ASX 200 to kick off FY25 in red, S&P 500 gives back early gains

ASX 200 futures are trading 35 points lower, down -0.45% as of 8:30 am AEST.

S&P 500 SESSION CHART

OVERNIGHT MARKETS

• Major US benchmarks finished mostly lower and near worst levels after a late-session selloff, likely attributed to quarter-end flows
• Relatively uneventful session outside of a few themes – US May core PCE showed continued disinflation momentum, consumer spending growth was weaker than expected, Nike earnings underwhelmed
• US 10-year yield ticked higher throughout the session, up 11 bps to a near three-week high of 4.40%
• Major US benchmarks mostly higher in June, led by the Nasdaq (+5.96%), S&P 500 (+3.47%), Dow (+1.12%) and Russell 2000 (-1.08%)
• First-half bullish highlights – Nvidia up over 150%, above-trend US economic growth, choppy disinflation, consensus for double-digit 2024 S&P 500 earnings growth, US$1tn 2024 buyback expectations and strong inflow trends (US$130bn to US equities)
• First-half bearish highlights – Hawkish repricing of Fed easing expectations, stick services inflation, exhausted excess savings, dampened corporate pricing lower, breadth concerns, elevated sentiment and geopolitical tensions
• Wall Street bears struggle to convince optimistic clients, saying they have embraced 'fanatical thinking' (FT)
• French election sparks domestic market turmoil with bonds, stocks and Euro under pressure (Bloomberg)

STOCKS

• Amazon intends to invest over US$100bn in AI and data centers over next decade (WSJ)
• Ford's planned US$30,000 EV expected to be profitable in two years (Reuters)
• Nestle forecasting stable sales growth for remainder of year amid easing cost inflation (Reuters)
• Nike tanks 20% to 4-year low following Q4 sales miss and FY25 guidance cut amid softness in lifestyle products and worse-than-expected China performance (Forbes)

CENTRAL BANKS

• Atlanta Fed President Bostic still anticipates rate cut in Q4 amid disinflation signs (Bloomberg)
• RBA Deputy Governor Hauser says mistake to base policy decision on single CPI print (Bloomberg)

GEOPOLITICS

• Biden underwhelms in debate with Trump ( Bloomberg)
• US and European diplomats warn Hezbollah against striking Israel as IDF mulls operation into Lebanon (AP)
• Iran warns of 'obliterating war' if Israel launches large attack on Lebanon (NYT)
• Le Pen's far-right party bolsters its lead ahead of the first round of France's snap legislative election on Sunday (Bloomberg)

ECONOMY

• Fed’s preferred inflation gauge rises at the slowest pace in six months – May core PCE up 0.1% month-on-month, in-line with consensus (Bloomberg)
• China's factory activity falls for a second month in June while services activity slumps to five-month low (Reuters)
• UK GDP grew faster than expected in Q1 as consumer spent more (Bloomberg)
• Japan industrial production, Tokyo core inflation firmer than expected (Reuters)
• French inflation slows further in July as food and energy prices fall (Bloomberg)
  
  

ASX TODAY

• ASX 200 set to kick off FY25 on a weaker note and resuming last Friday's weakness (index finished up 0.1% from session high of 0.77%)
• July has historically (last decade) been the best performing month of the year, up an average 3.0% and positive 90% of the time
• Relatively uneventful overnight lead with downward pressure across a few sectors including Uranium (-2.1%), Lithium (-1.5%), Gold (-0.8%) and Biotech (-0.4%)
• Cettire responds to ASX query (CTT)
• Nine Entertainment staff express fury at the decision to announce 200 job cuts, including 70-90 in publishing – staff across The Age, SMH, AFR and WA Today pass a motion of no confidence in Nine Chief Executive Mike Sneesby and the Board (MEAA)

BROKER MOVES

• Amcor initiated Equal Weight with US$9.80 target (Wells Fargo)
• Insurance Australia downgraded to Overweight from Buy; target up to $.735 from $6.80 (Jarden)
• Lynas Rare Earths upgraded to Outperform from Underperform; but target cut to $6.55 from $6.85 (CLSA)
• Reliance Worldwide downgraded to Neutral from Buy; target cut to $4.50 from $5.05 (BofA)
• Southern Cross Electrical Engineering initiated Buy with $1.94 target (Moelis)
• Strike Energy downgraded to Underperform from Neutral; target remains $0.22 (Macquarie)
  
  

KEY EVENTS

• Mon 1 July: Approximately 210 ETFs are trading ex-dividend. See a full list here
• Tue 2 July: Ricegrowers (SGLLV) – $0.45, Ram Essential Services Property Fund (REP) – $0.014
• Wed 3 July: Graincorp (GNC) – $0.24
• Thu 4 July: Clime Capital (CAM) – $0.014
• Fri 5 July: None

• Dividends paid: ANZ Group (ANZ) – $0.83, CSR (CSR) – $0.12
• Listing: None
• Earnings: None
• AGMs: None

• 11:45 am: China Caixin Manufacturing PMI (Jun)
• 3:00 pm: Japan Consumer Confidence (Jun)
• 10:00 pm: Germany Inflation (Jun)
• 12:00 am: US ISM Manufacturing PMI (Jun)

This Morning Wrap was written by Kerry Sun.