Market Wraps

Morning Wrap: ASX 200 futures flat + Morgan Stanley's take on the AI boom

Fri 26 May 23, 8:38am (AEST)

ASX 200 futures are trading 6 points lower, down -0.08% as of 8:20 am AEDT.

The Nasdaq rallies after Nvidia posts a blowout guidance, US debt ceiling deal edges closer as default looms, Germany falls into a recession, there's a 50% chance the Fed hikes by another 25 bps in June, Morgan Stanley says think about the initial mobile internet market as a case study for the AI boom and Charts of the Week.

Let's dive in.

Overnight Summary

Fri 26 May 23, 8:38am (AEDT)

Name Value Chg %
Major Indices
S&P 500 4,151 +0.88%
Dow Jones 32,765 -0.11%
NASDAQ Comp 12,698 +1.71%
Russell 2000 1,755 -0.70%
Country Indices
Canada 19,774 -0.77%
China 3,201 -0.11%
Germany 15,794 -0.31%
Hong Kong 18,747 -1.93%
India 61,873 +0.16%
Japan 30,801 +0.39%
United Kingdom 7,571 -0.74%
Name Value Chg %
Commodities (USD)
Gold 1,941.60 -0.11%
Iron Ore 105.60 -
Copper 3.594 +0.15%
WTI Oil 71.96 +0.18%
AUD/USD 0.6506 +0.02%
Bitcoin (AUD) 40,686 +0.33%
Ethereum (AUD) 2,780 +0.39%
US 10 Yr T-bond 3.814 +2.55%
VIX 19 -4.44%

US Sectors

Fri 26 May 23, 8:38am (AEDT)

Sector Chg %
Information Technology +4.45%
Communication Services +0.43%
Industrials +0.30%
Real Estate +0.28%
Financials +0.03%
Materials -0.38%
Consumer Discretionary -0.52%
Consumer Staples -0.77%
Health Care -1.04%
Utilities -1.38%
Energy -1.89%


S&P 500 intraday
Higher but choppy session for the S&P 500 – Led most by megacap tech stocks (Source: TradingView)


The data tables ARE CORRECT today. It's been a very depressing past few days dealing with error after error. Things should be back to normal from here.

  • S&P 500 higher but closed off session highs

  • Nasdaq surges on blowout Nvidia guidance, now up 0.3% this week

  • Nvidia rallies 24%, marks a record increase in market cap, set to approach US$1tn

  • Boost is largely isolated to tech, places more scrutiny on narrow market leadership 

  • FOMC policymakers ready to act if debt ceiling standoff destabilises markets (Bloomberg)

  • McCarthy optimistic of reaching last minute debt ceiling deal in time to avert default but gaps remain on spending levels (Bloomberg)

  • Yields on T-bills maturing in June surge above 7% amid debt ceiling fears (Bloomberg)


  • Nvidia guides Q2 revenue above expectations on strong AI processor sales (Bloomberg)

  • Nvidia's blowout Q2 results spark nearly US$300bn rally in AI stocks (Reuters)

  • Meta business groups cut in latest round of layoffs (Reuters)


Costco (+0.8%): Missed both revenue and earnings expectations, third quarter net sales rose 1.9% to US$52.6bn, the company’s same store sales have been weakening since May 2022. 

  • "Costco's solid value proposition and loyal customer base were not enough to capitalise on economic fears, even with their well-priced mix of name brands and in-house Kirkland labelled products.” – Michael Ashley Schulman, Chief Investment Officer at Running Point Capital Advisors, Reuters reported 


  • US weekly jobless claims up moderately, below market expectations (Reuters)

  • Economists say China RRR cut gives bigger growth boost than rate move (Bloomberg)

  • China growth warnings weigh global markets, unwinding reopening trade (Bloomberg)

  • German GDP confirms recession, country faces challenging outlook (Bloomberg)

  • South Korea producer inflation eases to two-year low (Yonhap)

Industry ETFs

Fri 26 May 23, 8:38am (AEDT)

Description Last Chg %
Nickel 27.9949 +1.33%
Aluminum 46.145 +0.60%
Steel 56.8448 -0.45%
Copper Miners 34.9 -0.57%
Strategic Metals 80.87 -0.75%
Gold 180.2 -0.96%
Lithium & Battery Tech 61.56 -1.01%
Silver 20.86 -1.42%
Uranium 19.76 -1.59%
Global Jets 18.16 +1.23%
Aerospace & Defense 109 -0.73%
Biotechnology 126.84 -1.89%
Cannabis 7.88 -4.83%
Description Last Chg %
Bitcoin 15.24 +0.59%
CleanTech 14.38 -0.28%
Solar 70.62 -0.28%
Hydrogen 8.935 -1.05%
Semiconductor 459.63 +6.66%
Robotics & AI 26.93 +3.02%
Video Games/eSports 52.53 +2.46%
Electric Vehicles 23.17 +1.22%
Cybersecurity 23.51 +0.43%
Cloud Computing 17.59 -0.40%
Sports Betting/Gaming 16.68 -0.60%
FinTech 20.26 -0.83%
E-commerce 16.4 -1.74%

Deeper Dive

Market-to-Fed Disconnect

CME's FedWatch Tool says the 14 June meeting is a coinflip for a pause (50.6%) vs. 25 bp hike (49.4%).

It also says there's a 24.5% chance for 25 bp hikes to take place at both the June and July meeting.

At the same time, the Fed has reiterated that they won't be cutting rates this year. While the market continues to price in cuts from the second half.

Morgan Stanley's take on the AI boom

Morgan Stanley says the surge in AI spending is paying off much sooner than expected.

"We simply have no historical precedent for the magnitude of this step function ... particularly in absolute dollar terms, given the US$4bn of data centre upside in the July quarter."

"It's important to note that Nvidia's track record early in an upward revision cycle is typically very conservative ... in the context of the company's historic patterns, it certainly bodes well ... the July quarter does not appear to be a one-time spike," said Morgan Stanley.

The Wall Street bank pointed to the Mobile Internet cycle as a potential case study. In short: Chips led (e.g. Qualcomm, ARM), then infrastructure/devices (e.g. Samsung) and finally software/services (e.g. Google and Amazon).

Charts of the Week

Kerry here. I'll be looking after Charts this Friday. Rather than forward-looking charts, I wanted to recap what the past week has been like: Choppy, the lack of set ups and stocks breaking lower.

The ASX 200 doesn't have the luxury of mega cap tech stocks. Weakness across banks and commodity prices has dragged the Index to near two-month lows. We broke below the key 7,200 level and 200-day moving average (blue) on Thursday. Volatility and distribution is rising. It's not exactly the most positive place to be in.

ASX 200 chart
ASX 200 daily chart (Source: TradingView)

This environment isn't very accommodative for stocks that are trying to break out. A lot of names that were consolidating and trading above the 20-day (red) would eventually break down this week. We have Corporate Travel (ASX: CTD) and Evergreen Lithium (ASX: EG1) charts below. But a few other mentions include Carsales, Collins Food and McMillan Shakespeare.

Corporate Travel daily chart (Source: TradingView)
Evergreen Lithium daily chart (Source: TradingView)

Key Events

ASX corporate actions occurring today:

  • Trading ex-div: CSR (CSR) – $0.20, Whitefield Industrials (WHF) – $0.102, Ellerston Asian Investments (EAI) – $0.08 

  • Dividends paid: OM Holdings (OMH) – $0.015, HomeCo (HDN) – $0.02 

  • Listing: None

Economic calendar (AEST):

  • 11:30 am: Australia Retail Sales

  • 4:00 pm: UK Retail Sales

  • 10:30 pm: US Durable Goods Sales

  • 10:30 pm: US Personal Consumption Expenditures Index

Written By

Kerry Sun

Content Strategist

Kerry holds a Bachelor of Commerce from Monash University. He is an avid swing trader, focused on technical set ups and breakouts. Outside of writing and trading, Kerry is a big UFC fan, loves poker and training Muay Thai. Connect via LinkedIn or email.

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