Evening Wrap: ASX tumbles, resources sell off, FedEx CEO warns of 'worldwide recession'

The S&P/ASX 200 closed 96 points lower, down -1.40%.

Another nasty selloff to top the week off. It's brutal out there eh?

We recap some dovish comments from RBA Lowe, FedEx CEO warns of a "worldwide recession", some passable economic numbers from China and a couple of charts.

Let's dive in.

ASX 200, All Ords and All Tech intraday overview

Markets

• All 11 sectors declined

• Resources headlined the selloff as oil prices tumbled

• A mix of defensive and growth sectors managed to hold up ok

• Utilities, Tech, Healthcare, Financials and Discretionary sectors all fell less than 1%

• 77% of the top 200 companies declined

Stocks

• Downer (ASX: DOW) -0.6% was awarded a contract to provide maintenance services across the SA Housing Authority social housing portfolio in Adelaide. The contract is valued at approximately $630m over seven-and-a-half years  

• Cleanaway Waste (ASX: CWY) -3.1% successfully completed a $50m share purchase plan at $2.50 per new share 

• Global Lithium (ASX: GL1) -5.1% announced “excellent results” from a second round of preliminary testwork on diamond core samples from the Marble Bar Lithium Project   

• Sayona Mining (ASX: SYA) -9.4% said its on track for the planning Q1 2023, with procurement 94% completed, 95% of required permits received and construction ramping up

• Anson Resources (ASX: ASN) -9.4% successfully raised $50m at 36 cents per share, a  9% discount to its last close 

• Atlas Arteria (ASX: ALX) -15.6% successfully raised $2.5bn at $6.30 per new share, a 19.4% discount to its last close   

Quick bites

Deutsche Bank expects Fed terminal rate of 4.5%: Historical inflation cycles suggest the Fed has to tighten rates above spot year-over-year inflation. Deutsche expects US core personal consumption inflation to stay above 4.5% well into early 2023, which could force a terminal rate above 4.5%

A surprisingly dovish Lowe: Speaking at the House of Representatives Standing Committee on Economics, Lowe said "the fact that we’ve raised rates quite a lot already increases the strength of the argument for smaller increases going forward … We are closer to a normal setting now which means ... the case for large adjustments … is diminished."

Grim words from FedEx CEO: FedEx shares tumbled -16.7% in after hours on Thursday after preannouncing its Q1 earnings and withdrawing its prior guidance. Revenues, margins and earnings all missed analyst expectations.

• “Global volumes declined as macroeconomic trends significantly worsened later in the quarter, both internationally and in the U.S," said CEO Raj Subramaniam

• FedEx said it will aggressively accelerate cost reduction efforts including closing 90 office locations, close five corporate office facilities and defer hiring efforts

A global recession is coming: The World Bank forecasts a 'Global Recession' in 2023, with GDP per capita forecast to contract 0.4%, according to Bloomberg

Economy

• China’s house price index fell -1.3% year-on-year in August from -0.9% in July

  • Decline in home values accelerated in August despite ongoing government support policies

• China’s industrial production rose 4.2% year-on-year in August from 3.8% in July

  • Beat consensus expectations of a 3.9% rise

  • Autos did the heavy lifting, with passenger car production up 33%

• China’s retail sales jumped 5.4% year-on-year in August from 2.7% in July

  • Beat consensus expectations of a 3.4% rise

  • Autos, food and online sales helped retail sales post a big surprise

  • Figure are also cycling low growth from last August

• China’s fixed asset investment rose 5.8% year-on-year in August from 5.7% in July

  • Slightly ahead of consensus expectations of 5.5%

Commodities 

• Iron ore futures on China’s Dalian Commodity Exchange fell -1.3%

Latest news

Scans

Post market charts

S&P/ASX 200: It looks like the selling the market experienced towards Thursday's close (session high of 0.72% but closed 0.21%) followed through on Friday. Since the late August top, we've talked about how we want the pullbacks to be orderly, where the index isn't experiencing distribution, failing to defend key areas and heavy intraday selling. Unfortunately, that's exactly what we got in the last 2 and current pullback. It's getting pretty ugly.

XJO chart (Source: TradingView)

S&P/ASX 200 Energy: The Index bounced on Thursday and does a complete U-turn today. Oil has been smashed by several compounding catalysts including:

• FedEx's recession comments

• The International Energy Agency warning that China's oil demand could fall by 420,000 barrels a day this year, its first annual decline since 1990

• US Department of Energy quashed rumours about the refilling of strategic reserves, saying that they won't be refilled anytime soon

The supply tight narrative is still here. It's just that the demand and recessionary narrative now has a louder voice.

XEJ chart (Source: TradingView)

Sectors and stocks

Lithium smashed: Here we are. Thursday was choppy and we pointed out a few names like Lithium Power International (ASX: LPI), Core Lithium (ASX: CXO) and Sayona (ASX: SYA) facing heavy selling pressure. Surprisingly, the three names were among the worst performing lithium names on Friday, down -9%, -4.3% and -9.4% respectively. Most large cap names fell 4-5%.

Sayona chart (Source: TradingView)

Likewise with Uranium: Its not a good look when the sectors that performed the best in the past few weeks are the ones headlining the selloff. Uranium names faced heavy selling, most of which were down between 4-10%. Boss Energy (ASX: BOE) was dumped -8.9% on 11.6m volume versus its 20-day average of 2.6m.

Boss Energy chart (Source: TradingView)

Macquarie: Threatening to break this key $172 area

Macquarie chart (Source: TradingView, Annotations by MarketIndex)

Data#3: The rare tech stock that held up pretty well, closed 0.8% higher

Data#3 chart (Source: TradingView, Annotations by MarketIndex)

CSL: Another large cap name threatening to push below a recent range

CSL chart (Source: TradingView, Annotations by MarketIndex)