Market Wraps

Morning Wrap: ASX 200 futures flat, US stocks lose steam + Why inflation could bounce back

Mon 17 Jul 23, 8:35am (AEST)

ASX 200 futures are trading 2 points lower, down -0.01% as of 8:20 am AEST.

The S&P 500 and Nasdaq gave back early strength to finish lower, Healthcare and Staples stocks push the Dow into positive territory, several US banks beat second quarter earnings expectations, China Q2 GDP expected to accelerate, a recap of ASX confessions season (pre-released earnings or trading updates) and the base effect: What is it and why is it important?

Let's dive in.

Overnight Summary

Mon 17 Jul 23, 8:35am (AEST)

Name Value Chg %
Major Indices
S&P 500 4,505 -0.10%
Dow Jones 34,509 +0.33%
NASDAQ Comp 14,114 -0.18%
Russell 2000 1,931 -1.02%
Country Indices
Canada 20,262 -0.08%
China 3,201 -1.14%
Germany 16,105 -0.22%
Hong Kong 19,414 +0.33%
India 66,221 +0.24%
Japan 32,391 -0.09%
United Kingdom 7,435 -0.08%
Name Value Chg %
Commodities (USD)
Gold 1,957.40 -0.36%
Iron Ore 112.38 -
Copper 3.878 -1.40%
WTI Oil 74.48 -1.25%
AUD/USD 0.6805 -0.51%
Bitcoin (AUD) 44,508 +0.12%
Ethereum (AUD) 2,839 +0.44%
US 10 Yr T-bond 3.819 +1.54%
VIX 13 -1.98%

US Sectors

Mon 17 Jul 23, 8:35am (AEST)

Sector Chg %
Health Care +1.50%
Consumer Staples +0.35%
Consumer Discretionary +0.27%
Real Estate -0.02%
Information Technology -0.15%
Industrials -0.33%
Utilities -0.41%
Materials -0.58%
Communication Services -0.61%
Financials -0.68%
Energy -2.75%


S&P 500 intraday
S&P 500 lower, gives back early strength (Source: TradingView)


  • S&P 500 fades from session highs of 0.4% to finish slightly lower

  • Oil falls almost 2% but finishes the week 2.1% higher

  • Bullish focus points for the week: Disinflation momentum, peak Fed as markets now expect just one more 25 bp hike at the July meeting, soft-landing momentum, improvement in market breadth and a good start to Q2 earnings season 

  • Bearish focus points for the week: No reprieve in Fed’s higher-for-longer messaging, negative signalling for market from recent strength in lower quality stocks and sectors, stretched valuations with S&P 500 trailing PE at over 21 and China remains a global growth disappointment 

  • Fed Governor Waller backs two more rate hikes (Bloomberg)

  • Goldman Sachs strategists see S&P 500 hitting record high by year-end (Bloomberg)

  • Global hedge funds scramble to unwind shorts on US stocks (Reuters)

  • Rapid decline in inflation a big tailwind for stocks (Yahoo)

  • 'Magnificent Seven' tech stocks to report over next few weeks, markets brace for strong results to justify premium valuation (Reuters)

  • Trough in earnings revisions a positive for profit outlook (Bloomberg)

  • Renewed FX market volatility may upend carry trade (Bloomberg)


It’s been a pretty strong start to the US earnings season with 14 of the 15 companies that reported last week beating consensus EPS expectations. The revenue beat rate was a little softer with 10 of 15 beating sales expectations. 

JPMorgan (+0.6%) – Double beat, revenue rose 34% to US$4.2bn thanks to a 44% jump in net interest income to US$21.9bn, raised full-year net interest income outlook. 

  • Credit quality: "We still do see this as a normalisation, not a deterioration story when we talk about consumer credit. Actually revolved per account has still not gotten to pre-pandemic levels … you know, I think the consumer continues to surprise on the upside here." – CFO Jeremy Barnum 

Wells Fargo (-0.3%) – Double beat, also lifted full-year net interest income view.

  • Credit quality: “"As expected, net loan charge-offs increased from the first quarter. Consumer charge-offs continued to deteriorate modestly. Commercial charge-offs increased driven by a small number of borrowers in Commercial Banking ..." – CEO Charles Scharf

Citi (-4.1%) – Double beat but revenues fell 1% from a year ago amid the underperformance in markets and investment banking businesses, committed to reach medium-term return targets.

  • "Markets revenues were down from a strong Q2 last year, as clients stood on the sidelines starting in April while the US debt limit played out. In Banking, the long-awaited rebound in IB has yet to materialise, making for a disappointing quarter."


  • US consumer sentiment near two-year high in July (Reuters)

  • China Q2 GDP growth seen accelerating, propped up by base effects (Reuters)

  • China data expected to show reopening recovery fading out, flags the need for more stimulus (Reuters)

  • Sources say China's financial regulators invite major global investors to a rare symposium next week (Reuters)

  • OPEC sees healthy demand growth of 2.25 million barrels per day in 2024 (Platts)

  • Crude oil surge through US$80 a barrel suggests long-awaited tightening finally starting to gain traction (Bloomberg)

  • RBA Deputy Governor Bullock to replace Philip Lowe (Bloomberg)

Industry ETFs

Mon 17 Jul 23, 8:35am (AEST)

Description Last Chg %
Silver 22.86 +0.35%
Gold Miners 31.96 -0.71%
Steel 66.8121 -0.73%
Lithium & Battery Tech 67.94 -1.31%
Copper Miners 39.86 -1.75%
Strategic Metals 86.71 -1.87%
Uranium 21.71 -3.08%
Agriculture 21.59 +1.12%
Construction 56.03 +0.99%
Aerospace & Defense 116.2 -1.16%
Global Jets 21.38 -1.88%
Biotechnology 128.24 -0.05%
Cannabis 6.57 -6.81%
Description Last Chg %
Bitcoin 16.13 -5.34%
Hydrogen 9.82 -1.60%
Solar 70.72 -1.94%
CleanTech 14.97 -2.48%
FinTech 23.82 -0.96%
Video Games/eSports 57.96 -1.13%
Cloud Computing 20.71 -1.15%
Semiconductor 518.13 -1.25%
Electric Vehicles 26.95 -1.39%
Cybersecurity 23.98 -1.40%
Robotics & AI 29.41 -1.54%
Sports Betting/Gaming 18.5071 -1.74%
E-commerce 19.53 -1.91%

Market Insights

Sectors to Watch

The S&P 500 and Nasdaq are in the midst of a pullback despite the positive bank earnings. There was a little bit of a defensive pivot with the Dow finishing higher, led by sectors like Healthcare and Staples. We've talked a lot about the importance of a shallow pullback where volatility does not pick up and weakness is bought into. For the ASX 200, we've only seen the opposite in the past 2-3 months. The Index has seen several 2-5 day rallies, followed by sharp selloff and an eventual bounce. Will this time be any different?

Our ETF list demonstrates a broad-based pullback with notable weakness across sectors such as Uranium (-3.08%), Jets (-1.88%), Rare Earths/Strategic Metals (-1.87%), Copper (-1.75%) and Semis (-1.25%).

Reporting Season: Pre-Releases

A few companies tend to provide either a) trading updates or b) pre-release results ahead of earnings 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

Below is a list of trading updates from ASX 200 companies since the beginning of June. The stocks have on average declined 4.1% in the day of the announcement.




1-Day Move










Domino's Pizza








AGL Energy




Karoon Energy








Fletcher Building




Johns Lyng Group




Link Administration







Some of the key observations include:

  • Building stocks like Boral (ASX: BLD) and Johns Lyng (ASX: JLG) posted relatively positive updates but were sold into. Both stocks have had a pretty strong year (Johns Lyng kicked off a capital raise shortly after which dragged its YTD performance into negative)

  • A few defensive names like ASX (ASX: ASX), CSL (ASX: CSL) and Cleanaway (ASX: CWY) were also sold off. ASX and CSL updates were rather downbeat and below analyst expectations

Base Effects Coming to an End

Inflation is expressed as a month-on-month and year-on-year figure. The month in which inflation spikes tends to produce the opposite effect a year later, creating the impression that inflation has slowed. This is known as the base effect.

The base effect can diminish over time if inflation levels remain relatively constant, which means that month-on-month inflation figures will likely become the most important metric over the next year.

The BofA chart below says the June CPI print is likely the last favourable year-on-year print. If inflation increases just 0.2% month-on-month, we'll be back at 4.0% at the beginning of next year.

base effects us cpi
Source: BofA Global Investment Strategy

Key Events

ASX corporate actions occurring today:

  • Trading ex-div: Katana Capital (KAT) – $0.005

  • Dividends paid: Garda Property (GDP) – $0.018

  • Listing: None

Economic calendar (AEST):

  • 12:00 pm: China GDP

  • 12:00 pm: China Industrial Production

  • 12:00 pm: China Retail Sales

  • 12:00 pm: China Fixed Asset Investment

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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