Market Wraps

Morning Wrap: ASX 200 to tumble, gold and copper prices slide + Russell 2000 turns negative

Tue 03 Oct 23, 8:32am (AEDT)

ASX 200 futures are trading 96 points lower, down -1.38% as of 8:20 am AEST.

The S&P 500 and Nasdaq finished in positive territory thanks to the outperformance of megacap tech stocks, the US 10-year yield briefly hits 4.70%, gold prices fall for a sixth straight session while oil prices pull back 2.3%, Goldman Sachs says its clients have been selling energy and loading up tech, the Russell 2000 hits negative year-to-date and brace for a painful session for miners and energy stocks.

Let's dive in.

Overnight Summary

Tue 03 Oct 23, 8:32am (AEDT)

Name Value Chg %
Major Indices
S&P 500 4,288 +0.01%
Dow Jones 33,433 -0.22%
NASDAQ Comp 13,308 +0.67%
Russell 2000 1,757 -1.58%
Country Indices
Canada 19,177 -1.86%
China 3,110 +0.10%
Germany 15,247 -0.91%
Hong Kong 17,810 +2.51%
India 65,828 +0.49%
Japan 31,760 -0.31%
United Kingdom 7,511 -1.28%
Name Value Chg %
Commodities (USD)
Gold 1,843.90 -1.19%
Iron Ore 119.74 -
Copper 3.647 -2.43%
WTI Oil 88.64 -2.37%
Currency
AUD/USD 0.6363 -1.05%
Cryptocurrency
Bitcoin (AUD) 43,739 +2.67%
Ethereum (AUD) 2,616 -0.59%
Miscellaneous
US 10 Yr T-bond 4.683 +2.41%
VIX 18 +0.51%

US Sectors

Tue 03 Oct 23, 8:32am (AEDT)

Sector Chg %
Communication Services +1.47%
Information Technology +1.33%
Consumer Discretionary +0.28%
Health Care -0.11%
Consumer Staples -0.64%
Financials -0.84%
Industrials -0.91%
Materials -1.31%
Real Estate -1.75%
Energy -1.91%
Utilities -4.72%

S&P 500 SESSION CHART

S&P 500 intraday chart
S&P 500 finished breakeven amid choppy trade (Source: TradingView)

MARKETS

  • S&P 500 closed breakeven from session highs of 0.29% and lows of -0.65%

  • Big tech pushed the benchmarks higher, S&P 500 equal-weight ETF down -1.1%

  • Utilities sector marked its worst day since April 2020, the S&P 500 Utilities sector is down 13% in since mid-August 

  • Market breadth remains very poor, despite the breakeven close, only 26% or 130 stocks managed to close higher

  • US 10-year yield up 10 bps, briefly touched 4.7% overnight after a ~50 bp rally last month

  • Gold tumbles for a sixth consecutive session, down a little over 5.0%

  • WTI crude settled 2.3% lower after an almost 9% rally last month 

  • Russell 2000 turns negative for the year, an indicator of broader weakness in the economy that's been masked by megacap tech stocks (CNBC)

  • US averts shutdown until 17 November, markets breath sigh of relief (Bloomberg)

  • Goldman Sachs sees earnings-led rally in big tech stocks (Bloomberg)

  • Trade in 'fear gauge' at high as investors hedge amid fragile markets (FT)

  • Wall Street bankers hope for dealmaking rebound after boom and bust (FT)

STOCKS

  • Birkenstock targets US$10bn valuation (Reuters)

  • Nvidia (+2.95%) after Goldman Sachs added the stock to its conviction list (CNBC)

  • Instacart (-9.2%) after the Wall Street bank that underwrote its IPO forecasted a weak second-half outlook with slower revenue growth (CNBC)

CENTRAL BANKS

  • Fed's Bowman urges multiple rate hikes to curb inflation (Bloomberg)

  • Powell says economy still working through the impact of the pandemic (Reuters)

  • BOJ to buy additional bonds to curb rise in sovereign yields (Bloomberg)

  • BoE warns banks not to underestimate impact of higher rates (London Times)

  • ECB deputy head warns the 'last mile' of disinflation the hardest (FT)

CHINA

  • China stock investors say worst yet to come in property crisis (Bloomberg)

  • China Caixin manufacturing PMI grows on stronger domestic demand (Bloomberg)

  • China tourism revenue more than doubled over holiday weekend (Bloomberg)

ECONOMY

  • Eurozone final September PMI stuck in steep downturn (Reuters)

  • UK final manufacturing PMI slows sharply in September (Reuters)

  • Australian home prices stay strong as RBA seen standing pat (Bloomberg)

  • Japan factory activity falls at fastest pace in seven months in September (Reuters)

  • South Korea exports drop in September, down for a 12th straight month (Yonhap)

  • UAW strikes have costs the US economy nearly $4bn so far (Fox Business)

Industry ETFs

Tue 03 Oct 23, 8:32am (AEDT)

Description Last Chg %
Commodities
Steel 64.54 -1.57%
Lithium & Battery Tech 54.17 -1.81%
Strategic Metals 64.32 -3.03%
Gold Miners 25.99 -3.42%
Copper Miners 35.13 -3.52%
Uranium 26.07 -3.59%
Silver 19.42 -4.52%
Industrials
Agriculture 21.58 +0.79%
Construction 49.97 -0.97%
Aerospace & Defense 104.78 -1.12%
Global Jets 16.79 -1.41%
Healthcare
Biotechnology 120.64 -1.35%
Cannabis 6.43 -3.31%
Description Last Chg %
Cryptocurrency
Bitcoin 14.27 +3.89%
Renewables
CleanTech 10.47 -4.30%
Solar 49.43 -4.56%
Hydrogen 7.01 -5.14%
Technology
Semiconductor 476.04 +0.50%
Robotics & AI 24.7 -0.08%
Cybersecurity 24.27 -0.08%
Cloud Computing 18.78 -0.27%
E-commerce 18.02 -0.39%
Video Games/eSports 51.31 -0.48%
FinTech 19.98 -0.79%
Electric Vehicles 23.26 -0.98%
Sports Betting/Gaming 15.5814 -1.79%

Insights from Goldman Sachs

A few interesting tidbits from the Goldman Sachs trading desks:

  • Nasdaq's healthy pullback: The Nasdaq 100 is nearly ~10% off recent highs, which "Bulls an arguably make claim to a more supportive backdrop into earnings ... the opportunity for positive resolutions to key overhangs (strikes, China, debt ceiling), healing seasonality and A.I. ‘monetization’ signposts."

  • Energy for tech: "Sell energy to buy tech ... Last week's notional long selling in US energy was the largest in more than 6 months and ranks in the 99th percentile vs. the past five years."

  • A return to tech: "After 6 consecutive weeks of net selling, Info Tech was the most notionally net bought US sector on our Prime book last week ... the largest in two months."

  • The market needs to bounce: "All eyes on S&P 500 200-day moving average of 4,195. If this level is tested and doesn't provide support, history suggests S&P 500 forward 1-month, 3-month, 6-month and 12-month returns are significantly below-average following a break in its 200 day."

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Source: Goldman Sachs

Russell 2000 Turns Negative

The Russell 2000 ETF briefly returned to negative year-to-date territory overnight. From a technical perspective, its holding onto dear life. Is a break down a cause for concern?

Nevertheless, it's a warning sign for growth and riskier assets.

Russell 2000
Russell 2000 daily chart (Source: TradingView)

Surprisingly, approximately a third of Russell 2000 companies still aren't profitable, which is the highest level in data that dates back to 1985.

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Source: Bank of America

Sectors to Watch: Resource Pains

ASX 200 futures are pointing to a drop of almost 1.5%, with the Resource sector likely to lead the market lower.

  • Quite a few of our overnight ETFs fell more than 3%, notably Uranium, Copper, Gold and Rare Earths

  • Energy was also the second worst performing S&P 500 sector, down almost 2%

  • Copper prices fell a sharp 2.6% overnight to US$3.64 and now testing a 4-month low

HG1! 2023-10-03 08-22-20
Copper daily chart (Source: TradingView)

Key Events

ASX corporate actions occurring today:

  • Trading ex-div: Wam Active (WAA) – $0.03, Sims (SGM) – $0.21, Wam Research (WAX) – $0.05, Wam Strategic Value (WAR) – $0.02, London City Equities (LCE) – $0.01, Imperial Pacific (IPC) – $0.06, Genusplus Group (GNP) – $0.02, Wam Microcap (WMI) – $0.05  

  • Dividends paid: Beach Energy (BPT) – $0.02, Insignia Financial (IFL) – $0.09, Fleetwood (FWD) – $0.02, Enero Group (EGG) – $0.045, Seek (SEK) – $0.23, NIB Holdings (NHF) – $0.15, Treasury Wine (TWE) – $0.17, Propel Funeral Partners (PFP) – $0.06, Supply Network (SNL) – $0.28, Universal Holdings (UNI) – $0.08, Australian Clinical Labs (ACL) – $0.07, Qualitas (QAL) – $0.05, IPD Group (IPG) – $0.047 

  • Listing: None 

Economic calendar (AEST):

  • 10:30 am: Australia Building Permits

  • 10:30 am: Australia Home Loans

  • 1:30 pm: RBA Interest Rate Decision

  • 12:00 am: US JOLTs Job Openings

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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