Market Wraps

Morning Wrap: ASX set to fall, investors rotate back into tech, commodity prices plunge

Wed 06 Jul 22, 8:34am (AEDT)

ASX Futures (SPI 200) imply the ASX 200 will open 64 points lower, down -0.99%.

The blue-chip Dow slumped while the Nasdaq surged, commodity prices are crashing, the US dollar index hits a 20-year high and Metals Grove - a lithium and rare earth explorer - is set to debut at 1:00 pm AEST.

Let’s dive in.  

Overnight Summary

Wed 06 Jul 22, 8:34am (AEDT)

Name Value Chg %
Major Indices
S&P 500 3,831 +0.16%
Dow Jones 30,968 -0.42%
NASDAQ Comp 11,322 +1.75%
Russell 2000 1,741 +0.79%
Country Indices
Canada 18,834 -1.02%
China 3,404 -0.04%
Germany 12,401 -2.91%
Hong Kong 21,853 +0.10%
India 53,134 -0.19%
Japan 26,423 +1.03%
United Kingdom 7,025 -2.86%
Name Value Chg %
Commodities (USD)
Gold 1,765.30 +0.08%
Iron Ore 113.61 -
Copper 3.438 +0.67%
WTI Oil 100.58 +1.09%
AUD/USD 0.6803 +0.06%
Bitcoin (AUD) 29,900 +1.69%
Ethereum (AUD) 1,689 +0.92%
US 10 Yr T-bond 2.809 -2.77%
VIX 28 +0.04%


It was a very, very interesting overnight session with a lot to break down. We like to keep the Morning Wrap as crisp as possible, but what happened overnight deserves a little more write up.

We’re witnessing rotation back into Tech, as the Nasdaq reversed from session lows of almost -2% to close 1.75% higher. Year-to-date winners, notably energy and material sectors, were smashed as recession fears soar.

It was the 4th worst day for commodities in the last 16 years, according to Invesco. Oil was the most notable decliner, with Brent crude down almost -10% to US$103 a barrel. 

The US dollar index hit a 20-year high and trading near parity with the Euro - a level not seen since 2002. Recession fears are driving investors back into safe havens like the US dollar and bonds.

Free falling commodity prices is setting the stage for a potential peak in inflation, with bond yields and Fed fund futures on the decline. This supports a more dovish medium term outlook for central banks, which in turn helped buoy rate sensitive tech stocks.

  • 3 out of 11 US sectors advanced

  • Discretionary and Tech outperformed

  • Defensive sectors were all negative

  • Energy, Utilities and Materials underperformed benchmarks

  • 51% of US stocks advanced

  • 75% of US stocks trade above their 200-day moving average


  • Crocs (+12.2%) rallied after Loop Capital upgraded the stock to Buy from Hold. The broker note suggested that Crocs are not a pandemic-era fad

  • Tesla (+2.6%) produced 258,580 vehicles in the second quarter and recorded their highest vehicle production month in history. The figure was still short of expectations due to disruptions in Shanghai and Berlin

  • Ford (-1.1%) shares hit a fresh 52-week low after reporting 1.8% growth in new vehicles sales for the second quarter, which missed analyst expectations

  • Stellantis (-5.6%) shares slumped after a Union workers report flagged that production could take a hit of around 220,000 vehicles due to the global chip shortage

  • Marathon Oil, Conocophillips and Halliburton (down 6-8%) shares tumbled after oil prices rolled over


  • The Reserve Bank raised interest rates by 50 bps to 1.35%

    • “The Board expects to take further steps in the process of normalising monetary conditions in Australia over the months ahead,” said Governor Philip Lowe

    • “Inflation is forecast to peak later this year and then decline back towards the 2-3 per cent range next year.”

  • US factory orders jumped 1.6% month-on-month in May

    • Beat economist expectations of a 0.6% increase


  • Iron ore futures were under pressure after a new wave of covid cases reported in China over the weekend and the rollout of mass testing

  • Oil prices fell around -10% to a 2-month low as recession risks soar

  • Gold hit a 9-month low amid a soaring US dollar


US Sectors

Wed 06 Jul 22, 8:34am (AEDT)

Sector Chg %
Communication Services +2.66%
Consumer Discretionary +2.28%
Information Technology +1.24%
Financials -0.47%
Real Estate -0.49%
Consumer Staples -0.57%
Health Care -0.59%
Industrials -1.53%
Materials -2.00%
Utilities -3.43%
Energy -4.01%

Industry ETFs

Wed 06 Jul 22, 8:34am (AEDT)

Description Last Chg %
Nickel 29.2621 +3.27%
Lithium & Battery Tech 71.75 +0.43%
Gold 168.32 -2.12%
Silver 18.31 -3.17%
Steel 49.19 -3.35%
Strategic Metals 86.8 -4.00%
Uranium 19.02 -4.26%
Copper Miners 29.79 -5.20%
Aluminum 52.4494 -5.77%
Global Jets 16.83 +0.24%
Aerospace & Defense 100.25 -3.09%
Biotechnology 120.17 +2.20%
Cannabis 15.96 +1.94%
Description Last Chg %
Bitcoin 11.96 +5.60%
Solar 72 -0.53%
Hydrogen 12.1667 -0.71%
CleanTech 13.55 -0.81%
Cloud Computing 16.89 +3.79%
E-commerce 17.19 +2.44%
Cybersecurity 25.57 +2.31%
FinTech 21.69 +2.21%
Video Games/eSports 47.96 +1.77%
Semiconductor 337.24 +0.79%
Robotics & AI 20.57 +0.68%
Sports Betting/Gaming 14.68 -0.20%
Electric Vehicles 21.39 -0.23%

ASX Morning Brief

Lots to break down, keeping things very short here today.

#1 Tech

Year-to-date losers took charge overnight, with notable gainers including:

  • Affirm +15.4%

  • Etsy +10.6%

  • Draftkings +10.2%

  • Zoom +8.5%

  • Meta +5.1%

The S&P/ASX 200 Info Tech Index rose 1.67% on Tuesday. Household names like Xero (ASX: XRO) and WiseTech (ASX: WTC) rallied 2.3% and 5.2% respectively. So in some ways, the US market was playing catch up.

It will be interesting to see how the real beaten up names perform, such as PointsBet (ASX: PBH) and Kogan (ASX: KGN).

#2 Biotech

The Biotech ETF is breaking out to a 10-week high. It's still in a massive downtrend, but managed to stabilise in recent months (unlike the broader market).

2022-07-06 08 12 03-Window
iShares Biotechnology ETF (Source: TradingView, Annotations by Market Index)

We've seen a lot of local names push near-term highs, notably:

#3 Energy

Local oil and gas stocks could be in for a rough session after Brent crude prices dipped as much as -10% overnight.

Oil sentiment was further dampened by another lockdown in the ancient Chinese city of Xi'an, home to approximately 13m.

2022-07-06 08 16 21-Window
Brent crude oil (Source: TradingView)

#4 Copper

The economic bellwether continues to scream a recession, down another -5.2% to US$3.4/lb.

Copper is down -25% from its June high of US$4.55/lb.

#5 Uranium

The Uranium ETF dipped -4.3% overnight, threatening to make fresh 10-month lows.

Surprisingly, uranium spot prices were relatively stable at US$50,3/lb according to fuel brokers Numerco.

2022-07-06 08 22 05-Window
Global X Uranium ETF (Source: TradingView, Annotations by Market Index)

The weak session could see some negative flows for local uranium miners and explorers.

#6 Iron Ore

The US-listed counterparts of BHP (ASX: BHP) and Rio Tinto (ASX: RIO) fell -2.2% and -4.3% respectively.

New Chinese lockdowns, the hysteria around commodity prices and weaker US counterparts could see more weakness follow through for local iron ore names.

Key Events

ASX corporate actions occurring today:

  • Ex-dividend: CDD, GNC, TGA

  • Dividends paid: FPH

  • Listing: MGA


Other things of interest (AEST): 

  • Eurozone Retail Sales (May) at 7:00 pm

  • US Fed Minutes at 4:00 am 

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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