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

Major US benchmarks gave back early gains to finish lower last Friday, Nike posted a dismal FY25 guidance and triggered the stock's worst-ever drop, the Fed's preferred inflation measure decelerated in May, voters turn out in record numbers in France's high stakes snap election and July has historically been the best performing month of the year for Aussie equities.

Let's dive in.

S&P 500 SESSION CHART

S&P 500 tumbles in late afternoon trade (Source: TradingView)

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)

Companies trading ex-dividend: 

• 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

Other ASX corporate actions today: 

• Dividends paid: ANZ Group (ANZ) – $0.83, CSR (CSR) – $0.12 

• Listing: None

• Earnings: None

• AGMs: None

Economic calendar (AEST):

• 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)