Market Wraps

Morning Wrap: ASX 200 to rise, robust US bank earnings + A contrarian signal for commodities

Wed 19 Jul 23, 8:40am (AEST)

ASX 200 futures are trading 39 points higher, up 0.53% as of 8:30 am AEST.

Major US benchmarks continued to climb higher thanks to better-than-expected bank earnings, Microsoft shares hit all-time highs after announcing a new artificial subscription service, Bank of America's fund manager survey shows sentiment remains bearish but soft landing expectations continue to grow, commercial flight numbers finally surpass pre-pandemic levels, fund managers are the most underweight on commodities since March 2020 (and why that's a contrarian signal).

Let's dive in.

Overnight Summary

Wed 19 Jul 23, 8:40am (AEST)

Name Value Chg %
Major Indices
S&P 500 4,555 +0.71%
Dow Jones 34,952 +1.06%
NASDAQ Comp 14,354 +0.76%
Russell 2000 1,976 +1.27%
Country Indices
Canada 20,377 +0.74%
China 3,198 -1.23%
Germany 16,125 +0.35%
Hong Kong 19,016 -2.05%
India 66,795 +1.11%
Japan 32,494 +0.32%
United Kingdom 7,454 +0.64%
Name Value Chg %
Commodities (USD)
Gold 1,982.60 +0.09%
Iron Ore 112.17 -
Copper 3.834 +0.12%
WTI Oil 75.81 +0.08%
AUD/USD 0.6814 +0.03%
Bitcoin (AUD) 43,750 -1.29%
Ethereum (AUD) 2,786 -0.91%
US 10 Yr T-bond 3.789 -0.79%
VIX 13 -1.34%

US Sectors

Wed 19 Jul 23, 8:40am (AEST)

Sector Chg %
Information Technology +1.26%
Financials +1.12%
Energy +0.98%
Materials +0.78%
Health Care +0.70%
Industrials +0.57%
Communication Services +0.38%
Consumer Discretionary +0.28%
Consumer Staples -0.13%
Utilities -0.78%
Real Estate -0.82%


S&P 500 intraday
S&P 500 climbs intraday and closes near best levels (Source: TradingView)


  • S&P 500 higher and finished near best levels

  • US markets buoyed by well-received earnings and continued tech tailwinds – via a Microsoft led rally

  • The path of least resistance continues to ride on disinflation momentum, rising soft landing expectations, peak Fed as well as better earnings/guidance

  • Gold continued to trend higher, oil rebounded from Tuesday’s decline but base metals remained relatively weak as policy support from China seemed to underwhelm 

  • BofA survey shows sentiment still bearish, with net 60% of investors expecting weaker global growth. Soft landing expectations continued to grow, up to 68%, while long big tech remains the most crowded trade (Bloomberg)

  • JPMorgan client survey reveals just 17% of clients said they are more likely to increase/decrease equity exposure over the coming weeks, down from 50% in early June and the lowest reading this year

  • Diversification rules stop some US asset managers buying more shares in high-flying tech stocks (FT)

  • Fed braces broader debate as it tees up rate hike (Reuters)

  • RBA saw stronger case to hold in July, reiterates some further tightening may be required (Bloomberg)


  • HP plans to shift more PC production out of China (Nikkei)

  • Microsoft shares surge as it announces further AI ambitions via Bing Chat Enterprise and Microsoft 365 Copilot pricing (Microsoft)

  • Pinterest shares hit levels not seen since early 2022 after Evercore ISI said improving advertising trends are creating an inflection point for the stock (CNBC)


Charles Schwab (+12.6%) – Double beat but quarterly revenue fell 9.0% year-on-year as customers reallocated their cash to higher rates. The bank guided to an FY23 revenue decline of 7-8% in-line with consensus expectations of a 7.4% fall. The rally today reflects the stock’s best earnings day reaction since April 2009.

Morgan Stanley (+6.5%) – Double beat but second quarter profits fell 18% year-on-year, reflecting a 36% decline in M&A activity. 

  • “Our Institutional business navigated the markets well through macro uncertainties. We finished the quarter in a strong capital position and raised our quarterly common dividend by 7.5 cents for a second year in a row.” – CEO James Gorman

  • Our “proprietary leading indicator framework points to an inflection in M&A activity in 2024 ... equity capital markets starting to show signs of life — M&A is typically next. Additionally, corporates are receiving increased clarity on the regulatory front …”

Bank of America (+4.4%) – Double beat, quarterly earnings rose 19% to US$7.4bn reflecting a 14% jump in net interest income.   

  • “Asset quality and the overall health of the U.S. consumer remained strong. Total loss rates remained below pre-pandemic levels. Our balance sheet remained strong with $190B of regulatory capital and a CET1 ratio nearly 120 bps above our current minimum requirements." – CFO Alastair Borthwick 

  • "As you look at it now, our customer spending pattern is now more consistent with the pre-pandemic lower-growth, lower-inflation environment.” – CFO Brian Moynihan 

Lockheed Martin (-3.0%) – Double beat and raised FY23 guidance. The aerospace and defence company has a book-to-bill ratio of 1.7 times – For every $1.00 in finished work it has $1.70 in new orders. 

  • “A record backlog of US$158bn and 8% sales growth year-on-year … Given the strength of our year-to-date results and ongoing demand … We are raising our full-year sales and EPS outlook.” – CEO James Taiclet


  • US retail sales miss expectations but rise for a third straight month in June (Reuters

  • US path to soft landing widens amid thoughts unemployment may not need to rise as much to reduce inflation (NY Times)

  • Goldman cuts US recession odds again from 25% to 20% (Reuters)

  • JP Morgan's Kolanovic sees increased chance of soft landing (Bloomberg)

  • China vows to launch policies supporting consumption soon (Reuters)

  • Wall Street lowers China growth outlook following disappointing Q2 GDP data (Reuters)

Industry ETFs

Wed 19 Jul 23, 8:40am (AEST)

Description Last Chg %
Gold Miners 32.63 +2.06%
Uranium 22.22 +1.55%
Steel 67.7497 +1.15%
Silver 22.99 +0.88%
Copper Miners 39.63 +0.61%
Lithium & Battery Tech 67.74 +0.46%
Strategic Metals 86.43 +0.44%
Global Jets 21.82 +1.92%
Agriculture 21.74 +1.40%
Construction 56.3701 +0.55%
Aerospace & Defense 116.28 -0.45%
Cannabis 6.29 +0.80%
Biotechnology 129.72 +0.37%
Description Last Chg %
Bitcoin 15.87 -0.63%
Hydrogen 10.39 +2.36%
CleanTech 15.49 +0.91%
Solar 72.89 -0.90%
Cybersecurity 24.63 +1.32%
Robotics & AI 30.13 +1.18%
Sports Betting/Gaming 18.73 +1.10%
Cloud Computing 21.16 +0.95%
Electric Vehicles 27.41 +0.88%
FinTech 24.44 +0.83%
Semiconductor 531.51 +0.18%
E-commerce 19.735 +0.13%
Video Games/eSports 58.73 +0.02%

Deeper Dive

A lot of short tidbits today.

Daily commercial flights rose above pre-covid levels around March this year and take-offs hit a little over 130,000 last week. The turnaround has largely been driven by the recovery of traffic in markets where airlines were able to stabilise operations more quickly.

Separately, Morgan Stanley rated Corporate Travel (ASX: CTD) as a stock it has conviction into earnings and outperformance into FY24 due to:

  • "If CTD delivers on FY24 guidance of A$265m EBITDA it implies c.10x EV/EBITDA and 16.5x FY24e P/E (c.40% discount to LT average). So meeting FY24 guidance is not priced in."

Source: Financial Times

Fund managers are now the most Underweight commodities since May 2020.

Source: Bank of America Global Fund Manager Survey

I plot the most Underweight periods on a Commodity-related ETF (in this case I used the Invesco DB Commodity Index). It seems like a pretty reliable contrarian indicator.

DBC 2023-07-19 08-15-38
Invesco DB Commodity Index (Source: TradingView)

Regional banks like Bendigo Bank (ASX: BEN) and Bank of Queensland (ASX: BOQ) have underperformed large cap peers by quite a margin, down 7.3% and 15% year-to-date respectively. But things are looking up for banks after the series of better-than-expected results from major US ones. We're also seeing the S&P Regional Banking ETF stage a bottom and rally to a 5-month high.

Banks comparison
S&P Regional Banking ETF (blue), Bank of Queensland (green) and Bendigo Bank (red)

Key Events

ASX corporate actions occurring today:

  • Trading ex-div: Embark Early Education (EVO) – $0.02

  • Dividends paid: None

  • Listing: None

Economic calendar (AEST):

  • 4:00 pm: UK Inflation

  • 10:30 pm: US Building Permits

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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