ASX 200 to rise, Chip sector rally lifts the S&P 500 + Fed hints at possible rate cut

ASX 200 futures are trading 17 points higher, up 0.21% as of 8:30 am AEST.

S&P 500 SESSION CHART

OVERNIGHT MARKETS

• Major US benchmarks finished higher but ended a little bit off session highs
• Tech bounce attempt in focus amid several dynamics including i) upbeat takeaways from latest round of earnings; ii) Microsoft missed Azure growth expectations but highlighted expectations for a reacceleration in the second half; iii) Microsoft’s aggressive capex was viewed as a positive for semiconductor stocks and iv) Reuters report that a new US rule on foreign chip equipment exports to China will exempt key allies
• More than 55% of S&P 500 companies have now reported, with Q2 earnings growth rates running at 10.2%, with over 78% of companies beating consensus expectations
• US 2-year falls below 4.30% for the first time since February, 10-year back below 4.10%
• Brent crude snapped three-day losing streak, up 3.8% on ramp in Middle East tensions
• Gold is within 1% of all-time highs on Powell’s remarks, geopolitical tensions
• US oil inventories fall for fifth consecutive week (Oilprice.com)

STOCKS

• Microsoft reported mixed Q4 results, including an unexpected 1 percentage point slowdown in Azure growth to 30%, underwhelming September quarter Azure growth of 28-29% and larger-than-expected capex ramp to US$19bn from US$14bn in the prior quarter (Bloomberg, FT)
• AMD revenue guidance tops expectations with company raising forecast for AI accelerators (Bloomberg)
• Intel to cut thousands of jobs in bid to reduce costs (Bloomberg)
• Nvidia shares have shed more than US$750bn in market cap across recent selloff (FT)
• Samsung's net profit tops forecasts as higher memory prices and demand for HBM chips drives chip unit higher (Bloomberg)
• CrowdStrike hit with shareholder class action lawsuit over IT outage (Bloomberg Law)
• Delta Airlines CEO confirms massive IT outage cost company US$500m and plans to seek damages (CNBC)

CENTRAL BANKS

• Powell says rate cut ‘could be’ on table at Fed’s next meeting (Bloomberg)
• Rate futures pricing in 95% chance of September cut after latest FOMC announcement, up from 89% before release (Reuters)
• BOJ hikes interest rates and flags more to come, reveals JGB taper details (Bloomberg)

POLITICS & GEOPOLITICS

• Harris draws level with Trump in race for the White House (Bloomberg)
• Middle East tensions escalate after Hamas leader Ismail Haniyeh killed in Iran and Israel strikes Beirut (Bloomberg)
• Assassination of Hamas leader upsets ceasefire hopes, raises fears of a regional Mideast war (Reuters)
• Ukraine passes law allowing suspension of foreign debt payments (Reuters)
• US rule on foreign chip equipment exports to China to exempt some allies like Netherlands, Japan and South Korea (Bloomberg)

ECONOMY

• Eurozone inflation sees surprise uptick to 2.6% in July vs. 2.4% consensus (Bloomberg)
• China manufacturing PMI loses further momentum, services stall (Bloomberg)
• Australian underlying inflation eases, raises RBA rate cut bets (Bloomberg)
• Japan industrial production weakens on fall in auto output, retail sales beat (Bloomberg)
  
  

ASX TODAY

• ARN Media and Southern Cross Media merger prevented by Kerry Stokes (The Aus)
• Experience Co reports unaudited Q4 underlying EBITDA of $2.4m vs. $3.2m a year ago amid disruptions including unfavourable weather conditions across Australia (EXP)
• Poseidon Nickel reported Q2 after-hours, flagged $1.4m cash or less than one estimated quarter of funding available, currently running processes on various assets to raise funds (POS)
• Westpac reportedly looking to divest retail auto loan back book (The Aus)

WHAT TO WATCH TODAY

• Quiet morning: The market was hit with a massive influx of announcements on yesterday, as 31-Aug is the last day/cut off for quarterly reports.
• Rio Tinto follow-up: Rio Tinto rallied 2.4% on Wednesday after reporting an operationally strong first-half (calendar year) result. The dividend was a little soft (177UScps vs. 179UScps) but all other financial metrics tracked in-line or slightly ahead of consensus. Let's see if this drives any 'day two' buying.

BROKER MOVES

• PointsBet upgraded to Buy from Overweight; target remains $0.85 (Jarden)
• SiteMinder downgraded to Overweight from Buy; target cut to $5.85 from $6.02 (Jarden)
  
  

KEY EVENTS

• Thu 1 Aug: Several ETFs trade ex-dividend over the next two days. See a full list here
• Fri 2 Aug: None
• Mon 5 Aug: PRL Global (PRG) – $0.05, Perpetual Credit Income Trust (PCI) – $0.007
• Tue 6 Aug: BKI Investment Company (BKI) – $0.04
• Wed 7 Aug: Amcil (AMH) – $0.03, Mayfield Group (MYG) – $0.02, Pacific Smiles (PSQ) – $0.07

• Dividends paid: None
• Listing: None
• Earnings: Pinnacle Investment Management (PNI)
• Quarterlies: ResMed (RMD), SSR Mining (SSR)
• AGMs: None

• 11:30 am: Australia Balance of Trade (Jun)
• 11:45 pm: China Caixin Manufacturing PMI (Jul)
• 9:00 pm: UK Interest Rate Decision
• 12:00 am: US ISM Manufacturing PMI (Jul)

This Morning Wrap was written by Kerry Sun.