ASX 200 to tumble, Wall Street pullback accelerates, Small caps retreat

ASX 200 futures are trading 87 points lower, down 1.09% as of 8:30 am AEST.

S&P 500 SESSION CHART

OVERNIGHT MARKETS

• Major US benchmarks extended yesterday’s declines to finish near worst levels
• Small cap Russell led to the downside after recent outperformance – On Tuesday it was trading almost 4.5 standard deviations above its 50-day moving average
• Mixed performance from Big Tech, with Meta (+3.0%) and Nvidia (+2.6%) while Apple, Alphabet and Amazon all finished around 2% lower
• US bond yields and US dollar both bounced from around five-month lows
• US small cap stocks back in vogue as so-called "Trump trade" seen favouring smaller domestic companies (Reuters)

STOCKS

• Amazon Prime Day event saw Americans spend record US$14.2bn, up 11% (CNBC)
• California registrations of Tesla vehicles fell 24% year-on-year in Q2 (Reuters)
• TSMC reports big Q2 net profit jump, hikes revenue outlook (Bloomberg)
• Netflix expected to have added fewest number of subscribers in five quarters (Reuters)
• Nokia sees double-digit fall in Q2 profit, lowest since 2015 as 5G slum persists, expects to see better second half (Bloomberg)

CENTRAL BANKS

• ECB keeps rates unchanged, in-line with expectations, provides few indicators about September decision (Reuters)
• Lagarde says ECB September rate cut meeting remains 'wide open" (Bloomberg)
• Top Fed officials say central bank getting closer to being able to cut rates (Reuters, FT)

POLITICS & GEOPOLITICS

• Biden faces intensified pressure from Democrats to step aside while sick with Covid (Bloomberg)
• JD Vance proclaims "America First" at RNC speech, rails against Wall Street and corporate America (Bloomberg)
• Biden cancels an additional $1.2bn in student debt for public servants (Bloomberg)
• Trump national security adviser says Taiwan needs to boost defense significantly (Reuters)
• France's Macron preparing for the possibility of caretaker government with limited powers for months (Bloomberg)

ECONOMY

• US initial jobless claims rise to 243,000 vs. 229,000 consensus amid summer auto plant shutdowns, Hurricane Beryl (Reuters)
• Japan export growth slows amid weak Chinese demand (Bloomberg)
• Australian jobs growth much stronger than forecast, with employment up by 50,200 roles vs. 20,000 consensus, raising odds of August RBA rate hike (Bloomberg)
  
  

ASX TODAY

• Alumina shareholders vote in favour of Aloca scheme (AWC)
• Australian Clinical Labs 20.3m share block trade crosses at $2.25, representing 10% of the company – Ethical partners was the seller as the fund is closing doors and returning funds to clients (AFR)
• Capitol Health enters into merger implementation deed with Integral Diagnostics (CAJ)
• Michael Hill International expects FY24 EBIT to be $14-16m vs. $14m consensus (MHJ)
• Ramsay Health Care may look to reduce stake in Ramsay Générale de Santé and move to a minority position (The Aus)
• Yancoal reports Q2 coal production of 8.2Mt, down 4% year-on-year, stable average realised coal prices and reaffirms FY guidance (YAL)

WHAT TO WATCH TODAY

• Accent Group: Trading update revealed a massive beat on Thursday, with 2H24 like-for-like sales up 4.1% year-on-year compared to Citi forecasts of just 1.0%. For the full year, LFL sales were up 1.7% vs. Citi's -4.4% forecast. The company also announced the closure of 17 underperforming Glue Stores, which might be well-received by analysts (cutting loss making assets). The stock opened the Thursday session up 0.5% and finished 10.2% higher. It's now receiving a bunch of broker upgrades.
• Yancoal: I don't have any consensus data re today's Q2 update. Yancoal ($9bn market cap) continues to print cash, lifting its quarterly cash position by $318 million to $1.55 billion (this was after paying $429m in dividends on 30 April). There was a rather interesting comment from the CEO in the report, saying "Having no interest-bearing loans, a large net cash position and robust operating margins provides us with the capacity to pursue suitable growth opportunities as they arise."

BROKER MOVES

• Accent Group upgraded to Overweight from Market-Weight; target up to $2.50 from $2.10 (Wilsons)
• Accent Group upgraded to Overweight from Neutral; target increased to $2.28 from $2.05 (Jarden)
• Corporate Travel Management downgraded to Hold from Accumulate; target cut to $13.16 from $14.91 (Ord Minnett)
• Evolution Mining downgraded to Neutral from Overweight; target cut to $3.75 from $4.05 (UBS)
• Genesis Minerals downgraded to Neutral from Buy; target up to $2.25 from $2.15 (UBS)
• Sandfire upgraded to Overweight from Neutral; target up to $9 from $7.40 (Jarden)
• Qube downgraded to Overweight from Buy; target increased to $4.0 from $3.7 (Jarden)
  
  

KEY EVENTS

• Fri 19 July: Plato Income Maximiser (PL8) – $0.006
• Mon 22 July: None
• Tue 23 July: None
• Wed 24 July: None
• Thu 25 July: None
• Fri: 26 July: None

• Dividends paid: Red Hill Minerals (RHI) – $1.50, Charter Hall Social Infrastructure REIT (CQE) – $0.04
• Listing: Ordell Minerals at 11:00 am
• Earnings: Xpon Technologies (XPN)
• AGMs: None

• 9:30 am: Japan Inflation Rate (Jun)
• 4:00 pm: UK Retail Sales (Jun)

This Morning Wrap was written by Kerry Sun.