Market Wraps

Morning Wrap: ASX 200 to fall, S&P 500 wobbles, Treasury yields hit 16-year high

Wed 20 Sep 23, 8:32am (AEDT)

ASX 200 futures are trading 16 points lower, down -0.22% as of 8:30 am AEST.

Major US benchmarks finished lower overnight but well off worst levels, bond yields continued to climb to 2007-08 highs, global industrial strike action intensifies, inflation in Canada accelerates much faster than expected and the RBA considered raising rates in September but opted for a pause instead.

Let's dive in.

Overnight Summary

Wed 20 Sep 23, 8:32am (AEDT)

Name Value Chg %
Major Indices
S&P 500 4,444 -0.22%
Dow Jones 34,518 -0.31%
NASDAQ Comp 13,678 -0.23%
Russell 2000 1,827 -0.42%
Country Indices
Canada 20,219 -1.34%
China 3,125 -0.03%
Germany 15,664 -0.40%
Hong Kong 17,997 +0.37%
India 67,597 -0.36%
Japan 33,243 -0.87%
United Kingdom 7,660 +0.09%
Name Value Chg %
Commodities (USD)
Gold 1,952.60 -0.04%
Iron Ore 122.16 -
Copper 3.753 -0.70%
WTI Oil 91.59 +0.12%
Currency
AUD/USD 0.6455 -0.01%
Cryptocurrency
Bitcoin (AUD) 42,069 +1.27%
Ethereum (AUD) 2,542 +0.05%
Miscellaneous
US 10 Yr T-bond 4.365 +1.07%
VIX 14 +0.79%

US Sectors

Wed 20 Sep 23, 8:32am (AEDT)

Sector Chg %
Health Care +0.10%
Communication Services +0.01%
Information Technology -0.08%
Materials -0.10%
Financials -0.11%
Consumer Staples -0.25%
Industrials -0.46%
Utilities -0.55%
Real Estate -0.56%
Consumer Discretionary -0.65%
Energy -0.83%

S&P 500 SESSION CHART

S&P 500 intraday chart
S&P 500 reclaims most of its intraday losses (Source: TradingView)

MARKETS

  • S&P 500 finished lower but well off session lows of -0.64%

  • Bond yields faced upward pressure from hotter-than-expected Canadian inflation

  • US 2-year yield hit a session high of 5.11% – A level not seen since June 2007

  • US 10-year yield advanced 5 bps to 4.36% – Highest since November 2008

  • Market’s path of least resistance continues to lean on bearish factors such as surging yields, higher oil prices, negative seasonality trends, US government shutdown risk and ongoing UAW auto strikes 

  • Fed widely expected to pause at tomorrow’s meeting but maintain hawkish higher-for-longer messaging 

  • S&P 500 marks 100 days without 1.5% drop, first time since 2018 (Bloomberg)

  • Hedge funds bets could spark turmoil in US Treasuries, BIS warns (FT)

  • Plenty of startups looking at IPOs, but few prepared to go (Bloomberg)

  • Saudi energy minister says oil cuts not about 'jacking up prices' (FT)

STOCKS

  • Ford faces possible worker strike on both sides of US-Canada border (FT)

  • Stellantis could close 18 US facilities under latest UAW deal (CNBC)

  • Amazon considers new subscription offerings in healthcare, grocery (Insider)

  • Instacart prices shares at $30 as IPO marks warms up (FT)

  • Disney plans to double spending on parks and cruises, shares fall (CNBC)

CENTRAL BANKS

  • Fed set to hold interest rates but leave tightening in play (FT)

  • Fed faces obstacles from UAW worker strike, possible government shutdown and resumption of student loan repayments (Reuters)

  • ECB to keep rates at 4% as long as needed, Villeroy says (Bloomberg)

  • RBA discussed raising rates again in September, opted to pause (Bloomberg)

ECONOMY

  • Canada inflation jumps, October rate hike bets rise (Reuters)

  • OECD raises 2023 global growth outlook but cuts 2024 (Reuters)

  • Eurozone August inflation revised slightly down(Reuters)

  • US national debt tops US$33 trillion for first time ever (NY Times)

  • US housing starts hit 3-year low, surge in permits point to strength (Reuters)

Industry ETFs

Wed 20 Sep 23, 8:32am (AEDT)

Description Last Chg %
Commodities
Steel 66.62 +0.20%
Silver 21.27 -0.14%
Copper Miners 37.52 -1.05%
Lithium & Battery Tech 56.95 -1.09%
Gold Miners 29.4 -1.18%
Uranium 26.35 -1.61%
Strategic Metals 69.55 -1.63%
Industrials
Agriculture 22.27 +0.41%
Global Jets 17.68 +0.06%
Construction 52.19 -0.17%
Aerospace & Defense 109.41 -0.57%
Healthcare
Biotechnology 125.71 +0.37%
Cannabis 7.46 -4.24%
Description Last Chg %
Cryptocurrency
Bitcoin 13.99 +1.60%
Renewables
Solar 54.6 +0.66%
CleanTech 11.56 +0.52%
Hydrogen 8.12 +0.12%
Technology
Electric Vehicles 24.39 -0.08%
Cloud Computing 19.32 -0.10%
Video Games/eSports 52.18 -0.44%
Cybersecurity 24.64 -0.44%
Robotics & AI 25.37 -0.55%
E-commerce 18.27 -0.84%
Semiconductor 478.76 -0.84%
FinTech 20.92 -1.13%
Sports Betting/Gaming 16.8 -1.35%

Canada's Inflation Surprise

Canada's inflation re-accelerated much more than expected in August.

  • Headline: 4.0%, up from 3.3% in July and above the 3.8% expected

  • Headline: 0.4% month-on-month, above the 0.3% expected

  • Core: 3.3%, up from 32.% in July

The likelihood of another 25 bp hike from the Bank of Canada jumped to 42%, up from a prior 23%. While the Canadian dollar rallied around 0.6% to 74.6 US cents, the highest since 10 August.

Canada inflation
Source: TradingEconomics

Global Worker Strikes

We're beginning to see a growing number of strikes and labour protests in industries all over the world. This reminds me of some of the comments from Jeremy Grantham, who spoke at Livewire Live last week.

"Inequality has increased in every developed country, certainly in the UK, Australia and Canada but massively in the US," he said.

He talked about how the key to a healthy society is moving income inequality in the right direction, via taxes, stronger unions and smaller pay cheques for the top 1.0%.

Some of the major protests in the past few weeks include:

  • Up to 20,000 people demonstrated for higher wages in Bern, Switzerland

  • Junior doctors and consultants in England

  • Chevron LNG workers in Australia

  • Inghams Group workers strike for 24-hours on 22 September

The one that's capturing all the headlines is the United Auto Workers strike against three Detroit based automakers. The union is demanding:

  • 40% increase in hourly pay over 4 years

  • Reduced 4-day, 32-hour workweeks

  • Faster path to top pay

  • Cost of living adjustments

  • 5 or more weeks of vacation, more paid holidays and extended parental leave

Bank of America says that the UAW strike and a potential US government shutdown could "subtract another tenth or two due to higher energy prices, and we are looking at a potential drag of more than 2.0 percentage points ... if several things go wrong, we could be looking at a negative fourth quarter GDP."

Key Events

ASX corporate actions occurring today:

  • Trading ex-div: Flight Centre (FLT) – $0.18, Hearts and Minds Investments (HM1) – $0.07, Kelly Partners (KPG) – $0.004, COG Financial Services (COG) – $0.047, Navigator Global (NGI) – $0.047

  • Dividends paid: Long list of companies paying out dividends today – See a full list here 

  • Listing: None

Economic calendar (AEST):

  • 9:50 am: Japan Balance of Trade

  • 4:00 pm: UK Inflation

  • 4:00 am: Fed Interest Rate Decision 

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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