Market Wraps

Morning Wrap: ASX 200 to fall, S&P 500 gives back early strength + Powell speech in focus

Fri 25 Aug 23, 8:31am (AEDT)

ASX 200 futures are trading 91 points lower, down -1.29% as of 8:20 am AEST.

Every S&P 500 sector finished red as benchmarks tumbled from session highs to close at worst levels, the US Dollar breaks out towards a three month high, Nvidia shares close around breakeven after a 6% open and Friday's Charts of the Week!

Let's dive in.

Overnight Summary

Fri 25 Aug 23, 8:31am (AEDT)

Name Value Chg %
Major Indices
S&P 500 4,376 -1.35%
Dow Jones 34,099 -1.08%
NASDAQ Comp 13,464 -1.87%
Russell 2000 1,846 -1.27%
Country Indices
Canada 19,776 -0.52%
China 3,082 +0.12%
Germany 15,621 -0.68%
Hong Kong 18,212 +2.05%
India 65,252 -0.28%
Japan 32,287 +0.87%
United Kingdom 7,334 +0.18%
Name Value Chg %
Commodities (USD)
Gold 1,944.70 -0.17%
Iron Ore 107.82 -
Copper 3.769 -1.04%
WTI Oil 78.88 -0.01%
Currency
AUD/USD 0.6419 0.00%
Cryptocurrency
Bitcoin (AUD) 40,651 -0.91%
Ethereum (AUD) 2,577 -0.74%
Miscellaneous
US 10 Yr T-bond 4.235 +0.88%
VIX 17 +7.63%

US Sectors

Fri 25 Aug 23, 8:31am (AEDT)

Sector Chg %
Financials -0.24%
Real Estate -0.41%
Materials -0.43%
Utilities -0.63%
Energy -0.74%
Health Care -0.76%
Consumer Staples -0.77%
Industrials -1.22%
Consumer Discretionary -2.01%
Communication Services -2.04%
Information Technology -2.15%

S&P 500 SESSION CHART

S&P 500 intraday chart
S&P 500 tumbles intraday to finish at worst levels (Source: TradingView)

MARKETS

  • S&P 500 tumbles intraday to finish at worst levels and undercuts the 4,400 level

  • Nvidia shares close around breakeven from a session high of 6.6%

    • JPMorgan: "This Nvidia earnings event is likely more important than Jackson Hole. ... the ability for Tech companies to print strong earnings in an elevated interest rate environment should give comfort in hitting future consensus earnings growth targets and support markets."

    • Goldman Sachs: "Something that stood out to us was the lack of institutional demand on our desk in Nvidia post earnings ... in stark contrast to last quarter, where we had 10+ buyers on our desk after hours ... a reflection of much fuller institutional positioning this time around."

  • US Dollar Index rallies 0.6% to its highest level since early June

  • Powell’s Jackson Hole speech set to take place tonight and analysts expect a hawkish lean, in-line with the Fed’s tightening bias

  • Fed Harker expects no more rate hikes needed this year (Reuters)

  • Nvidia adds jet fuel to AI optimism with record results, $25bn buyback (Reuters)

  • Oil fund ETF sees $180m of outflows, most since 2020 (Bloomberg)

  • BofA disputes Goldman logic on zero-day option threat to stocks (Bloomberg)

  • Option strategists say the US market may not be ready for hawkish Powell at Jackson Hole, investors may be underestimating the degree of volatility (Reuters)

  • Foreign Investors beat $11bn retreat from China (London Times)

STOCKS 

  • Snowflake gives restrained outlook on slower software demand (Bloomberg)

  • NetApp beats revenue estimates on rising demand for cloud services (Reuters)

  • T-Mobile to lay off 7% of staff  offset spike in customer acquisition costs (Bloomberg)

  • Subway sells itself to private equity firm Roark Capital (CNBC)

CENTRAL BANKS

  • BoE peak seen at 5.5% but strong chance of 5.75% (Reuters)

  • Bank of Korea holds rate for 5th time amid slowdown woes (Bloomberg)

CHINA

  • China braces for $38bn in losses from troubled trust sector (Bloomberg)

  • China's local government financing vehicles insiders say $9tn debt problem is worsening (Bloomberg)

  • Goldman Sachs says Chinese developers need to liquidate $2tn of property inventory (FT)

ECONOMY

  • US core capital goods orders post largest gain in five months (Reuters)

  • US job growth in year through March was less than estimated (Reuters)

  • Risk of UK recession grows as companies wilt under cost of borrowing (FT)

  • Australia's growth to slow as workforce participation falls (Reuters)

Industry ETFs

Fri 25 Aug 23, 8:31am (AEDT)

Description Last Chg %
Commodities
Gold Miners 28.68 -0.21%
Silver 22.11 -0.81%
Lithium & Battery Tech 57.12 -1.07%
Steel 65.2611 -1.22%
Strategic Metals 71.37 -1.65%
Uranium 23.1 -1.70%
Copper Miners 36.41 -2.41%
Industrials
Agriculture 21.56 +0.84%
Construction 53.3269 -1.45%
Global Jets 18.97 -1.66%
Aerospace & Defense 113.44 -1.82%
Healthcare
Biotechnology 126.86 -0.91%
Cannabis 6.34 -4.08%
Description Last Chg %
Cryptocurrency
Bitcoin 13.4 -2.19%
Renewables
CleanTech 11.87 -1.90%
Solar 55.5 -2.22%
Hydrogen 8.3 -2.81%
Technology
Sports Betting/Gaming 16.9688 -1.34%
Robotics & AI 25.65 -1.76%
FinTech 20.71 -1.80%
Video Games/eSports 52.58 -1.92%
Cloud Computing 19.42 -1.97%
E-commerce 18.09 -2.11%
Electric Vehicles 23.8 -2.50%
Cybersecurity 23.33 -2.51%
Semiconductor 483.63 -3.30%

Deeper Dive

US Dollar Breaking Out

The US dollar is breaking out of a longstanding trendline. It's renewed strength could act as a headwind for equities as well as commodities like gold and copper.

The resurgence has pushed the Dollar into overbought territory, from an RSI perspective. This has acted as a reliable indicator of Dollar peaks this year.

But given factors such as the strong US economy and higher-for-long rates thematic, does the Dollar rally have more legs to run?

DXY 2023-08-25 08-17-36
US Dollar Index daily chart with RSI (Source: TradingView)

Charts of the Week

This segment of the morning wrap brings you weekly technical commentary on the ASX 200 and some of the more interesting charts in the market. These are not meant as recommendations. They are for illustrative purposes only. Any discussion of past performance is for educational purposes only. Past performance is not a reliable indicator of future return. Always do your own research.

ASX 200 – Grinding

image (1)
ASX 200 daily chart (Source: Commsec)

The XJO caught some support at the 7100 in recent session and has pushed up to 7200. More broadly, the index remains firmly range bound. It’s not a bad results, given this reporting season was supposed to be a particularly trying one. We’ve made it through super week (super Tuesday and super Thursday of the last full week in August are typically the busiest reporting days) and are still here to tell the tale. With most of the reporting season risk now behind us, hopefully the bulls can focus on building a sustainable rally.

Brickworks (ASX: BKW) – Brick by brick

image (2)
Brickworks daily chart (Source: Commsec)

Brickworks has not reported this months – it delivers results 28 September. The chart looks solid however. We saw a rally through April-June before the price action came back to test the breakout point, around $25 – a key round number. More recently the price action has bounced off this level, on rising volume, and appears destined to push back up towards the late June swing high around $28.

REA Group (ASX: REA) – Keeps on keeping on

image (3)
REA Group daily chart (Source: Commsec)

REA Group often gets characterised as a property stock, yet the share price doesn’t follow the whims of the property market. Investors would do better to think of it as a tech/communications company that has built a hyper-efficient, dominant, online marketplace – which just so happens to service the property market. It’s a great business that has performed well over an extended period of time, and the share price currently has one of the cleanest uptrends going around.

Key Events

ASX corporate actions occurring today:

  • Trading ex-div: Fiducian Group (FID) – $0.18, Estia Health (EHE) – $0.12, Ingenia Communities (INA) – $0.05, GUD Holdings (GUD) – $0.22, Argo Investments (ARG) – $0.18 

  • Dividends paid: BWP Trust (BWP) – $0.09, Goodman Group (GMG) – $0.15

  • Listing: Great Divide Mining (GDM) at 11:00 am 

Economic calendar (AEST):

  • 10:00 pm: Jackson Hole Symposium

  • 12:05 am: Fed Chair Powell Speech

  • 5:00 am: ECB President Lagarde Speech

Written By

Chris Conway

Managing Editor

Chris is the Managing Editor at Livewire Markets and Market Index. His passion is equity research, portfolio construction, and investment education. He is also very keen on the powerful processes that can help all investors identify great opportunities and outperform the market, and wants to bring them to life and share them with you.

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