Market Wraps

Morning Wrap: Iron ore miners set to drag the ASX 200 lower + FOMC minutes suggest more hikes to come

Thu 06 Jul 23, 8:30am (AEST)

ASX 200 futures are trading 37 points lower, down -0.52% as of 8:20 am AEST.

Major US benchmarks pulled back after a strong week of gains, China's services activity expands at the slowest pace in five months, US and China relations are getting ugly amid Chinese export curbs, the Fed minutes reiterate the same higher-for-long message and US-listed BHP falls 2.3% in overnight trade.

Let's dive in.

Overnight Summary

Thu 06 Jul 23, 8:30am (AEST)

Name Value Chg %
Major Indices
S&P 500 4,447 -0.20%
Dow Jones 34,289 -0.38%
NASDAQ Comp 13,792 -0.18%
Russell 2000 1,873 -1.26%
Country Indices
Canada 20,104 -0.50%
China 3,223 -0.69%
Germany 15,938 -0.63%
Hong Kong 19,110 -1.57%
India 65,446 -0.05%
Japan 33,339 -0.25%
United Kingdom 7,442 -1.03%
Name Value Chg %
Commodities (USD)
Gold 1,923.20 -0.20%
Iron Ore 111.84 -
Copper 3.744 -0.93%
WTI Oil 71.83 +0.06%
AUD/USD 0.6654 0.00%
Bitcoin (AUD) 45,813 -1.07%
Ethereum (AUD) 2,873 -1.55%
US 10 Yr T-bond 3.945 +2.26%
VIX 14 +3.50%

US Sectors

Thu 06 Jul 23, 8:30am (AEST)

Sector Chg %
Communication Services +1.21%
Utilities +1.10%
Real Estate +0.47%
Consumer Discretionary +0.08%
Health Care -0.05%
Consumer Staples -0.09%
Financials -0.33%
Energy -0.54%
Information Technology -0.56%
Industrials -0.60%
Materials -2.47%


S&P 500 intraday
S&P 500 snaps a three-day winning streak (Source: TradingView)  


  • S&P 500 finished lower in a relatively uneventful session

  • No major directional drivers in play

  • Markets focused on softer China services data and the continued escalation of tech tensions between the US and China

  • FOMC minutes was a largely non-event given the same higher-for-longer message

  • US 10-year yield jumps 8 bps to the highest level since 9 March

  • Fed minutes hint awkward pause-and-hike message (Bloomberg)

  • Economists raise peak rate forecasts as stubborn inflation stalks Fed (Bloomberg)

  • More volatility expected as US stocks move in different directions (Reuters)

  • Investors sour on Asian equities amid China slowdown (Bloomberg)


  • Meta loses as EU court backs antitrust regulators over privacy breach (CNBC)

  • Meta set to launch new Twitter-like app called Threads this week (CNBC)

  • General Motors said US sales increased 18.8% in the second quarter (CNBC)


  • US to restrict Chinese companies' access to cloud-computing services (Bloomberg)

  • Trade officials assess fallout from China's gallium and germanium export control (FT)

  • China’s curb on metals stokes fears that rare earth controls may follow (FT)

  • China's Xi urges open supply chains after curb on key metal exports (Bloomberg)

  • China’s chip-making export curbs ‘just a start’ says Beijing adviser (Reuters)

  • Yellen's first trip to China to focus on repairing ties between the two nations (Reuters)


  • Chinese services activity expands at slowest pace in five months (Bloomberg)

  • Japan services activity maintains firm pace of growth (Reuters)

  • Eurozone business activity slips into contractionary territory in broad-based downturn across the region (Reuters)

  • Eurozone producer prices drop for fifth month – Lowest level in 2 years (Reuters)

  • China's largest banks lower rates for USD deposits to shore up yuan (Bloomberg)

  • New Zealand house prices fall by most in eight months (Bloomberg)

Industry ETFs

Thu 06 Jul 23, 8:30am (AEST)

Description Last Chg %
Silver 21.21 +0.95%
Strategic Metals 85.28 +0.82%
Lithium & Battery Tech 66.72 -0.19%
Gold 177.84 -0.35%
Uranium 21.38 -1.02%
Copper Miners 37.69 -1.36%
Steel 63.36 -2.26%
Global Jets 21.72 +0.32%
Aerospace & Defense 116.73 -0.16%
Biotechnology 127.03 +0.17%
Cannabis 6.6 -3.51%
Description Last Chg %
Bitcoin 16.33 -2.39%
Hydrogen 9.13 -1.40%
Solar 69.79 -2.28%
CleanTech 14.51 -2.42%
FinTech 22.32 -0.31%
Cloud Computing 19.75 -0.35%
Electric Vehicles 26.16 -0.61%
E-commerce 18.585 -0.62%
Cybersecurity 23.99 -0.62%
Robotics & AI 28.53 -1.18%
Video Games/eSports 55.22 -1.62%
Sports Betting/Gaming 17.2 -1.72%
Semiconductor 500.46 -2.21%

Deeper Dive

FOMC Minutes: More to Come

The FOMC Minutes was a rather nonevent for markets but its worth recapping some of the key points:

  • On the June pause: "... almost all participants judged it appropriate or acceptable to maintain the target range for the federal funds rate at 5 to 5.25 percent at this meeting. Most of these participants observed that leaving the target range unchanged at this meeting would allow them more time to assess."

  • Outlook: Almost all participants stated that upside risks to inflation outlook or likelihood of anchored inflation expectations. Almost all officials expected more rate hikes in 2023. One-year inflation expectations currently sit at 2.26% and five-year expectations at 2.35%.

  • Views on current data: "We like the inflation data we are seeing but we want to make sure everyone knows and thinks we are serious about staying restrictive." This suggests that the Fed wants to continue to chip away at inflation expectations to cap wage growth, price setting etc.

  • Economic outlook: "The staff saw the possibility of the economy continuing to grow slowly and avoiding a downturn as almost as likely as the mild-recession baseline." Its worth noting that the Fed staff still has a 4Q23 to 1Q24 recession as a baseline forecast.

Sectors to Watch

Markets have been hit by a little bit of selling after a recent V-shaped move (both Australia and the US). A pullback is after a strong move is quite normal, provided we don't see a massive pick up in volatility and distribution (aka what happened after our eight-day win streak between 9-20 June).

Most of our overnight ETFs were down around 1-2%, especially the commodity-related ones. Iron ore will be a key sector of interest on Thursday, given soft Chinese economic data. BHP (ASX: BHP) and Rio Tinto (ASX: RIO) ADRs fell 2.3% and 1.3% respectively overnight. Materials was also the worst performing sector on the S&P 500, down 2.47% vs. the average -0.20% decline.

Key Events

ASX corporate actions occurring today:

  • Trading ex-div: None

  • Dividends paid: ALS Ltd (ALQ) – $0.194 

  • Listing: None

Economic calendar (AEST):

  • 11:30 am: Australia Balance of Trade

  • 12:00 am: US ISM Services PMI

  • 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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