Market Wraps

Morning Wrap: ASX 200 futures flat, China's property crisis + Morningstar's high-risk calls

Tue 15 Aug 23, 8:30am (AEST)

ASX 200 futures are trading flat as at 8:15 am AEST.

Major US benchmarks bounced from oversold conditions, the US 2-year Treasury yield is 0.03% off from starting with a five handle again, Tesla shares tank as the EV maker cuts prices for select Model Y versions in China, Goldman Sachs says it expects the first Fed rate cut to take place in mid-2024 and expects no more hikes this year, one of China's largest private wealth managers missed payments on multiple high-yield investment products and four high-risk calls from MorningStar.

Let's dive in.

Overnight Summary

Tue 15 Aug 23, 8:30am (AEST)

Name Value Chg %
Major Indices
S&P 500 4,490 +0.58%
Dow Jones 35,308 +0.07%
NASDAQ Comp 13,788 +1.05%
Russell 2000 1,920 -0.24%
Country Indices
Canada 20,291 -0.57%
China 3,178 -0.34%
Germany 15,904 +0.46%
Hong Kong 18,774 -1.58%
India 65,402 +0.12%
Japan 32,060 -1.27%
United Kingdom 7,507 -0.23%
Name Value Chg %
Commodities (USD)
Gold 1,939.10 -0.39%
Iron Ore 104.63 -
Copper 3.728 +0.24%
WTI Oil 82.47 -0.87%
AUD/USD 0.6485 0.00%
Bitcoin (AUD) 45,285 +0.09%
Ethereum (AUD) 2,842 -0.12%
US 10 Yr T-bond 4.184 +0.38%
VIX 15 -0.13%

US Sectors

Tue 15 Aug 23, 8:30am (AEST)

Sector Chg %
Information Technology +1.85%
Communication Services +1.04%
Consumer Discretionary +0.39%
Health Care +0.33%
Materials +0.19%
Industrials +0.03%
Financials -0.18%
Energy -0.33%
Consumer Staples -0.52%
Real Estate -0.54%
Utilities -0.83%


S&P 500 intraday
S&P 500 rallies intraday to finish at best levels (Source: TradingView)


The Morning Wrap tables (Overnight Summary, US Sectors and ETFs) are back!

  • S&P 500 finished higher and at best levels

  • Nasdaq outperformed as tech stocks bounced – catching a bid off oversold conditions and a rotation out of the energy sector

  • Treasury yields were higher, with the 2-year up for a fourth straight session and not far off March 2023 highs and the 10-year up for a third straight session to a 9-month high

  • A relatively uneventful session ahead of a massive data dump (China, RBA Minutes, US Retail sales etc) as well as the Fed’s Jackson Hole Conference next week

  • The market’s recent tone has been more risk-off with a focus on stretched long positioning, upward pressure on yields, negative operating risks to earnings, a rebound in energy prices, BoJ policy tweak, China’s recovery headwinds and seasonality

  • Hedge funds pile into equities after missing this year’s rally (FT)

  • Biggest Treasury ETF sees largest outflows since 2020 meltdown (Bloomberg)

  • Yen slides to 8-month low as Japan-US yield gap widens (Bloomberg)


  • US Steel rejects US$7.3bn takeover offer from Cleveland-Cliffs (Bloomberg)

  • Tesla cuts prices for select Model Y versions in China (Reuters)

  • PayPal announces Intuit’s Alex Chriss would take over as CEO (CNBC)

  • Nikola recalls 209 EV trucks following an independent investigation of a June fire, which follows disappointing second quarter earnings (CNBC)


Over 90% of the S&P 500 has reported Q2 results. Here are the key takeaways:

  • Blended growth rate of -5.0%, above the -7.0% expected at the end of Q2

  • 80% of results have topped earnings expectations vs. 77% five-year average 

  • Earnings are coming in 7.5% above expectations, below the 8.4% five-year average 


  • Fed is playing a waiting game to try and avoid a recession (Bloomberg)

  • Goldman Sachs expects first Fed rate cut mid-2024 after forecasting no more hikes this year (Bloomberg)

  • ECB still seen delivering one last hike in September (Bloomberg)

  • Argentina's central bank devalues peso and hikes rates by 21% to 118% following a shock far-right primary election victory (CNBC)


  • China finance giant Zhongzhi missed payments on high-yield investment products, triggering fresh anxiety about the country's shadow banking industry (Bloomberg)

  • Property developer Country Garden suspends trading in at least ten onshore bonds on Monday (FT)

  • China market turmoil amps up on bearish investor sentiment (Bloomberg)

  • China's central bank expected to keep rates unchanged despite slowing economy and weaker yuan (Reuters)

  • Huge inflow into China ETFs prompt speculation about state buying (FT)

Industry ETFs

Tue 15 Aug 23, 8:30am (AEST)

Description Last Chg %
Steel 66.42 +2.26%
Silver 20.72 -0.38%
Uranium 22.65 -0.96%
Copper Miners 37.87 -1.51%
Lithium & Battery Tech 59.68 -1.73%
Gold Miners 28.95 -1.73%
Strategic Metals 76.13 -1.96%
Construction 56.3526 +0.41%
Global Jets 20.25 +0.30%
Aerospace & Defense 116.89 -0.29%
Agriculture 21.25 -0.75%
Cannabis 6.9262 +0.67%
Biotechnology 128.42 -0.12%
Description Last Chg %
Bitcoin 15.16 -0.33%
Hydrogen 9.08 +1.34%
CleanTech 13.17 +0.69%
Solar 62.02 +0.32%
Semiconductor 500.73 +2.88%
Robotics & AI 26.59 +1.14%
Video Games/eSports 54.72 +1.09%
Cybersecurity 23.96 +0.80%
Cloud Computing 19.97 +0.40%
E-commerce 19.38 +0.26%
Sports Betting/Gaming 17.62 +0.17%
FinTech 22.48 -0.13%
Electric Vehicles 24.93 -0.20%


Kerry here. Our table are back (but using the old solution as the team continues to work on the new one). A few weeks ago, we swapped out the Bloomberg Exchange Traded Notes (ETNs) for Nickel and Aluminium (because they no longer exist) for:

  • Invesco DB Agriculture Fund (since our ETF list has no soft commodities)

  • Invesco Dynamic Building & Construction

This Agriculture ETF can be helpful for gauging stocks like:

  • Australian beef company Australian Agricultural Co (ASX: AAC)

  • Horticulture and fresh produce supplier Costa Group (ASX: CGC)

  • Agribusiness company Elders (ASX: ELD)

While the Building & Construction ETF can be helpful for:

  • Fibre cement siding and backerboard manufacturer James Hardie (ASX: JHX)

  • Building products and construction materials group Boral (ASX: BLD)

We've also swapped our a Physical Gold ETF for the VanEck Gold Miners ETF.

Morningstar (and Ord Minnett)'s 4 high-risk calls

In our sell-side scour today, I thought I'd highlight Morningstar's work and namely, some of its "high", "higher", and "very high" risk calls. The risk ratings are around the conviction (or uncertainty) of its calls and can provide some interesting colour on their reasoning on specific stocks.

  • Avita Medical (ASX: AVH) - HOLD - "Shares now appear fairly valued. We expect product pipeline and high gross margins to provide a path to profitability. However, a near-term transition to profitability is unlikely, and we concede there is a wide range of potential outcomes based on the success of its pipeline. We expect Avita won't be cash flow-positive before 2026." (Uncertainty rating: VERY HIGH)

  • News Corporation (ASX: NWS- HOLD - "The result vindicates the 20%-plus stock price rally over the last three months, and shares in no-moat-rated News are trading broadly in line with our intrinsic assessment." (Uncertainty rating: HIGH)

  • REA Group (ASX: REA- LIGHTEN (Ord Minnett for "trim your holdings") - "The key risk we see for REA Group in the medium term is that its annual double-digit price hikes start attracting regulatory scrutiny. We believe REA Group has been riding a residential property boom as well as a secular shift towards online property listings over much of the past decade. We expect these tailwinds to have mostly dissipated ... At current prices, REA Group shares screen as materially overvalued." (Uncertainty rating: HIGH)

  • Star Entertainment (ASX: SGR- ACCUMULATE (Ord Minnett for "buy slowly") - "While there remains considerable uncertainty around the quantum of the Austrac fine, we now think Star's $150 million provision for the fine is beginning to appear optimistic. (Uncertainty rating: VERY HIGH)

The great rate cut debate

Now that everyone is in some form of agreement that central banks are near their end-games for this cycle, the attention has turned to when the first rate cut is coming. Here in Australia, rates traders believe we won't see a meaningful cut until the back end of 2024 and most economists tend to agree. The current consensus from the AFR's most recent survey suggests May 2024 is when cuts will start.

Screenshot 2023-08-14 at 10.09.18 am
ASX 30-day interbank cash futures implied yield curve (Source: ASX)

In the US, the debate just got kicked up a notch after Goldman Sachs economists said they expect the first rate cut to come  in the second quarter of 2024.

“The cuts in our forecast are driven by this desire to normalise the funds rate from a restrictive level once inflation is closer to target,” economists led by Jan Hatzius wrote. “We are penciling in 25 basis points of cuts per quarter but are uncertain about the pace.”

The rates market tends to agree, with traders expecting cuts from May 2024 onwards. And while that's great news for lots of investors (especially bond investors who have been waiting for the cuts to signal a new bull market for that asset class), someone has already found the cynical side of the rate-cutting cycle ... George Takei of Star Trek fame.

2023-08-15 07 58 14-Window
Source: Twitter

Key Events

ASX corporate actions occurring today:

  • Trading ex-div: QV Equities (QVE) – $0.013, Advanced Share Registry (ASW) – $0.05, Flagship Investments (FSI) – $0.049 

  • Dividends paid: None

  • Listing: None

Economic calendar (AEST):

  • 9:50 am: Japan Q2 GDP

  • 11:30 am: RBA Minutes

  • 12:00 pm: China Industrial Production, Retail Sales, Unemployment Rate and Fixed Asset Investment for July

  • 4:00 pm: UK Unemployment

  • 10:30 pm: Canada Inflation

  • 10:30 pm: US Retail Sales

Written By

Hans Lee

Senior Editor

Hans is one of the Senior Editors at Livewire Markets and Market Index. He created Signal or Noise and leads the team's coverage of the global economy and fixed income markets.

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