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Morning Update (8:30 am AEST): ASX 200 futures are trading 55 points lower, down -0.69%.
Overnight Markets Recap:
Major US benchmarks finished relatively flat overnight as markets brace for a significant week of high-profile earnings and macro events. McDonald's (ASX:MCD) shares rallied despite reporting weaker-than-expected Q2 revenue and earnings. Fortescue Metals (ASX:FMG) faces a major shareholder selling nearly $2 billion worth of shares. Credit Corp (ASX:CCP) kicks off August reporting season with its FY24 results this morning.
OVERNIGHT MARKETS
- US Benchmarks: The S&P 500 and Nasdaq finished just above breakeven in a relatively sideways session.
- Small Caps: The Russell 2000 saw a modest pullback after last week’s 3.5% rally.
- Earnings Watch: A relatively uneventful session for macro and company earnings, but the next few days are packed. Over 170 S&P 500 companies, including four of the Magnificent 7 names (20% of the index), will report this week.
- Market Positioning: Remains elevated but not stretched; JPMorgan notes a drop from the 95th percentile on 16-Jul to the 80th percentile now. Morgan Stanley highlights last week as the largest selling period for semiconductor stocks since 2022, with investors most underweight on the Magnificent 7 since 2016.
- Earnings Growth: Over 40% of the S&P 500 has reported Q2 earnings, showing a 9.8% growth (100 bps above expectations). About 78% of stocks have beaten consensus EPS expectations, aligning with the one-year average.
ASX TODAY
- Fortescue Metals (ASX:FMG) : A major holder is looking to sell $1.9bn stake at A$18.55-19.19 per share, a 6.1% to 8.8% discount to the last close.
- Fletcher Building (ASX:FBU) : Mulling a JV for NZ$1bn land bank to avoid raising equity.
- Regional Express Holdings (ASX:REX) : May seek to raise additional capital.
- WOTSO Property (ASX:WOT) : Proposes up to 16.2m-unit on-market buyback from 19-Aug to 18-Aug-25.
WHAT TO WATCH TODAY
- ASX 200 Futures: Indicating a weak open. Our overnight ETF watchlist showed declines in sectors such as Rare Earths/Strategic Metals, Uranium, Airlines, Biotech, and Copper.
- Credit Corp (ASX:CCP) FY24 Results: Macquarie estimates: $450.5m revenue, $87.8m EBITDA, $36.6m NPAT, full-year DPS of 51 cents.
- Fortescue Metals (ASX:FMG): The new selldown is almost double the previous $1.1bn block trade on 17-Jun at a larger discount. Expect a sizeable gap down.
- Kogan (ASX:KGN): Despite a bullish update with unaudited full-year revenue down 29.8% to $459.7m and adjusted EBITDA growth of 33.2% to $40m, the stock closed 0.9% lower after an initial 8.3% rise. Concerns over competitive pressures and lack of regular updates on customer numbers and subscribers remain.
- Pinnacle Investment Management (ASX:PNI) FY24 Results: Macquarie estimates: $75.5m attributable NPAT, EPS of 37.8, DPS of 36.1, Pinnacle Affiliate performance fee of $105.3m, Funds Under Management (Closing) of $106.5bn.
BROKER MOVES
- Deterra Royalties (ASX:DRR): Upgraded to Outperform from Hold; target cut to $4.20 from $4.25 (CLSA).
- Viva Energy Group (ASX:VEA): Upgraded to Positive with $3.60 target (E&P).
