Market Wraps

Morning Wrap: ASX set to rise, China ramps up stimulus, BHP faces strike action at Escondida

Fri 25 Nov 22, 8:36am (AEST)

ASX Futures (SPI 200) imply the ASX 200 will open 13 points higher, up 0.17%.

US markets were closed for Thanksgiving, European stocks extended gains thanks to Fed downshift hopes, China's daily covid cases hit a record high, German business climate shows hope of a softer recession and the US dollar hits a three month low.

Let's dive in.

Overnight Summary

Fri 25 Nov 22, 8:36am (AEDT)

Name Value Chg %
Major Indices
S&P 500 4,027 +0.59%
Dow Jones 34,194 +0.28%
NASDAQ Comp 11,285 +0.99%
Russell 2000 1,864 +0.17%
Country Indices
Canada 20,344 +0.30%
China 3,089 -0.25%
Germany 14,540 +0.78%
Hong Kong 17,661 +0.78%
India 62,273 +1.24%
Japan 28,383 +0.95%
United Kingdom 7,467 +0.02%
Name Value Chg %
Commodities (USD)
Gold 1,737.60 -0.13%
Iron Ore 91.94 -
Copper 3.62 +0.14%
WTI Oil 79.99 -1.19%
AUD/USD 0.6766 +0.51%
Bitcoin (AUD) 24,469 -0.50%
Ethereum (AUD) 1,771 +1.65%
US 10 Yr T-bond 3.706 -1.38%
VIX 20 -4.09%


Wall Street was closed for Thanksgiving, so we turn to the next best alternative: European markets.

  • The pan-European STOXX 600 rallied for a third consecutive session, up 0.46% to a three month high

  • The FTSE 100 was flat, France's CAC rose 0.4% and Germany's DAX rallied 0.8%

  • The best performing sector was the chemicals sector

  • Asian markets rallied on Thursday following the Fed's dovish comments about smaller rate hikes


  • Workers at Chile's Escondida reject BHP proposal, threaten strike (Bloomberg)

  • China to ramp up monetary stimulus as growth outlook darkens (Bloomberg)

  • China to dispatch inspectors to ensure Beijing policies are 'fully implemented' (SCMP)


Germany’s business climate index rose to 86.3 in November from 84.5 in October. 

  • “Today's Ifo index adds to recent glimmers of hope that the German economy might avoid a winter recession. These hopes are built on the back of several government stimulus packages, filled national gas reserves, a better and faster adaption of businesses and households to reduce gas consumption.” - ING 

Turkey cut interest rates by 150 bps to 9.0%.

  • “Considering the increasing risks regarding global demand, the Committee evaluated that the current policy rate is adequate and decided to end the rate cut cycle that started in August.” - Central Bank of the Republic of Turkey

South Africa raised interest rates by 75 bps to 7.0%. 

  • “We will still see increases in the repo rate going forward, but these will likely be at a slower pace,” said Angelika Goliger, chief economist at EY Africa, Bloomberg reported 

  • “I am expecting a couple more smaller rate rises, of 50bps and 25bps, at the first two meetings of 2023, and then hoping we will be at the top of the rate hike cycle — although not expecting rates to come down anytime in 2023.”


Iron ore futures rose 0.3% to US$92.90 a tonne. 

  • ICBC, the largest bank in China, signed contracts with 12 property developers to provide intentional lines of credit worth up to 655bn yuan  (US$91bn) for property development, M&A and mortgages

  • China’s State Council plans to dispatch inspection teams before the end of November to “enhance the local-level implementation of economic stabilisation policies”, according to the South China Morning Post 

Oil stages a tiny bounce but still down around -2.7% for the week. 

  • “Brent crude fell heavily on Wednesday amid reports that the group could settle on a level around $65 which is roughly where they currently sell it at, and with a sizable profit. That would blunt the effectiveness of the cap and ensure we don’t see any shortages in supply.” - Oanda senior market analyst, Craig Erlam 

Gold extended gains, now on a three day winning streak, up 1.1%. 


  • China & Covid: China's daily covid cases hit an all-time high of 29.754. Cities that account for approximately 23% of domestic GDP is impacted by some degree of restrictions and/or lockdowns.

City lockdown tracker
Source: DisruptorStocks
  • S&P 500 vs. VIX: "The VIX is also back to support which has market previous rally peaks this year." - Lance Roberts, Chief Strategist at RIA Advisors

S&P 500 and VIX
Source: CappThesis
  • Looming recession: "Global recession is coming. Germany's new export orders in the global manufacturing PMIs bounced in November (blue), but new export orders elsewhere kept falling, with the UK now the weakest link (pink). The German bounce is just noise. The big picture points to global recession." - Robin Brooks, Chief Economist at the Institute of International Finance

new export order indices
Source: Robin Brooks

ASX Morning Brief

The ASX 200 is set for a fourth consecutive positive open, with SPI futures pointing towards a +0.17% open. We did see some selling come in on Thursday afternoon, as the market closed 0.14% higher, down from session highs of 0.45%.

There's a lot of mixed economic news floating around but at least for now, the good seems to outweigh the bad. Notably:

  • China: Image under 'Quick Bites' shows that the share of cities facing restrictions represent approximately 23% of China's GDP. Offsetting their downhill battle against covid is stimulus, with South China Morning Post saying "Beijing is doubling down on its efforts to boost infrastructure and equipment renovation, while also relaxing property financing, in an apparent bid to offset the mounting pressure caused by record-high coronavirus infections."

  • New Export orders: Image under 'Quick Bites' shows that new export orders are falling sharply, globally. There's a big difference between a bear market and a recessionary bear market. But elsewhere, the Atlanta Fed's GDPNow model is forecasting 4.3% real GDP growth for the US in the fourth quarter.

Sectors to watch

I feel a little blind without the US market and the US-listed ETF watchlist.

  • Commodities: Commodity markets were a little choppy but higher thanks to a weaker US dollar (now at a three month low), optimism surrounding slower US interest rate hikes and further support for China's property sector

  • Gold: Gold is trying to make up for lost time now that peak hawkishness is in the rearview mirror. Even though gold has yet to top last week's highs of US$1,785, gold stocks are powering ahead. Several large cap names have rallied 20-30% in the past few weeks, making them a little extended from a short-term perspective.

Key Events

Key events 

Stocks going ex-dividend over the next week:

  • Fri: None

  • Mon: None

  • Tue: 360 Capital Enhanced Income Fund (TCF), Infratil (IFT), Red Hill Iron (RHI), Graincorp (GNC), My Food Bag (MFB), Liberty Financial Group (LFG) 

  • Wed: Pengana International Equities (PIA), Aristocrat Leisure (ALL) 

  • Thu: Technology One (TNE), Pendal (PDL) 

ASX corporate actions occurring today:

  • Dividends paid: Maggie Beer (MBH), KMD Brands (KMD), HomeCo Daily Needs REIT (HDN), HealthCo Healthcare and Wellness REIT (HCW), 

  •  Listing: None

Other things of interest (AEDT):

  • 6:00 pm: Germany GFK consumer climate indicator 

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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