ASX 200 to fall, S&P 500 posts worst day since 2022, VIX hits highest level since Covid

ASX 200 futures are trading 27 points lower, down -0.35% as of 8:30 am AEST.

S&P 500 SESSION CHART

OVERNIGHT MARKETS

• Major US benchmarks finished sharply lower but off worst levels – Approximately US$1.4 trillion was wiped out from the market overnight
• S&P 500 logged its worst session in almost two years, now down 8.5% from 16-Jul record highs
• Broad-based selloff, with all sectors red and only 22 advancers in the S&P 500
• Big Tech was the largest drag on benchmarks, with most names down 3-6%
• Bitcoin down 5.6% but at one point falling 15% and below US$50,000
• VIX briefly spiked to 65.7 – This marks the third biggest jump in history after the GFC and Covid
• Unwinding of Yen carry trade was the key driver of the global risk-off, which was compounded by recent growth worries, the continued unwinding of systematic long/short trades, rising Middle East tensions and US political uncertainty
• Traders assigned 60% chance of emergency rate cut at height of Monday sell-off (BI)
• CBOE VIX logged it largest ever intraday jump on Monday (Reuters)
• Investors pulled over US$800m from commodity ETFs last week, largest outflow since Dec-22 (Bloomberg)
• Asian markets hit circuit breakers and European stocks set for biggest three-day decline in two years (Bloomberg)
• Japan stock market enters bear market territory, exacerbated by yen strength (FT)
• Japanese Yen jumps to 7-month highs against dollar amid worries over US slowdown (Reuters)
• South Korea, Taiwan stock markets hit worst losses since 2022 as circuit breakers activated for first time in four years (Bloomberg)

STOCKS

• Buffett's Berkshire Hathaway unloads nearly half of its gigantic Apple stake (CNBC)
• Elliott says Nvidia is in a bubble and AI is overhyped (FT)
• Novo Nordisk spends record amounts on research to fight off weight-loss rivals taking its market share (FT)
• US utility stocks receive big inflows as the emergence of power-hungry AI drives surge in electricity demand (FT)

CENTRAL BANKS

• Traders assigned 60% chance of emergency rate cut at height of Monday sell-off (BI)
• Soft July employment report challenges soft-landing narrative, raises worries Fed behind the curve (FT)
• Minutes show some BOJ policymakers warned rising import prices from weak yen hurting consumer sentiment (Reuters)
• RBA expected for a hawkish hold, board seen warning about upside risks in inflation (Bloomberg)

POLITICS & GEOPOLITICS

• Harris narrows VP search to Pennsylvania Governor Shapiro and Minnesota Governor Walz (Reuters)
• Israel prepares for possible Iran attack while Washington presses for Gaza ceasefire, deploys additional military (Bloomberg)
• US Commerce Department to propose prohibiting Chinese software in autonomous and connected vehicles in coming weeks (Reuters)
• North Korea says deployed 250 new mobile launchers for ballistic missiles that can deliver nuclear strikes on South Korea, US bases (Bloomberg)

ECONOMY

• US service sector PMI rebounds in July, employment also recovers (Reuters)
• Goldman Sachs raises US recession 2025 risk to 25% from 15% prior (Bloomberg)
• China Caixin services activity continues to expand in July (Reuters)
• UK services sector growing at fastest rate since May 2023 (Reuters)
• Japan service activity returns to growth in July on solid domestic demand (Reuters)
• German consumer confidence rises despite economic slump, fueled by wage gains (Bloomberg)
  
  

ASX TODAY

• Audinate reports preliminary FY24 EBITDA of $19.5-20.5m vs. consensus $20.5m, drivers of revenue during FY24 not expected to continue into FY25 (AD8)
• Australian government to cap university overseas enrollment to 40% of students, sources say the caps will commence 1-Jan-2025 (AFR)
• Coronado Global reports second quarter results, with $673.8m revenue vs. consensus $657m (CRN)
• Galan Lithium receives $150m takeover bid from EnergyX – This news was leaked to the AFR, driving the share price 15% higher on Monday (AFR)
• Woodside Energy Group to acquire OCI Clean Ammonia for $2.35bn cash (WDS)

WHAT TO WATCH TODAY

BROKER MOVES

• Pro Medicus downgraded to Hold from Buy; target remains $120 (Jefferies)
  
  

KEY EVENTS

• Tue 6 Aug: BKI Investment Company (BKI) – $0.04, Amcil (AMH) – $0.03
• Wed 7 Aug: Mayfield Group (MYG) – $0.02, Pacific Smiles (PSQ) – $0.07
• Thu 8 Aug: None
• Fri 9 Aug: Djerriwarrh Investments (DJW) – $0.08, Aloca (AAI) – $0.107
• Mon 12 Aug: None

• Dividends paid: Collins Foods (CKF) – $0.155
• Listing: None
• Earnings: Arcadium Lithium (LTM), Coronado Global (CRN)
• AGMs: None

• 2:30 pm: RBA Interest Rate Decision
• 7:00 pm: Eurozone Retail Sales (Jun)
• 10:30 pm: Canada Balance of Trade (Jun)

This Morning Wrap was written by Kerry Sun.