Market Wraps

Morning Wrap: ASX 200 futures flat, Tesla beats earnings estimates + Is it time to get defensive?

Thu 20 Jul 23, 8:37am (AEST)

ASX 200 futures are trading 2 points higher, up 0.02% as of 8:20 am AEST.

The Dow advances for an 8th straight session as the Nasdaq begins to fatigue, Netflix shares tumble after hours following a mixed second quarter result, Tesla posts a record quarter for revenue and vehicle production, Citi's Economic Surprise Index jumps to its highest level since early 2021, a recap of ASX confession season plus a few updates to our ETF table.

Let's dive in.


S&P 500 intraday
S&P 500 higher but finishes below session highs (Source: TradingView)


Note: Morning Wrap tables are showing inconsistencies again. To avoid confusion, I have taken them down. Will hopefully be back tomorrow :(

  • S&P 500 higher but finished off session highs of 0.52%

  • Real Estate the best performing sector, boosted by cooler-than-expected inflation prints from the US and UK – Which buoyed rate sensitive stocks

  • Materials the worst performing sector as Rio Tinto said its second quarter shipments of iron ore fell 1.0% and the US Dollar Index reclaimed the key 100 level

  • Lots of talk about overbought conditions – S&P 500 has closed at overbought levels (defined as one standard deviation above the 50-day moving average) every session 27 May

  • S&P 500 up 7 of the last 8 and up 9.2% since the beginning of June

  • S&P 500 has gone 37 days without a 1% decline. A streak of this magnitude was last seen during the November 2021 top

  • Fed's July rate hike expected to be last of cycle (Reuters)


  • AT&T pushes back against lead covered cable concerns, says less than 10% of network affected (Bloomberg)

  • Bank earnings show encouraging signs around capital markets, IPOs and M&A businesses (Bloomberg)

  • Apple testing generative AI tools in effort to challenge OpenAI, Alphabet (Bloomberg)

  • Netflix removes lowest priced ad-free plan in push toward ad-supported option (CNBC)

  • Oddity Tech IPOs with $2.8 billion market valuation (CNBC)

  • Carvana shares surge 40% after reaching a deal that will reduce its total outstanding debt by more than US$1.2bn (CNBC)


Lots of companies including Tesla, Netflix and IBM reported after markets close – After hours performance still subject to change. 

Goldman Sachs (+1.0%) – Revenue beat but earnings miss, the latter fell 58% year-on-year reflecting a decline in investment banking activity and US$300m of commercial real estate write downs. 

  • “.. there are a number of structural catalysts that should lead to increased levels of activity and we're seeing it begin to pick-up in a few spots already, particularly equity capital markets and M&A dialogue.” 

Netflix (+0.6%, after hours -5.8%) – Earnings beat but revenue miss, added 5.9 million subscribers compared to expectations of a 970,000 loss, third quarter outlook was a little soft.

  • “We expect revenue growth to accelerate in H2 ‘23 as we start to see the full benefits of paid sharing plus continued steady growth in our ad-supported plan.”

  • “We generally haven’t had price increases in our largest revenue markets since the first half of last year (limited during paid sharing rollout). Revenue from advertising and our extra member feature are not yet material enough to offset these factors."

United Airlines (unch, after hours +2.6%) – Revenue and earnings beat, second quarter fuel costs fell 26% year-on-year, capacity was up 17.5% and revenue per available seat mile fell 0.4%. 

Tesla (-0.7%, after hours -0.3%) – Revenue and earnings beat expectations but free cashflow and gross margins missed.

  • "Q2-2023 was a record quarter on many levels with our best-ever production and deliveries...Our operating margin remained healthy at approximately 10%, even with price reductions in Q1 and early Q2.”


  • US housing starts drop but building permits hit a 12-month high (Reuters)

  • Around 20% of 27m US student debt holders due to start repayments in September to pay more than US$500 a month (Bloomberg)

  • Citi Economic Surprise Index at its highest point since early 2021 (Axios)

  • UK inflation eases sharply, easing pressure on BoE (Bloomberg)

  • New Zealand inflation slows by less than expected (Bloomberg)

  • Japan manufacturer sentiment falls for first time in six months (Reuters)

Deeper Dive

ETF Table Update

Hi, Kerry here. A little bit of housekeeping with our ETF tables after Bloomberg removed their Nickel and Aluminium ones. (These changes went live on Tuesday)

  • Added: Invesco DB Agriculture Fund

  • Added: Invesco Building & Construction ETF

  • Changed: Swapped Gold ETF for the VanEck Gold Miner ETF

You can read more about why these ETFs matter and what they are here.

These additions were made to broaden the ETF table (since there were a lot of growth-y and resource-related ones).

  • Agriculture: The ETF has exposure to a broad range of soft commodities including sugar, cattle and wheat. Its performance can impact local names like Australian Agricultural Co (ASX: AAC), Costa Group (ASX: CGC) and Elders (ASX: ELD)

  • Building & Construction: Likewise, this can help with stocks like James Hardie (ASX: JHX) and Boral (ASX: BLD)

  • Gold Miners: We already have gold spot price in the Overnight Summary table. This ETF reflects the performance of a portfolio of global miners. This is useful because there might be days where gold prices move lower but gold miners hold up relatively well (or vice versa)

Confession Season

We've added a few more stocks to our confession season table. This tracks the one-day performance of large cap companies providing trading updates or pre-releasing results ahead of August reporting season. The aim of this is to:

  • Lessen the share price move when actual results are released

  • Spread catalysts across two events (e.g. revenue and profit figures in pre-released results but finer details during reporting season)

  • Reset expectations before earnings season

The average one-day decline is 2.0% (and -4.4% if you exclude Megaport).



1-Day Move








Domino's Pizza






AGL Energy



Karoon Energy






Fletcher Building



Johns Lyng Group



Link Administration















Northern Star





And speaking of confession season, I'm seeing some interesting broker notes given the flurry of corporate activity. Some of the following highlights are to do with earnings guidance updates and some are related to the quarterly production and revenue updates from the ASX resources space.

Ansell (ASX: ANN) - Morgans - HOLD

"As management continues to steer through slowing PPE demand and growing recessionary fears, an added layer of reorganisation makes visibility on a full recovery uncertain and difficult to forecast. Our FY24-25 estimates move materially lower on restructuring, with our price target decreasing to A$21.93."

Lendlease (ASX: LLC) - Morgan Stanley - EQUAL WEIGHT

"Lendlease has confirmed that press reports of further staff restructuring, involving 740 employees is true ... At this stage, information is scant, but we'd remind investors that whilst c.A$160 million was saved from its last cost-out program in 2022, only part of it was related to the 400 staff redundancies; the bulk were from overheads such as tenancies."


"IGO has announced a non-cash impairment of A$880-980 million (pre-tax) for the WSA assets vs our modelled A$410 million. Its $1.26 billion deal (to buy Western Areas) is now worth $300-400 million. The key question we now have is just how bad is Cosmos [the project IGO took over following its acquisition of Western Areas]?"

Talking Technicals: The Dow

On Wednesday, I noted how the S&P Regional Bank ETF was breaking out of a rather picture perfect inverse head and shoulders set up. This has also seen a lot of strength for local regionals like Bendigo Bank (ASX: BEN) and Bank of Queensland (ASX: BOQ).

Today, we're going to look more bigger picture index. The Dow has a much more defensive composition. It's top five sector exposures as at 6 July 2023 include:

  • Financials: 20.15%

  • Healthcare: 18.76%

  • Tech: 18.6%

  • Industrials: 14.64%

  • Discretionary: 13.64%:

Yesterday, the Dow broke out to a 15-month high. This comes at a time where there's a lot of chatter about how the S&P 500 and Nasdaq are extremely overbought. So is it time to get a little more defensive?

Dow Jones Industrial Average weekly chart (Source: TradingView)

Key Events

ASX corporate actions occurring today:

  • Trading ex-div: Kelly Partners (KPG) – $0.004, Plato Income Maximiser (PL8) – $0.006, Spheria Emerging Companies (SEC) – $0.028 

  • Dividends paid: Graincorp (GNC) – $0.14

  • Listing: None

Economic calendar (AEST):

  • 9:50 am: Japan Balance of Trade

  • 11:30 am: Australia Unemployment Rate

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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