Autosports (ASG) – $0.045

• Fri 31 Oct: None

Other ASX corporate actions today:       

• Dividends paid: Centuria Industrial REIT (CIP), Centuria Office REIT (COF), Nick Scali (NCK)

• Earnings: Coronado Global (CRN)

• IPOs: None

• AGMs: Austal (ASB), Credit Corp (CCP), CSL (CSL), Omni Bridgeway (OBL), Polynovo (PNV) 

Economic calendar (AEDT):

No major economic announcements.