ASX 200 to open at record highs, Russell 2000 jumps 3%, Gold prices surge

ASX 200 futures are trading 55 points higher, up 0.68% as of 8:30 am AEST.

S&P 500 SESSION CHART

OVERNIGHT MARKETS

• Major US benchmarks finished higher and near best levels
• S&P 500, Nasdaq and Dow all closed at fresh all-time highs
• Breadth was very positive, with the equal-weight S&P 500 outperforming the official index by over 100 bps
• Russell 2000 rallied for a fifth straight session, now up 11.5% since 9-Jul – Bespoke says this is the 14th four-day positive streak for the Russell since 1979
• Russell 2000 now trading more than three standard deviations above its 50-day moving average and near record overbought levels
• BofA’s July Global Fund Manager Survey says overall investor bullish still underpinned by expectation for Fed rate cuts and soft-landing hopes, portfolio cash levels ticked higher but remained near long-term lows
• Traders now betting on 100% chance Fed will cut interest rates by September (CNBC)
• Gold hits record highs amid bullish bets on Fed rate cuts (Bloomberg)
• Demand for safe returns has supported Treasuries despite a huge supply increase (WSJ)
• Incoming Fed rate cuts on the horizon may now wake up the true bull market (Yahoo Finance)
• China becoming a slow-burn trade for global investors with money in the country's stock market (Reuters)

STOCKS

• Charles Schwab shares dive 10% on net interest margin miss, warns it may have to shrink itself in order to maintain profitability (Bloomberg)
• Bank of America shares surge 5% on better-than-expected earnings amid robust investment banking and trading activity (Reuters)
• Morgan Stanley shares tick 1% higher on better-than-expected Q2 performance (FT)
• Adidas boosts outlook amid solid demand for Sambas and Yeezys (Bloomberg)
• Luxury brands offering up to 50% discounts in China as middle-class shoppers rein in spending (FT)
• KKR weighs potential US$3bn sale of machinery maker Kito Crosby (Bloomberg)
• Storage firm Lineage seeking to raise as much as US$3.85bn in its IPO (Bloomberg)

CENTRAL BANKS

• Fed Chair Powell says Q2 data has given Fed more confidence on inflation (Bloomberg)
• RBNZ rate cut could hinge on Wednesday's New Zealand Q2 CPI print (Bloomberg)

POLITICS & GEOPOLITICS

• Trump makes RNC entrance, picks JD Vance as his VP (Bloomberg)
• Silicon Valley backers welcome JD Vance as Trump's VP pick (Bloomberg)
• Democrat revolt against Biden quiets down but re-election bid looks tougher after Trump assassination attempt (WSJ)
• Biden set to announce plan that would cap annual rent raises by 5% (Bloomberg)
• Trump's VP pick, senator JD Vance, says China is biggest threat to US (Bloomberg)
• UBS says prospects of Trump tariffs of 60% on China exports would more than halve China's annual growth rate (Bloomberg)
• France readies appointment of caretaker government until new PM found (Bloomberg)

ECONOMY

• US June retail sales was flat month-on-month vs. consensus for a 0.2% decline (Reuters)
• German ZEW declines for the first time in a year on political uncertainty (Bloomberg)
  
  

ASX TODAY

• ASX 200 set to open in record territory after a strong lead from Wall Street, growing Fed rate cut expectations and a continued rotation into small caps and cyclicals
• Alcoa shareholders voted in favour of issuing shares for Alumina acquisition (AWC)
• BHP reports Q4 production iron ore of 69.2Mt vs. 67.8Mt consensus (BHP)
• DroneShield responds to ASX price query, says there’s no new material information despite 22% selloff on Tuesday (DRO)
• Genex Power's shareholders vote in favour of J-Power's proposed acquisition (GNX)

WHAT TO WATCH TODAY

• Gold: Gold prices rallied almost 2% overnight to a fresh all-time high of US$2,468. The VanEck Gold Miners ETF pared similar gains, up 3.5% to its highest level since April 2022. Most ASX-listed gold names should gap up as the market opens on Wednesday. It will be interesting to see if they just gap up 2-5% and do nothing for the rest of the session – or pick up some intraday bids.
• Homebuilders: US homebuilder stocks surged on growing Fed rate cut expectations. The SPDR Homebuilders ETF rallied 5.7% (up 16.6% in the last five sessions). The NYSE-listed James Hardie rose 2.5% (up 10.8% in the last five sessions). Like I said a few days ago, we don't have many building and construction stocks left after ABC, CSR and BLD were taken out.

BROKER MOVES

• REA Group downgraded to Hold from Outperform but target up to $208 from $204 (CLSA)
• Seek downgraded to Neutral from Outperform; target cut to $23 from $29 (Macquarie)
  
  

KEY EVENTS

• Wed 17 July: Turners Automotive (TRA) – $0.069
• Thu 18 July: None
• Fri 19 July: None
• Mon 22 July: None
• Tue 23 July: None

• Dividends paid: None
• Listing: None
• Earnings: Mitchell Services (MSV)
• AGMs: None

• 4:00 pm: UK Inflation Rate (Jun)
• 10:30 pm: US Building Permits (Jun)

This Morning Wrap was written by Kerry Sun.