Market Wraps

Morning Wrap: ASX 200 to fall, Wall St higher as earnings season ramps up + RBA minutes in focus

Tue 18 Jul 23, 8:26am (AEST)

ASX 200 futures are trading 20 points lower, down -0.28% as of 8:20 am AEST.

The S&P 500 closes at another fresh 16-month high, short covering viewed as a major catalyst behind recent market strength, Goldman Sachs cut its US recession odds again from 25% to 20%, China's Q2 GDP comes in softer-than-expected and fuels calls for more stimulus, plus three big picture charts.

Let's dive in.

Overnight Summary

Tue 18 Jul 23, 8:26am (AEST)

Name Value Chg %
Major Indices
S&P 500 4,523 +0.39%
Dow Jones 34,585 +0.22%
NASDAQ Comp 14,245 +0.93%
Russell 2000 1,951 +1.05%
Country Indices
Canada 20,227 -0.17%
China 3,210 -0.87%
Germany 16,069 -0.23%
Hong Kong 19,414 0.00%
India 66,590 +0.80%
Japan 32,391 -0.09%
United Kingdom 7,406 -0.38%
Name Value Chg %
Commodities (USD)
Gold 1,958.50 +0.11%
Iron Ore 111.81 -
Copper 3.841 -0.09%
WTI Oil 74.12 -0.04%
AUD/USD 0.6817 -0.01%
Bitcoin (AUD) 44,294 -0.53%
Ethereum (AUD) 2,810 -1.03%
US 10 Yr T-bond 3.797 -0.58%
VIX 13 +1.05%

US Sectors

Tue 18 Jul 23, 8:26am (AEST)

Sector Chg %
Information Technology +1.33%
Financials +1.00%
Industrials +0.42%
Consumer Discretionary +0.32%
Materials +0.08%
Energy -0.12%
Consumer Staples -0.30%
Health Care -0.43%
Communication Services -0.65%
Real Estate -0.83%
Utilities -1.18%


S&P 500 intraday
S&P 500 grinds higher to another fresh 16-month high (Source: TradingView)


  • S&P 500 higher, finished near best levels after a modest pullback on Friday

  • Relatively quiet session – Main headlines include the better-than-expected US Empire manufacturing Index and softer-than-expected China Q2 GDP

  • Disinflation momentum, rising soft-landing expectations and peak Fed still the major bullish focus points for markets

  • US earnings activity will pick up later this week – Approximately 12% of the S&P 500’s market cap will report this week

  • US Dollar Index down ~2% last week, which marks its biggest pullback since last November and broke the psychologically important 100 level 

  • Commodities pull back, most down for a second straight session including WTI crude, copper, gold and aluminium

  • Hedge fund rush to unwind bearish stock positions (Reuters)

  • Goldman Sachs says last week’s short covering in US Macro Projects was the largest since November 2020 and ranked in the 100th percentile vs. the past five years 

  • Trough in earnings revisions viewed as a positive for signal for stocks (Bloomberg)


  • Richemont shares slum on signs of falling luxury demand in US, China (Bloomberg)

  • Netflix eyes video games for its next growth chapter (Business Insider)

  • Ford shares tumbled after the company said prices on its electric F-150 Lightning pickups would fall as much as $10,000 (CNBC)

  • Tesla built its first Cybertruck over the weekend following multiple delays (CNBC)

  • Lilly slows Alzheimer's by 60% for mildly impaired patients (Reuters)


There’s a major focus on the upcoming batch of megacap tech earnings – aka the ‘Magnificent Seven’ – Apple, Microsoft, Alphabet, Amazon, Nvidia, Tesla and Meta Platforms 

  • These stocks drove 73% of S&P 500 gains in the first half

  • The Group is expected to represent all US corporate earnings, with a 21% year-on-year increase vs. the 10% year-on-year loss for the rest of the S&P 500

  • The Group is expected to grow earnings by an average of 19% over the next 12 months vs. the 8% increase expected for the rest of the S&P 500


  • China's economic growth faltering, fueling calls for more stimulus (FT)

  • PBoC cuts back on one-year cash injection despite weak growth (Bloomberg)

  • Goldman Sachs cut US recession odds again to 20% from 25% (Markets Insider)

  • Inflation gap between US and UK set to hit highest level in decades (FT)

  • UK economy seen falling behind further vs. the Eurozone next year (Bloomberg)

  • UK inflation expected to drop but heat still on Bank of England (Guardian)

  • Australia expects unemployment rate to rise (Reuters)

Industry ETFs

Tue 18 Jul 23, 8:26am (AEST)

Description Last Chg %
Uranium 21.88 +0.78%
Steel 66.978 +0.25%
Gold Miners 31.97 +0.03%
Silver 22.79 -0.31%
Lithium & Battery Tech 67.43 -0.75%
Strategic Metals 86.05 -0.76%
Copper Miners 39.39 -1.18%
Aerospace & Defense 116.8 +0.52%
Global Jets 21.41 +0.14%
Construction 56.06 +0.05%
Agriculture 21.44 -0.69%
Biotechnology 129.24 +0.78%
Cannabis 6.24 -5.02%
Description Last Chg %
Bitcoin 15.97 -0.99%
Solar 73.55 +4.00%
Hydrogen 10.15 +3.36%
CleanTech 15.35 +2.54%
Semiconductor 530.53 +2.39%
FinTech 24.24 +1.76%
Cybersecurity 24.31 +1.38%
Video Games/eSports 58.72 +1.31%
Robotics & AI 29.78 +1.26%
Cloud Computing 20.96 +1.21%
E-commerce 19.71 +0.92%
Electric Vehicles 27.17 +0.82%
Sports Betting/Gaming 18.5257 +0.10%

Deeper Dive

Hans' Charts of the Week

I'm going to mix things up today and do my own version of Charts of the Week. Note that I'm the macro guy on the team and I don't do stock picks. But I do know a thing or two about the influence the big picture can have on corporate earnings. Today's collection of charts all come from the fine people at Societe Generale (aka SocGen).

First up, a chart I am sure you are all familiar with - the S&P 500 with then without the AI basket. But this one comes with a twist. The S&P 500 chart below is the gains over the past few months measured up against EPS forecast changes. It seems to suggest that momentum is playing a much larger role in these markets than normal. Further to that, it confirms the old theory that prices lead fundamentals (by how much and to what extent it can remain this way is very much up for debate.)

Source: Datastream

My second chart is all about dispersion (the range of possible returns for an investment). The immense outperformance of certain sectors compared to certain stocks suggests the world we live in is still very macro-driven. And if you believe the CFRA and BCA Research arguments of late, this will likely continue as fund managers who missed the boat try to make up for lost time and gains.

Source: Datastream

And finally, speaking of earnings and EPS forecasts, we are coming up to August reporting season here in Australia. But in the US, quarterly reports are already under way and in Europe, stocks recently recorded their worst weekly effort since March. But in a good sign for those who focus more on fundamentals than data, earnings downgrades appear to have stalled on both sides of the Atlantic. That or we've officially hit peak pessimism among analysts.

Source: Datastream

RBA Minutes - What to watch for

Just a quick final note on the RBA meeting minutes which are out at 11:30am AEST. With the new Governor announced as Michele Bullock, all eyes are on whether there will be any more clues as to whether July's pause will last or if another backflip will be necessary to keep inflation under control.

Last week, ANZ changed its terminal rate call to an extended pause at 4.1%. This implies that July's pause is going to stick - and chief economist Richard Yetsenga points out, that pause will likely not lead to rate cuts until next year at least.

"On balance we therefore expect an extended pause at the current cash rate of 4.1%. We (again) acknowledge the near-term uncertainty and do not entirely rule out a move in August. Looking into 2024 our base case remains an extended pause before easing toward the very end of the year driven by both a higher unemployment rate and confidence inflation is returning to the band," he said.

Key Events

ASX corporate actions occurring today:

  • Trading ex-div: Metcash (MTS) – $0.11 

  • Dividends paid: K2 Asset Management (KAM) – $0.01, US Masters Residential Property Fund (URF) – $0.01, Red Hill Minerals (RHI) – $0.10 

  • Listing: None

Economic calendar (AEST):

  • 11:30 am: RBA Minutes

  • 10:30 pm: Canada Inflation

  • 10:30 pm: US Retail Sales

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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