ASX Faces Volatility Amid Global Market Shifts and Rate Cut Debates

ASX to edge up, S&P 500 slips amid rate cut debate

Oxford Economics' Nancy Vanen Houten said the Fed's desire to guard against a scenario where layoffs start to climb, leading to a more rapid weakening in the labour market and the economy "raises the odds the Fed lowers rates at a more aggressive pace than we have in our baseline. "However, for now, we think the labour market is solid enough to withstand a measured pace of rate cuts, and we are comfortable with our forecast for a 25 basis points cut in September to be followed by 25bps cuts one per quarter thereafter." In commodities markets, oil, copper and iron ore continued to falter, though more moderately than the previous session. Chris Weston, head of research at Pepperstone, said global growth concerns married with headlines of increasing supply are proving to be "a toxic mix for an oil market that is already feeling vulnerable". Weston said there also are flow-based effects with momentum accounts going heavy on shorting crude futures, and the result is that "crude literally can't find a friend in this market". As for iron ore, Panmure Liberum's Tom Price said he sees further short-term downside/correction risk for ore/steel prices and demand in September and October. Price rates as "bearish" most of the China signals he watches: the debt-laden property sector; steel industry losses; sustained declines in prices for China's rebar/HRC (weak demand/robust supply); higher than seasonal levels of ore inventories; total steel output outpacing finished steel demand; and, ore imports poised to reset the annual record high. There is "not yet" any upside to iron ore prices, Price said. "After years of price-buoying disruptions, seaborne's ore mining-majors are finally delivering an unmitigated, record-high, collective flow of ore to their principal customer, China. Problem is, China's need for ore - and the steel generated from it - is faltering." Star's banks baulk at cost blowouts and loan plea The ASX-listed casino operator has been negotiating with its lenders for days. But delays getting security over individual properties is slowing down progress. Chanticleer: Why Howard Marks says you're making a big mistake Howard Marks says investors must ignore manic depressive markets and focus on the bigger picture. Rates will be higher for longer and that will bring pain - and opportunity. ASX futures up 6 points or 0.1% near 3.35am AEST FWDBonds' Chris Rupkey: "The Fed may be dangerously close to falling behind the curve as there are signs of labour market weakness that have the potential to dash the market's hopes for a soft-landing overnight. Stay tuned. "There were 8.184 million job openings at the end of June and suddenly in today's report there are 7.673 million openings at the end of July. Half a million job openings evaporated overnight. "Many of these openings are not real of course and serve as window-dressing and keep a company's name out there in the public eye, but still, the loss of half a million jobs in one month is something that is starting to look recessionary. The labour market may be less stable than Fed officials believe." Capital Economics' Thomas Ryan said although job openings fell sharply in July, "the totality of the JOLTS data points to a labour market that continues to normalise, rather than one rapidly deteriorating. That leaves it up to the August Employment Report to determine whether the Fed kicks off its loosening cycle this month with a 25 basis point or a 50bp cut". Local: July trade balance at 11.30am; RBA governor Michele Bullock will speak starting at 1.05pm about the costs of high inflation to The Anika Foundation in Sydney Overseas data: German July factory orders at 4pm; US ADP employment report at 10.15pm, initial weekly jobless claims at 10.30pm, services PMIs from S&P Global and ISM Antonio Ernesto Di Giacomo, a senior market analyst at XS.com said investors are beginning to adjust their expectations regarding the company's future growth. "The volatility in Nvidia's stock highlights the unpredictable nature of the tech sector, where investor expectations can shift rapidly in response to new economic data or financial forecasts," he also said. Nigel Green, CEO of deVere Group, said investors should see the valuation reset as a buying opportunity. "The market may be reacting to short-term concerns, but Nvidia's role in the future of AI remains solid. This dip should be viewed as a temporary setback, not a sign of declining relevance." Green also said investors who understand Nvidia's long-term growth potential recognise that its value is not tied to quarterly fluctuations but to the overarching AI trend that is set to reshape industries for years to come. "Beyond Nvidia, this is also a moment to consider the broader AI ecosystem. While Nvidia is a key player, the AI revolution is a much larger story involving numerous companies." Private health giant Healthscope hopes for rent relief at 38 hospitals But Health Minister Mark Butler has ruled out a taxpayer bailout for major private hospital operators, insisting they deal with soaring costs themselves. When it comes to the economy, spending is great. Or is it? Jim Chalmers says the weakness of the economy justifies high government spending. He doesn't want voters to link that with interest rates and inflation, writes Jennifer Hewett. Record government spending prolonging RBA's inflation fight Treasurer Jim Chalmers says the economy would have gone backwards without government spending, but economists warn the outlays are making the RBA's job harder. Family trust: Inside the Pratts' legal soap opera Richard Pratt carefully designed a succession plan for his three children, Anthony, Heloise and Fiona. But even the best-laid plans can wind up in court. Data centre owner Infratil revels in the AirTrunk effect Shares in the CDC investor rose on Wednesday following AirTrunk's $23.5 billion sale to a Blackstone-led consortium.

ASX to fall, Nvidia sell-off paces Wall St slide, oil plunges

"The near-term outlook for the manufacturing sector remains tepid," Oxford Economics' Matthew Martin said. "Encouragingly, the details do not point to a wider downturn on the horizon." Comerica Bank's Bill Adams attributed the US weakness to high interest rates, election uncertainty, the strong US dollar, and weak foreign markets. Stephen Stanley, chief US economist at Santander, said decision makers are sitting on their hands right now waiting for the Federal Reserve to begin cutting rates and, more importantly, for the immense uncertainty regarding the future of tax and regulatory policy to be resolved on November 5. "The key ISM indicators most directly tied to economic activity were all well below 50 in August," Stanley said, referencing the point between expansion and contraction. The new orders and production components each slid below 45, with the new orders gauge the softest since May 2023 and the production index the lowest since 2020. In contrast, the employment measure bounced last month but only to 46.0, still the second worst reading so far this year. The prices paid index rose modestly for a second month in a row, to 54.0 in August. AirTrunk's $23.5b AI pay day Blackstone emerged as the winning bidder in the year's biggest merger and acquisition deal, netting its founder Robin Khuda a $1 billion payday. Vintage Cellars to disappear under Coles' bottle shop rebrand Coles is trialling an enlarged Liquorland footprint as its best chance of catching up to rival retailer Dan Murphy's. Brokers tip these stocks in an already hot sharemarket Equities strategists and fund managers are working out how to navigate a market that has been on a bull run, creating increasingly stretched valuations. ASX futures down 69 points or 0.9% near 3.30am AEST In a note Nick Magguilli, chief operating officer for Ritholtz Wealth Management added his voice to those wary of the outlook for Nvidia, given how fast its market valuation has surged. The stock has risen more than 125 per cent so far this year, even after considering its tumble to start September. Nvidia has shed more than 12 per cent in the last five sessions. "As impressive as Nvidia's [revenue] growth has been, I'm here to tell you that its valuation is out of control," Magguilli wrote. " "Nvidia is trading at a higher price-to-sales multiple today than Microsoft was during the peak of the DotCom bubble! And do you know what happened to Microsoft after its P/S ratio peaked? Its stock got cut in half and didn't fully recover for 14 1/2 years." Magguilli said he doesn't see a direct correlation in terms of where Nvidia's stock may head in comparison with what happened to Microsoft. "I generally don't like relying on valuation metrics, however, the P/S ratio is one I monitor in the extremes. The reason why is because it's the purest valuation metric out there. You can't manipulate it with accounting tricks like you can earnings (P/E) or book value (P/B). Outside of outright fraud, sales are difficult to fake. As a result, this metric can be quite reliable during frothy periods." His simple advice: "if you own lots of Nvidia stock, I will say the same thing that I said to Tesla shareholders back in early 2021 -- just take the money. You've won the game. You've hit a lotto that you are unlikely to hit again." Local: Second-quarter GDP at 11.30am Overseas data: PMI composite or services data on Japan, China and France; US July trade balance at 10.30pm; Bank of Canada rate decision at 11.45pm; US JOLTS job openings, factory orders, durables good orders and Fed Beige Book In a note, Bank of America said its contrarian sentiment signal, or Sell Side Indicator (SSI) rose 61 basis points to 56.2 per cent in August, improving for a second consecutive month and hitting its highest level in nearly 2 1/2 years. The indicator tracks sell side strategists' average recommended allocation to equities in a balanced fund. BofA said the SSI has been bullish when Wall Street was extremely bearish and vice versa. "The indicator is still in 'neutral' territory but inching closer to a contrarian 'sell' signal." Following last month's increase, the SSI is the closest it has been to "sell" since January 2022 (1.8 percentage points away v 4.9ppt from "buy"). The SSI's current level 56.2 per cent suggests a price return of 11.5 per cent for the S&P 500 over the next 12 months, lower than recent history but still healthy. As sell side strategists have grown bullish on equities, BofA also said buy side positioning reveals funds increasingly bracing for a slowdown. Over the last quarter, funds sold cyclical sectors such as materials, energy and discretionary. I'll tell it as it is on the economy: Chalmers Jim Chalmers says his first duty is to level with voters, as he comes under fire for saying the RBA was smashing the economy with rate rises. CFMEU ban to deny Labor millions in election cash Party figures expect rival unions including the United Workers Union and the conservative Shoppies to fill a funding void left by the CFMEU's administration. Why the Philippines is the new China flashpoint Most people have never heard of the Sabina Shoal, but it's become the latest global testing ground for confrontation with China. Will it trigger broader conflict, asks Jennifer Hewett. Foreign investors want clarity on retooled FIRB Federal Treasurer Jim Chalmers' safeguards for higher-risk foreign investment proposals have been met with confusion overseas.

ASX 200 LIVE: ASX to dive, Nvidia plunges amid Wall St sell-off

Australian shares are poised to fall. Nvidia tumbled 9.5 per cent in New York as investors took weak manufacturing data in the US, combined with similar data from China over the weekend, as a sell signal. Nvidia's plunge wiped out $US278.9 billion ($415 billion) in the biggest loss of value ever for a US stock. It is poised to fall further. After the closing bell, Bloomberg reported that the US Justice Department sent subpoenas to Nvidia and other companies as it seeks evidence that the chipmaker violated antitrust laws, an escalation of its investigation into the dominant AI computing provider. Market concerns are heightening ahead of August's US jobs data, set to be released at 10.30pm AEST on Friday and investors are opting to book at least some profits from the markets' year-to-date advance. Monthly jobs openings data and weekly jobless claims also are awaited. Brent crude shed near 5 per cent, falling below $US74 a barrel. Iron ore extended its retreat, shedding another 3.5 per cent in Singapore trading to $US93.45 a tonne. The Australian dollar dropped more than 1 per cent. ASX futures were down 91 points or 1.1% near 7am AEST. At the close in New York, the US-listed shares of BHP were 5.1 per cent lower, while those of Rio were down 4.6 per cent. As markets reset, volatility surged. The VIX was up 5.17 or 33 per cent to 20.72 at 3.15pm in Chicago. The NYSE Fang + Index, which tracks the mega techs, was 3.5 per cent lower. All seven of the "magnificent seven" were down. Economic activity in the US manufacturing sector contracted in August for the fifth consecutive month, though it actually rose 0.4 percentage point to 47.2 per cent last month from July, according to the Institute for Supply Management. Economists expected the index to rise to 47.5 in August. The miss puts an even greater focus on this week's US jobs data which includes monthly job openings and August's nonfarm payrolls report, which could be the key determinant in whether the Federal Reserve opts for a quarter point rate cut this month or a 50 basis point one. Fortescue, Ramsay Health Care and Whitehaven Coal all trade ex-dividend on Wednesday. AirTrunk's $23.5b AI pay day Blackstone emerged as the winning bidder in the year's biggest merger and acquisition deal, netting its founder Robin Khuda a $1 billion payday. Vintage Cellars to disappear under Coles' bottle shop rebrand Coles is trialling an enlarged Liquorland footprint as its best chance of catching up to rival retailer Dan Murphy's. Brokers tip these stocks in an already hot sharemarket Equities strategists and fund managers are working out how to navigate a market that has been on a bull run, creating increasingly stretched valuations.