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Morning Wrap: ASX futures flat, S&P 500 rocked by fake Pentagon explosion + UBS' best stock ideas

Tue 23 May 23, 8:27am (AEST)

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ASX 200 futures are trading 5 points higher, up 0.06% as of 8:20 am AEDT.

The S&P 500 briefly sheds US$500bn in market cap after an AI-generated image of an explosion at the Pentagon goes viral, China bans major chip maker Micron from key infrastructure projects after it failed a security review, Biden and McCarthy set to talk with debt ceiling deadline just 10 days away, Ford announces a flurry of lithium deals overnight, the Global X Uranium ETF rallies 2.9% overnight and UBS reveals its best ASX stock ideas list.

Let's dive in.

Edit: There are some bugs with our overnight tables and the data is not showing correctly.


S&P 500 intraday
S&P 500 eases from session highs to close flat (Source: TradingView)


  • S&P 500 breakeven in fairly uneventful trading, closed off session highs of 0.4%

  • S&P 500 slumps 30 points in early trade as fake AI photo of Pentagon blast goes viral and spooks markets (Bloomberg)

  • FOMO driving bearish managers into stocks at fastest pace since October (Bloomberg)

  • Minneapolis Fed’s Kashkari says he’s open to the idea that the Fed can move more slowly here, suggesting openness to a June pause (Bloomberg)

  • Wall Street preparing for the fallout from a potential US default (Reuters)

  • JPMorgan analysts expect US$750bn in net T-bill issuance in four months after debt ceiling deal (Reuters)

  • Morgan Stanley's Wilson warns recent rally not the start of a new bull market (Bloomberg)

  • Fed survey shows deterioration of consumer financial health from higher inflation (FT)


  • Micron under pressure after Cyberspace Administration of China said company’s products failed network security review, classifies products as “major security risk” and bars operators of critical information from buying MU products (Bloomberg)

  • Meta hit with a $1.3bn EU fine on data transfers (CNBC)

  • Nvidia chips away at Intel, AMD turf in supercomputers (Reuters)

  • JP Morgan raises NII guidance on First Republic acquisition (Bloomberg)

  • PacWest Bancorp rallies after selling US$2.6bn worth of construction loans (CNBC)


  • Biden and McCarthy set to talk on averting US default (Bloomberg)

  • Japan core machinery orders fall for second consecutive month (Reuters)

  • South Korea exports fall in first 20 days of May (Reuters)

Deeper Dive

Inflation Reduction Act: Flurry of Ford Deals

Ford announced a flurry of battery raw material deals overnight,, including:

  • A five-year lithium hydroxide supply deal with Albemarle. This seeks to produce hydroxide in the US or originate from a country with a US Free Trade Agreement

  • Battery-grade lithium carbonate and hydroxide deal with SQM, no specific numbers just yet

  • An 11-year deal for up to 13,000 tonnes per annum of lithium hydroxide with Canada's Nemaska Lithium

  • Lithium products deal with EnergySource Minerals and Compass Minerals, developers that expect to begin producing in 2025

Ford on batteries and the supply chain:

  • “The mining part is not the constraint. It’s really the processing,” Ford Chief Executive Officer Jim Farley said in a Bloomberg Television interview

  • 240GWh of upcoming battery cell capacity is underway from 5 gigafactories ...

    “ramping these facilities will define our EV launch curve … massive, massive facilities … with really deep raw material value chains."

  • “Our [lithium] plan is significant derisked with these agreements [Albemarle, SQM, Livent / Nemaska], versus relying on investments with junior producers or smaller entrants who are still in permitting, extraction or processing development."

Sectors to Watch

Indices continue to move sideways but capital continues to flow into megacap US tech stocks.

  • Tech: The Nasdaq rose 0.5% overnight and our tech-specific ETFs like Cloud and Fintech rallied more than 2%.

  • Uranium: The Global X Uranium ETF is rallying again after a volatile pullback. The price action has been relatively similar for local names like Paladin Energy (ASX: PDN) and Boss Energy (ASX: BOE), with a big rally in early May followed by a sharp pullback. The ETF rallied 2.9% overnight, which could see some positive flows in today's session.

Uranium ETF
Global X Uranium ETF (Source: TradingView)

UBS' Best Stock Ideas

Every so often, the UBS sell-side team work on their best ASX stock ideas list. It's a collection of 30 buy and sell ideas (termed most preferred and least preferred) that reflect their convictions and top-down research. This month, there are four new additions and two subtractions.

  • International travel spending intentions have actually accelerated over the last quarter, on surging optimism from high-income earners. Webjet (ASX: WEB) is added to the most preferred list, joining travel sector companion Qantas (ASX: QAN)

  • .In the resources space, AGL (ASX: AGL) joins the most preferred list. Analysts think the company has an under-appreciated earnings growth profile. Santos (ASX: STO) exits the list as does Amcor (ASX: AMC) on valuation grounds

  • On the least preferred list, margin risks are a problem for such names as Boral (ASX: BLD) and Bank of Queensland (ASX: BOQ). Both are now on the least preferred list while Pinnacle Investment Management (ASX: PNI) is taken off it.

Attention: Income Investors

Speaking of AGL, UBS thinks it and four other names (APA Group, QBE, Suncorp, and Transurban) are the five best options for investors who want to generate more income and yield in portfolios. This leads me to a chart that I saw which I think is worth your time. While chasing growth is never a bad thing, you should never discount the power of a dividend grower - as this chart shows (note: This is a US chart, this will obviously be different in Australia.)

Source: Wide Moat Research

Key Events

ASX corporate actions occurring today:

  • Trading ex-div: Amcor (AMC) – $0.184, Elders (ELD) – $0.23

  • Dividends paid: None

  • Listing: None

Economic calendar (AEST):

  • 9:00 am: Australia Manufacturing PMI 

  • 9:00 am: Australia Services PMI 

Written By

Hans Lee

Content Editor

Hans is a Content Editor at Livewire Markets and Market Index. He created Signal or Noise and helps write the LW-MI Morning Wrap on Tuesdays and Thursdays.

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