Market Wraps

Morning Wrap: ASX 200 to rise, S&P 500 powers ahead + Charts of the Week

Fri 14 Jul 23, 8:36am (AEST)

ASX 200 futures are trading 39 points higher, up 0.54% as of 8:30 am AEST.

The S&P 500 and Nasdaq continue to push higher, copper prices are almost back at US$4.0/lb, Goldman Sachs strategists see us markets hitting record highs by year-end, Pepsi and Delta Airlines post better-than-expected second quarter earnings and Charts of the Week!

Let's dive in.

Overnight Summary

Fri 14 Jul 23, 8:36am (AEST)

Name Value Chg %
Major Indices
S&P 500 4,510 +0.85%
Dow Jones 34,395 +0.14%
NASDAQ Comp 14,139 +1.58%
Russell 2000 1,951 +0.91%
Country Indices
Canada 20,278 +1.03%
China 3,236 +1.26%
Germany 16,141 +0.74%
Hong Kong 19,351 +2.60%
India 65,559 +0.25%
Japan 32,419 +1.49%
United Kingdom 7,440 +0.33%
Name Value Chg %
Commodities (USD)
Gold 1,965.00 +0.06%
Iron Ore 110.95 -
Copper 3.952 +0.29%
WTI Oil 77.15 +0.34%
Currency
AUD/USD 0.6888 +0.04%
Cryptocurrency
Bitcoin (AUD) 45,437 +3.12%
Ethereum (AUD) 2,881 +6.09%
Miscellaneous
US 10 Yr T-bond 3.761 -2.59%
VIX 14 +0.52%

US Sectors

Fri 14 Jul 23, 8:36am (AEST)

Sector Chg %
Communication Services +2.32%
Information Technology +1.50%
Consumer Discretionary +1.08%
Materials +0.79%
Real Estate +0.67%
Consumer Staples +0.44%
Utilities +0.38%
Financials +0.37%
Industrials +0.15%
Health Care -0.01%
Energy -0.45%

S&P 500 SESSION CHART

S&P 500 intraday
S&P 500 gaps up and finishes near best levels (Source: TradingView)

MARKETS

  • S&P 500 finishes higher and near best levels, now up 2.5% in last four sessions

  • Disinflation and soft-landing expectations gaining momentum – Monthly core inflation is back below 2% on an annualised basis, two-year yields down more than 40 bps from recent highs and US dollar marking its biggest four-day decline since Nov 2022

  • Copper rallies 2.2% overnight – Trading at its highest level since 25 April  

  • US Dollar Index extends its losing streak to six, trading at 16-month low

  • Goldman Sachs strategists see S&P 500 hitting record high by year-end (Bloomberg)

  • US inflation falls to lowest in more than two years, lowering probability of another Fed rate hike beyond July (FT)

  • US junk bond market down almost US$200bn from all-time high in late 2021 (FT)

  • China tech stocks extend rally as government ends multi-year crackdown (Bloomberg)

STOCKS

  • Tesla in talks about building 500,000 EV/pa factory in India (Times of India)

  • Meta to release commercial version of AI model (FT)

  • Amazon Prime sales up 6% vs. last year but still short of estimates (Bloomberg)

  • Swiss watch demand rebounds, remains strong (Bloomberg)

  • Alphabet expands AI chatbot internationally (Reuters)

EARNINGS

The ‘Earnings’ segment is back – Highlighting major US earnings for the day.

Pepsi (+2.4%) – Earnings and revenue beat, raised full-year guidance after price hikes and steady demand. This marks the 21st straight quarter of Pepsi beating consensus.

  • Pepsi flexes its pricing power as its two major categories – Convenient foods and beverages – posted volume decline of 3% and 1% respectively. But revenue rose 13%

  • "We're seeing very positive consumer behaviour, especially when it refers to our categories and that's why we raised guidance on our top line and because of the first factor, we raised guidance on the bottom line as well." – CEO Ramon Laguarta

Delta Airlines (-0.5%) – Earnings and revenue beat, expects record third quarter revenue and raised full-year profit outlook. Worth noting the stock rallied 3.75% in early trade.

  • "All these comparisons in terms of corporate travel, unfortunately, are still all made to 2019 and we lose sight of the fact that our economy is 20% larger than in 2019 … Actually there is a lot of room to improve for corporate America on travel.” – CEO Ed Bastian

ECONOMY

  • US producer prices barely rise in June, core PPI subsides (Reuters)

  • China exports and imports shrink at a quicker-than-expected pace (Reuters)

  • UK GDP contraction smaller than forecast in May (FT)

  • Eurozone industrial production posts slight miss, weighing further on GDP (Eurostat)

  • German economic institute shows deteriorating confidence (Reuters)

  • New Zealand house prices slump is over, economists say (Bloomberg)

  • IEA cuts 2023 oil demand growth estimate by 220,000 barrels per day due to challenging economic environment (IEA)

Industry ETFs

Fri 14 Jul 23, 8:36am (AEST)

Description Last Chg %
Commodities
Uranium 22.4 +2.85%
Silver 22.78 +2.84%
Copper Miners 40.57 +2.68%
Strategic Metals 88.36 +1.67%
Steel 67.3 +1.32%
Lithium & Battery Tech 68.84 +1.15%
Gold 182.01 +0.07%
Industrials
Aerospace & Defense 117.56 +0.12%
Global Jets 21.79 -0.95%
Healthcare
Cannabis 7.05 +2.47%
Biotechnology 128.3 +0.27%
Description Last Chg %
Cryptocurrency
Bitcoin 17.04 +5.12%
Renewables
Hydrogen 9.98 +4.45%
CleanTech 15.35 +1.45%
Solar 72.12 +1.12%
Technology
FinTech 24.05 +3.44%
Cloud Computing 20.95 +2.85%
E-commerce 19.91 +2.84%
Cybersecurity 24.32 +2.53%
Video Games/eSports 58.62 +2.34%
Robotics & AI 29.87 +2.12%
Semiconductor 524.69 +2.07%
Sports Betting/Gaming 18.835 +1.81%
Electric Vehicles 27.33 +1.41%

CHARTS OF THE WEEK

No Chris this morning but I'll be looking after Charts this week. As always, this presents technical and fundamental commentary on some of the more interesting charts in the market and for illustrative and educational purposes only.

ASX 200: There's not a whole lot going on the the ASX 200. It's taking the scenic route as the US goes on a massive run. The Index remains rangebound between 7,000 and 7,300. Let's see how it behaves as it approaches the key 7,300 level.

XJO
ASX 200 daily chart (Source: TradingView)

Interesting stocks: The problem with looking at charts right now is that a lot of trending sectors have already moved out. At a glance, I'm talking about:

  • Copper: Copper prices are trading at an almost US$4 handle. A name like Hot Chili (ASX: HCH) has pushed out very strongly

  • Construction: Lots of building names like CSR (ASX: CSR) and Boral (ASX: BLD) moved out in recent weeks

  • Gold: The momentum behind the disinflation narrative and tumbling US dollar is setting gold up for another crack at US$2,000. The entry into gold has been rather difficult as several names dipped lower in early June before making a V-shaped rebound

As for charts that aren't too extended (aka V-shaped):

MMA Offshore (ASX: MRM): MMA Offshore reflects a fundamental turnaround play as well as a strong trending stock that's been moving up in a staircase like fashion since late 2021. It's starting to poke its head out of a 5-month long base.

MRM 2023-07-14 08-19-43
MMA Offshore chart (Source: TradingView)

Patriot Battery Metals (ASX: PMT): Patriot was hit by a short report last Friday, which triggered a 7.4% selloff on high volume. An event like this trends to create a bit more chop for trending names. Patriot typically experiences a bit of selling as it approaches the key $2.00 level. So let's see if the chart can take shape and have another crack at breaking out. Other lithium peers such as Winsome Resources (ASX: WR1) and Pilbara Minerals (ASX: PLS) also share similar characteristics, trying to break out of key trendlines or price points.

PMT chart
Patriot Battery Metals chart (Source: TradingView)

Woodside (ASX: WDS): Woodside's weekly chart is starting to get interesting. It's been mostly rangebound since November 2022 but the recent US inflation print, weakening US dollar and positive OPEC outlook is starting to bring some life back into oil prices. Does this set Woodside up for a break above the $36 region?

Woodside price chart
Woodside weekly price chart (Source: TradingView)

Key Events

ASX corporate actions occurring today:

  • Trading ex-div: None 

  • Dividends paid: PT Aneka Tambang (ATM) – $0.03 

  • Listing: None

Economic calendar (AEST):

No major economic announcements.

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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