Market Wraps

Morning Wrap: ASX 200 to rise, S&P 500 marks 3rd straight week of gains

Mon 31 Jul 23, 8:42am (AEST)

ASX 200 futures are trading 19 points higher, up 0.25% as of 8:20 am AEST.

Major US benchmarks rallied despite the pullback on Thursday, the Bank of Japan adopts a more flexible stance on yield targets, S&P 500 quarterly EPS is so far down 7.3%, why the S&P 500's pullback on Thursday is bullish for markets and sectors to watch.

Let's dive in.


S&P 500 intraday
S&P 500 choppy but higher (Source: TradingView)


S&P 500 weekly chart
S&P 500 up 9 of the last 11 weeks (Source: TradingView)


  • S&P 500 +0.99%, Nasdaq +1.90%, Dow +0.50%, Russell 2000 +1.36%

  • S&P 500 higher, finished near best levels and capped off a 1.0% weekly gain, up for a third-straight week

  • Commodities generally firmer: Copper +1.3%, WTI crude +1.1% posting a fifth-straight weekly gain, Gold +0.7%

  • Bullish focus points for the week: Peak Fed with views that July was the last hike of the cycle, elevated macro surprise momentum with better-than-expected US Q2 GDP, dovish ECB, record money-market fund assets support, disinflation momentum, better-than-feared Q2 earnings, China stimulus hopes 

  • Bearish focus points for the week: Stretched positioning, overbought conditions with almost 70% of the S&P 500 trading one standard deviation above its 50-day moving average, negative operating leverage as price increases roll off, Bank of Japan policy tweak, high bar for tech earnings 

  • Cash parked at money market funds hit fresh all-time high of US$5.5 trillion after latest Fed rate hike (Bloomberg)

  • Rising stocks and falling yields result in looser financial conditions (FT)

  • Confidence in a soft landing has underpinned S&P rally but traders increasingly seek downside protection (Bloomberg)

  • US dollar weakens as Fed near peak, could boost earnings growth for US multinationals (Bloomberg)


  • BOJ to conduct yield curve control with greater flexibility – Maintained 10-year bond yield target of around 0% and a band of +/- 0.5% with some deviation (Reuters)

  • Fed and ECB pivot rhetoric favors more ambiguity as inflationary pressures wane (FT)

  • ECB leaves room for September pause as rates hit 23 year high (Reuters)

  • BoE set to raise rates to 5.25% as high inflation persists (Reuters)


  • Chip makers say semiconductor oversupply starting to ease but demand remains weak (Reuters)

  • Global automakers scramble to reset China strategies as sales slow (Reuters)


A few stats about current US Q2 earnings season:

  • Blended earnings growth rate for S&P 500 EPS currently sits at -7.3% vs. the -7.0% expected at the beginning of earnings season

  • Blended revenue growth rate is 0.1%

  • Of the 51% of S&P 500 companies that have reported earnings, 80% have beaten EPS expectations, above the 77% five-year average 

  • In addition, 64% have beat sales expectations, below the 69% five-year average 

The blended earnings growth rate for Q2 S&P 500 earnings per share currently sits at -7.3% vs. the -7.0% expected at the beginning of earnings season. 

Intel (+6.6%): Double beat, returned to profitability (EPS of $0.13 vs. -$0.03 expected), progressing towards $3bn in cost savings, strong third quarter guidance.

Procter & Gamble (+2.8%): Double beat, volumes in the June quarter fell 1% – marking the fifth consecutive quarter of declines, average prices rose 7%, FY24 sales outlook missed expectations.

Exxon Mobil (-1.2%): EPS miss but revenue beat, production and cash distribution targets unchanged, expects lower scheduled maintenance in the third quarter.

  • " we head into the back half of the year, I think as demand picks up, we're going to see limits that we have on additional supply, I think, come back into the mix and see the supply/demand tighten up a bit.” – CEO Darren Woods


  • US PCE rises 0.2% month-on-month in June, in-line with consensus and marks the lowest annualised figure since April 2021 (Reuters)

  • Germany exits winter recession, Q2 growth output stagnated (Bloomberg)

  • France's Q2 growth surges as inflation cools (Bloomberg)

  • Spain's Q2 growth slows and inflation unexpectedly rises (Bloomberg)

  • Tokyo core inflation hotter-than-expected, remains well above BOJ's target (Reuters)

  • Taiwan growth resumes in Q2 on strong domestic demand, exports still weak (Reuters)

  • Australian retail sales tumble, adds to case for RBA pause (Bloomberg)

  • China housing ministry reinforces calls for property support (Bloomberg)

  • China real estate stocks near bull market (Bloomberg)

  • High-frequency data show China's recovery continued to lose momentum in July (Bloomberg)

Deeper Dive

S&P 500 and Nasdaq: Stats and charts

A few interesting performance-related data points for major US benchmarks.

A bullish outlook: After 24 July:

  • More than 80% of S&P 500 stocks traded above their 50-day moving average for 10 days

  • More than 80% traded above their 20-day moving average

  • More than 70% traded above their 200-day moving average

According to MarketCharts, this has happened on 21 occasions since 1985. Following this occurrence, the S&P 500 performs:

  • 1 month: Average +2.3% gain (positive 90% of the time)

  • 3 month: Average 4.8% gain (positive 86% of the time)

  • 1 year: Average 14.9% gain (positive 95% of the time)

An interesting reversal: Last Thursday, the S&P 500 finished -0.64% lower after rallying 0.88% in early trade. This kind of reversal (especially after such a strong rally) tends to suggest a short-term top as investors take profits. As Friday came about, it was more of a 'haha gotcha' moment as major benchmarks continued to rally. The chart below suggests that such 'reversal' days (defined as S&P hitting a 52-week high then closed below the open which is below the prior day's low) tend to take place in bull markets.

Source: Bespoke Invest

Sectors to Watch

The US market went from 'this looks like a potential short-term top and pullback' to 'I guess it keeps rallying' in just two sessions. This kind of dynamic makes it pretty hard for traders as the Index continues to move in a V-shaped fashion with awkward pullbacks. A few sectors to watch this morning:

Tech: Tech sectors and ETFs continued to trend higher overnight including Global X Cloud (+2.3%), iShares Semiconductor (+2.2% and closed at highest level since Jan 2022) and Global X FinTech (+1.6%).

Lithium: Lithium has been all over the place amid volatile price-action in Chinese futures markets and unpredictable quarterly earnings (e.g. Core Lithium vs. Pilbara Minerals). The VanEck Rare Earth/Strategic Metals ETF bounced 2.08% overnight but remains below all key moving averages.

VanEck Rare Earth/Strategic Metals ETF (Source: TradingView)

Uranium: The Global X Uranium ETF settled +2.0% higher. It remains rangebound but let's see if this translates into positive flow for local names.

Copper: Copper is having a crack at the US$4.0 level (albeit in a rather volatile fashion). The strength behind spot prices helped boost the Global X Copper Miners ETF +1.56% overnight.

Copper price
Copper price chart (Source: TradingView)

Key Events

ASX corporate actions occurring today:

  • Trading ex-div: Metrics Master Income Trust (MXT) – $0.016, Metrics Income Opportunities Trust (MOT) – $0.016

  • Dividends paid: Rural Funds Group (RFF) – $0.029, Kelly Partners (KPG) – $0.004

  • Listing: None

Economic calendar (AEST):

  • 11:30 am: Australia Housing Credit

  • 11:30 am: China NBS Manufacturing PMI

  • 7:00 pm: Eurozone Q2 GDP

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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