Morning Wrap: ASX 200 to rise, Nasdaq slips on extended tech weakness, Small caps outperform

The S&P 500 and Nasdaq continued to fall overnight as investors continued to pivot away from megacap tech stocks, Ford experiences its worst one-day selloff since the GFC, US Q2 GDP prints well above market expectations and let's see how names like Macquarie, Ampol and Karoon Energy perform after yesterday's trading updates.

Also – Apologies for yesterday's ASX futures line. The numbers were right but it was supposed to say down, not up.

Let's dive in.

S&P 500 SESSION CHART

S&P 500 tumbled from midday highs (Source: TradingView)

OVERNIGHT MARKETS

• Major US benchmarks finished mixed but well-off session highs – Both the S&P 500 and Nasdaq were up around 1.1% by midday but faded into the close

• Small caps continued to outperform, with Russell 2000 on track for a weekly gain

• All Magnificent 7 stocks finished lower except for Tesla

• Several dynamics taking place including lacklustre Big Tech earnings vs. elevated expectations, growing consumer concerns, stretched positioning and a tight race between Trump and Harris

• Massive volume of earnings today, with over 30% of the S&P 500 having now reported – Key themes include AI momentum, airline capacity issues, big-ticket spending softness, push for operational efficiency and cost savings 

• Commodity markets were mixed – Copper snapped an eight-day losing streak, gold continued to sell off, Chinese iron ore futures bounced to US$102 a tonne   

• Global investors scramble to adjust portfolios to guard against US election (Reuters)

• Treasury curve steepens as markets brace for Fed rate cuts (Bloomberg)

• Sudden yen surge hits assets from equities to gold, sparking widespread liquidation across markets (Bloomberg)

• Japan's stock market enters technical correction territory on concerns over AI bets, risk of BOJ rate hike (Bloomberg)

• Oil prices unlikely to rebound much over next few months absent broader inventory draws (Reuters)

STOCKS & EARNINGS

• Nasdaq (+7.2%) Q2 earnings and revenue beat on better results from Capital Access Platform and Listing services

• IBM (+4.3%) Q2 revenue beat estimates, doubling of AI business bookings (Bloomberg)

• Gucci owner Kering (-7.5%) posts double-digit sales drop in Q2 and expects a softer second half of year (Reuters)

• Stellantis (-7.7%) reports 1H net income drop of 48%, plans output, price cuts (Reuters)

• Ford (-18.3 %) stock experiences its worst day since the GFC on higher costs, EV unit take a toll on profit growth (Reuters)

• Lululemon shares dip 9% on Citi downgrade, cites further yoga and active apparel deceleration in the second half (Yahoo)

• Airlines cutting ticket prices as post-pandemic travel boom fades ( Bloomberg)

• Lineage raises US$4.4bn in this year's biggest IPO (Bloomberg)

• Berkshire Hathaway sold US$2.3bn of Bank of America shares this past week (CNBC)

CENTRAL BANKS

• China makes surprise out-of-sequence 20 bp cut to one-year MLF rate, signaling policy shift (Bloomberg)

POLITICS & GEOPOLITICS

• Biden touts achievements in Oval Office address, lays out priorities for final months of his presidency (Washington Post)

• Harris and Trump escalate attacks on each other, setting up a brutal election campaign (WSJ)

• M&A practitioners now reconsidering their electoral strategies with JD Vance and Harris shaking up expectations (FT)

• US warns tech start-ups of hostile states such as China potentially gaining sensitive data and intellectual property (FT)

• Some US states purge Chinese companies from their investments amid fraying US-China relations (AP)

ECONOMY

• US Q2 GDP up 2.8% quarter-on-quarter, well-above 1.9% consensus – beat largely driven by inventory build and higher consumption – and on an annualised basis, Q2 GDP was up 3.1% vs. 2.9% consensus (Reuters)

• German Ifo business climate unexpectedly missed expectations in July (Reuters)

• South Korea Q2 GDP unexpectedly shrinks amid weak consumer spending (Bloomberg)

ASX TODAY

• AMA Group hires Pitcher Partners to sell ACM Parts division for debt reduction (AFR)

• BHP, Coronado and Whitehaven believed to be passing up on Anglo American’s Queensland coal mines (The Aus)

• COG Financial major shareholder First Sentier sells down 9.4m shares at $1.00 (AFR)

• Nine Entertainment's publishing division reject latest EBA offer and vote to go on a five-day strike (AFR)

• Sigma Healthcare holder HMC Capital decreases holding to 12.2% from 15.0% (SIG)

 WHAT TO WATCH TODAY

ASX 200 set to tick higher following a solid overnight session for value and small caps.

• Overnight ETFs: Bit of a mixed performance for our overnight ETF watchlist, with strength across Biotech, Energy and Homebuilders and weakness for Silver, Gold, Semiconductors and Uranium.

• Day Twos: I'm keen to see how a few of yesterday's trading updates and quarterlies perform today, including:

  • Ampol: Reported a 1H24 EBITDA, refinery production and refining margin miss. The stock opened 4% lower on Thursday, finished 1.8% lower. A few mixed analyst views coming through this morning.

  • Karoon Energy: Reported a highly-anticipated new capital returns plan including dividend payout of 20-40% NPAT, $25m share buyback. The stock gapped up 4.7% as the market opened on Thursday, only to finish 3% lower. Can it stage a bounce today?

  • Macquarie: Shares dipped 3.4% yesterday after reporting 1Q25 numbers well-below consensus expectations. Citi says the market will need to place a lot of trust on Macquarie's 2H25 performance.

BROKER MOVES

• Ampol upgraded to Positive at E&P with $37 target (E&P)

• Ampol downgraded to Neutral from Overweight; target cut to $35 from $37 (JPMorgan)

• Northern Star upgraded to Outperform from Hold; target up to $15.95 from $14.80 (CLSA)

• Northern Star downgraded to Neutral from Overweight; target cut to $14.25 from $15 (JPMorgan)

• Northern Star downgraded to Hold from Buy; target cut to $15 from $16 (Jefferies)

Companies trading ex-dividend: 

• Fri: 26 July: None

• Mon 29 July: None

• Tue 30 July: Mirrabooka Investments (MIR) – $0.09, 360 Capital Mortgage REIT (TCF) – $0.042

• Wed 31 July: None

• Thu 1 Aug: None

Other ASX corporate actions today: 

• Dividends paid: Steamships (SST) – $0.21, 360 Capital Group (TGP) – $0.015, 360 Capital REIT (TOT) – $0.007, Turners Automotive (TRA) – $0.06

• Listing: None  

• Earnings: Korvest (KOV), Marley Spoon (MMM)

• Quarterlies: Mineral Resources (MIN), 

• AGMs: None 

Economic calendar (AEST):

• 10:30 pm: US Core PCE (Jun)