Market Wraps

Morning Wrap: Nasdaq hits fresh 2-year low, JP Morgan CEO's recession warning, ASX to rise

Tue 11 Oct 22, 8:37am (AEST)

ASX Futures (SPI 200) imply the ASX 200 will open 12 points higher, up 0.18%.

Wall Street tanks again ahead of an all-important CPI print and retail sales data, US kicks off its third quarter earnings season this week, JP Morgan CEO Jamie Dimon warns of a recession in six to nine months, gold outflows continue and oil snaps a massive win streak.

Let's dive in.

Overnight Summary

Tue 11 Oct 22, 8:37am (AEST)

Name Value Chg %
Major Indices
S&P 500 3,612 -0.75%
Dow Jones 29,203 -0.32%
NASDAQ Comp 10,542 -1.04%
Russell 2000 1,692 -0.60%
Country Indices
Canada 18,583 -2.09%
China 2,974 -1.66%
Germany 12,273 0.00%
Hong Kong 17,217 -2.95%
India 57,991 -0.34%
Japan 27,116 -0.71%
United Kingdom 6,959 -0.45%
Name Value Chg %
Commodities (USD)
Gold 1,675.70 -1.97%
Iron Ore 95.62 -
Copper 3.438 +1.51%
WTI Oil 90.82 -1.96%
AUD/USD 0.6298 +0.03%
Bitcoin (AUD) 30,562 -1.76%
Ethereum (AUD) 2,077 -1.56%
US 10 Yr T-bond 3.888 +0.13%
VIX 32 +3.48%


Major US benchmarks closed slightly above session lows but still an ugly 0.7% to 1.0% decline. The Nasdaq has wiped out all of its recent gains, marking a fresh year-to-date low and down -33.8% for the year.

It's a massive week for US markets as it kicks off earnings season. The Fed minutes, retail sales and inflation data is also due later this week.

  • 7 out of 11 US sectors declined

  • Defensives including Industrials, Staples and Utilities outperformed

  • Growth and energy sectors led to the downside 

  • 56% of US stocks declined

  • 70% of US stocks trade below their 200-day moving average (70% on Monday, 70% a week ago)


  • Kraft Heinz (+3.15%) was upgraded by Goldman Sachs to a Buy from Neutral. The investment bank said it was one of the few consumer staple stocks where the prospect of higher profit margins is not yet fully priced in   

  • Ford (-3%) and General Motors (-4%) shares tanked after UBS downgraded both stocks

    • “... We think it will only take 3-6 months for the auto industry to end up in oversupply, which will put an abrupt end to a 3-year phase of unprecedented OEM pricing power and margins.”

  • Nvidia (-3.4%) shares hit a fresh 52-week low after Biden published a set of export controls last Friday, including measures to cut China off from certain semiconductor chips  

  • Rivian (-7.3%) notified customers that it is recalling 13,000 vehicles due to a possible issue with a loose fastener that could make the driver lose steering control. The company has only produced 14,317 vehicles so far this year  

  • Wynn Resorts (-12.3%) and other casino companies tumbled after China imposed fresh lockdowns after a jump in new daily covid cases after a week-long public holiday

Key comments from JP Morgan CEO:

  • Signs of distress in markets: "The IPO market closes first. That's happened. High yield closes second and structured credit. That's happened for the most part."

  • Recession in six to nine months: "When we go into recession, they're (consumer) going to be in much better shape than in 2008, 2009; companies are in good shape, credit is very good ... I mean, Europe is already in recession. And then they're likely going to put us in some kind of recession, six, nine months from now."

  • Where do markets go: "It's hard for me to answer that. But it could, it could be another easy 20%. And I think like the next 20% would be much more painful."


  • JPMorgan CEO expects US recession six to nine months (Bloomberg)

  • Market sees 60% chance of Musk's Twitter deal by deadline (Bloomberg)

  • Bernanke shares economics Nobel prize for crisis research (Bloomberg)


Fed speeches:

  • Chicago Fed President Evans:

    • “Front-loading was a good thing, given how far below neutral rates were. But overshooting is costly, too, and there is great uncertainty about how restrictive policy must actually become.”

    • “I see the nominal funds rate rising to a bit above 4.5% early next year and then remaining at this level for some time while we assess how our policy adjustments are affecting the economy.”

  • Fed Vice Chair Brainard:

    • “We are attentive to the risk of further adverse shocks - for instance, from Russia’s war against Ukraine, the pandemic, or China’s zero-COVID policies.” 

    • “We are also very aware that the cross-border effects of unexpected movements in interest rates and exchange, as well as worsening external imbalances, in some cases could interact with financial vulnerabilities.”

    • “There is ample room for margin re-compression to help reduce goods inflation as demand cools, supply constraints ease, and inventories increase.”


  • Iron ore futures fell -0.4% to US$97.5 a tonne

    • “Daily crude steel output among the member mills of the China Iron & Steel Association finally eased over 21-30 September after steadily rising since early August,” Mysteel reported

    • Daily output during the last ten days of September fell -0.6% to average 2.13 million tonnes a day

    • Market sources said that Tangshan, the country’s largest steel-producing hub faced curbs on steel production in late September to improve air quality

  • Oil prices snapped a five-day winning streak as demand concerns kick on

    • China’s services PMI and recession warnings from JP Morgan weighed  

  • Gold continues to sink, down -3.3% in the last four sessions

    • “The yellow metal is on course for the fourth day of losses amid a resurgent greenback and dwindling faith in slower monetary tightening,” said Oanda senior market analyst, Craig Erlam 

Other commodities of interest:

  • Copper +1.5% to US$3.44/lb

  • Aluminium -1.4% to US$2,247/t

  • Palladium -0.3% to US$2,175/oz

  • Platinum -1.7% to US$896/oz

  • Newcastle coal futures -0.6% to $377/t

  • Uranium futures +0.7% to US$48.3/lb


Moving the quick bites lower.

  • Nobody wants gold: The amount of gold held in exchange-traded funds fell for a 17th consecutive week, the longest stretch since 2018, according to Bloomberg

Gold outflows
Source: Bloomberg
  • Puts keep stacking: Aggregated puts on the S&P 500 relative to calls has made a fresh record high since 2013, according to Sentiment Trader

S&P 500 put call
Source: Sentiment Trader
  • Eyes on these three stocks: Bloomberg's MLIV Pulse Survey showed that Apple, JP Morgan and Tesla matter the most this earnings season

US earnings important companies
Source: Bloomberg

US Sectors

Tue 11 Oct 22, 8:37am (AEST)

Sector Chg %
Industrials +0.33%
Consumer Staples +0.29%
Materials +0.24%
Utilities +0.17%
Communication Services -0.46%
Financials -0.48%
Consumer Discretionary -0.61%
Health Care -0.65%
Real Estate -1.19%
Information Technology -1.56%
Energy -2.06%

Industry ETFs

Tue 11 Oct 22, 8:37am (AEST)

Description Last Chg %
Steel 51.1 +1.10%
Nickel 29.5097 +0.40%
Copper Miners 28.76 0.00%
Strategic Metals 83.91 -1.30%
Gold 157.88 -1.52%
Aluminum 47.905 -1.54%
Lithium & Battery Tech 67.33 -2.21%
Silver 18.5 -2.22%
Uranium 20.37 -4.81%
Aerospace & Defense 95.21 +1.16%
Global Jets 15.57 -0.64%
Biotechnology 118.84 -0.75%
Cannabis 14.38 -6.05%
Description Last Chg %
Bitcoin 11.96 -1.42%
CleanTech 13.615 -1.21%
Hydrogen 10.85 -1.29%
Solar 71.05 -1.35%
Video Games/eSports 41.03 -0.76%
Robotics & AI 18.56 -1.51%
Electric Vehicles 20.51 -1.71%
FinTech 20.8 -2.02%
E-commerce 15.57 -2.06%
Sports Betting/Gaming 13.76 -2.98%
Semiconductor 325.85 -3.40%
Cybersecurity 24.28 -4.12%
Cloud Computing 16.2 -4.32%

ASX Morning Brief

US markets, not a pretty sight. To recap the recent series of unfortunate events:

  • Between 6 to 12 September, the S&P 500 rallied 5.2% into the hotter-than-expected inflation report, where stocks got obliterated

  • Likewise, the market rallied 5.7% between 30 September and 4 October into a still solid jobs report, where stocks again, got obliterated

The market has managed to muster up abrupt rallies thanks to a combination of being oversold, short covering and the hopes of a Fed pivot.

But as the Fed has repeated time and time again, there is no pivot. Rates are going up and they're going to stay high for quite some time.

Now, US markets are in an ugly place, dangling at recent lows and starring at the next leg down. A bounce is needed and we turn Thursday's inflation print as the next high stakes catalyst.

The ASX 200 has a little more breathing room compared to US markets, currently trading ~3.3% above June lows. SPI futures suggest a small +0.18% bounce at open but volatility remains so high that markets could easily rip, dip or both.

Sectors to watch

Notable overnight ETF gainers: Steel (+1.1%), Aerospace & Defence (+0.9%)

Notable overnight ETF losers: Uranium (-4.8%), Cloud (-4.3%), Semiconductors (-3.4%), Lithium (-2.2%), Gold (-1.5%)

Nothing too interesting overnight. Risk sectors led to the downside, which could see some pressure for local tech stocks. Specialty resources like uranium and lithium also experienced a bit of selling. Oil prices snapped a massive winning streak, which could see some more weakness follow through for local energy names.

Key Events

Stocks going ex-dividend:

  • Tue: TRA, REH  

  • Wed: WGB, HZN, RRL, GOW

  • Thu: TI1, D20, CGO 

  • Fri: LSX, HVN

  • Mon: WAA, CDM, CDO, FGX, WMA 

ASX corporate actions occurring today:

  • Dividends paid: PAC, IMD, RMS, CNU, EP1, CAU

  • Listing: None

Other things of interest (AEDT):

  • 10:30 am: Australia consumer confidence

  • 11:30 am: Australia business confidence

  • 5:00 pm: UK unemployment rate

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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