Market Wraps

Morning Wrap: Nasdaq tumbles but Dow outperforms, iron ore price collapses, ASX set to fall

Fri 28 Oct 22, 8:32am (AEST)

ASX Futures (SPI 200) imply the ASX 200 will open 26 points lower, down -0.38%.

The S&P 500 and Nasdaq extend losses as tech earnings continue to disappoint, the blue-chip Dow rallies again, Facebook-parent Meta shares plunge as investors lose faith, US Q3 GDP beats expectations and iron ore prices plummet to levels not seen since April 2020.

Let's dive in.

Overnight Summary

Fri 28 Oct 22, 8:32am (AEST)

Name Value Chg %
Major Indices
S&P 500 3,807 -0.61%
Dow Jones 32,033 +0.61%
NASDAQ Comp 10,793 -1.63%
Russell 2000 1,806 +0.11%
Country Indices
Canada 19,352 +0.38%
China 2,983 -0.55%
Germany 13,211 +0.12%
Hong Kong 15,428 +0.72%
India 59,757 +0.36%
Japan 27,345 -0.32%
United Kingdom 7,074 +0.25%
Name Value Chg %
Commodities (USD)
Gold 1,667.40 -0.11%
Iron Ore 93.56 -
Copper 3.528 -0.48%
WTI Oil 88.60 +0.78%
AUD/USD 0.6450 -0.03%
Bitcoin (AUD) 31,588 -2.40%
Ethereum (AUD) 2,360 -2.54%
US 10 Yr T-bond 3.937 -1.94%
VIX 27 +0.40%

US Sectors

Fri 28 Oct 22, 8:32am (AEST)

Sector Chg %
Industrials +1.14%
Financials +0.75%
Utilities +0.68%
Energy +0.27%
Consumer Staples +0.04%
Real Estate -0.00%
Materials -0.26%
Health Care -0.58%
Consumer Discretionary -0.72%
Information Technology -1.25%
Communication Services -4.12%


Note: Moved the US sectors table higher for better flow.

  • The Dow was the only winner thanks to gains from blue chip names like Caterpillar, Boeing and McDonalds

  • The S&P 500 and Nasdaq continue to feel the weight of disappointing tech earnings, now on a two day skid

  • European stocks reversed declines after the ECB hiked interest rates by 75 bps, the STOXX 600 rallied from session lows of -0.94% to close around breakeven

  • Defensive sectors led to the upside on Wall Street while tech and growth heavy sectors lagged

  • 51% of US stocks advanced

  • 58% of US stocks trade below their 200-day moving average (59% on Thursday, 67% a week ago)


  • Caterpillar (+7.7%) shares in the construction equipment giant beat earnings expectations, with third quarter revenue up 21% to US$12.4bn

  • McDonald’s (+3.3%) beat Wall Street expectations with a 9.5% year-on-year jump in comparable sales and raised its quarterly dividend by 10%

  • Mastercard (-0.04%) earnings were ahead of analyst expectations but guided to a 6-7% FX hit in the next quarter

    • CEO: "Consumer spending remains resilient and cross-border travel continues to recover. We delivered strong revenue and earnings growth again this quarter, reflecting the focused execution of our strategy.”

  • Meta Platforms (-24.6%) posted another quarter of revenue declines, which missed analyst expectations and issued a weak guidance for the December quarter

    • Operating margins tumbled to 20% from 36% a year ago

    • Net income was down -52% to US$4.4bn

    • Losses in the Reality Labs unit, which sells the company’s VR headsets and metaverse technologies, widened to -US$3.7bn

    • Meta shares are down -75% from all-time highs, the lowest level since January 2016, from US$1.08tn to US$269bn

    • CEO: “We are still behind where I think we should be but we believe that we will return to healthier revenue growth trends next year. It is not clear that the economy has stabilised yet so we're planning our budget somewhat more conservatively.”

    • “Our current surge in Capex is largely due to building out our AI infrastructure, and we would expect capex to come down as a percent of revenue over the long term. We expect reality labs expenses will increase meaningfully again in 2023.”


  • Mastercard spending growth slows (Bloomberg)

  • Meta Platforms to spend more than $600bn on VR (Reuters)


Eurozone raised interest rates by 75 bps to 2.0%

  • In-line with consensus expectations

  • “With this third major policy rate increase in a row, the Governing Council has made substantial progress in withdrawing monetary policy accommodation,” - ECB

  • The ECB has now hiked 200 bps in a little over three months, the most aggressive hiking in its history

US durable goods orders rose 0.4% month-on-month in September from 0.2% in August.

  • Below consensus expectations of a 0.6% increase

  • Excluding a rise in orders for transportation equipment, durable goods orders fell -0.5% in September

  • “Manufacturing recession looks likely in the months ahead,” - Ian Shepherdson, Chief Economist at Pantheon Macroeconomics 

US Q3 GDP rose 2.6% quarter-on-quarter from -0.6% in Q2.

  • Ahead of consensus expectations of 2.4% growth

  • “The main story in Q3 GDP is that private domestic demand (GDP less inventories, trade and government) ground to a halt, up just 0.1% on a seasonally adjusted annual rate. This series trends to be more useful in informing us about the outlook for GDP than GDP itself,” - Renaissance Macro Research 

  • “Net exports added 2.77% to growth, which because of a soaring dollar, will not continue. Thus, the trade data that acted as a drag during 1H22 bolstered growth in Q3’22 and will not be a tailwind moving into 2023,” - Joseph Brusuelas, RSM Principal and Chief Economist

  • “We expect 3Q22 to mark the peak in quarterly growth, as the cumulative effect of tighter monetary policy begins to push growth below potential. With the 3Q GDP data in hand, we initiative our 4Q GDP tracking at 0.8%,” -  Morgan Stanley 


  • Iron ore futures fell -12.2% to US$81.55 a tonne

    • “Weakness in the Chinese property market remains a headwind for steel and iron ore. New housing starts continue to fall. Weakness in steel demand is also emerging outside China. Steel profitability remains subdued amid falling steel prices,” - ANZ Research

  • Oil prices inched higher as the US economy returned to growth

    • “Oil’s gains are capped as the key takeaway from this morning’s swathe of economic readings is that an economic slowdown is here,”- Oanda senior market analyst, Ed Moya 

  • Gold was mostly unchanged in the face of easing bond yields but a higher US dollar 

Other commodities of interest:

  • Natural gas -5.7% to US$5.84/MMBoe


  • Tech contagion: "Amazon is down -9% since yesterday's open heading into its report tonight. Has basically already experienced an earnings miss type of move before its report due to weakness in other mega-caps." - Bespoke Investment

  • Don't count out the dollar: The US dollar has staged a small bounce after sliding -4.5% from recent highs. "At the moment it is difficult to see kind of what causes the dollar to weaken from here .. the Fed hasn’t hit the terminal rate yet, the US economy looks like it’s probably a bit more resilient than some other economies out there." - JPMorgan

  • Fed to stay hawkish: "Fed can hike a lot more than other central banks. The structure of the financial system in each country is different, thus the mechanism of policy transmission. Households in countries with floating rate mortgages feel the impact quickly, so their central banks can hike less to have an impact." - Joseph Wang, former senior trader a the US Fed Open Market Trading Desk

Industry ETFs

Fri 28 Oct 22, 8:32am (AEST)

Description Last Chg %
Silver 17.98 0.00%
Gold 154.98 -0.15%
Copper Miners 30.14 -1.19%
Steel 54.61 -1.25%
Lithium & Battery Tech 69.21 -1.44%
Aluminum 48.85 -1.47%
Strategic Metals 90.03 -1.91%
Uranium 21 -2.05%
Nickel 30.135 -2.20%
Aerospace & Defense 103.06 +1.69%
Global Jets 17.27 +1.27%
Biotechnology 126.6 -1.36%
Cannabis 15.25 -2.03%
Description Last Chg %
Bitcoin 12.84 -0.39%
Solar 70.83 +1.07%
CleanTech 14.05 +0.43%
Hydrogen 11.01 -1.36%
Cybersecurity 24.91 +1.12%
Cloud Computing 16.43 +0.97%
E-commerce 15.17 -0.20%
Robotics & AI 19.6 -0.41%
Sports Betting/Gaming 14.54 -0.47%
FinTech 21.56 -0.83%
Video Games/eSports 40.32 -0.99%
Electric Vehicles 21.26 -1.08%
Semiconductor 326.96 -1.77%

ASX Morning Brief

Hope the ETF explainer piece was helpful. Again, if you have any questions or questions that you think are worth adding to the article, please feel free to shoot me ... an email.

I miss the simple days where bond yields rise and the market falls.

Now, we've got US corporate earnings, a few central banks becoming dovish, freefalling iron ore prices and a complicated US GDP print.

So far, the crappy earnings from Alphabet, Microsoft and Meta appear mostly isolated among the tech sector and other mega caps. This has been evidenced by the continued outperformance of the Dow which is a lot less tech oriented than the S&P 500.

Still, the Dow is rallying into the 200-day moving average, an area that could see some resistance/profit taking/selling, especially after such a spectacular 11.5% rally from October lows.

Dow Jones Industrial Average chart
Dow Jones chart (Source: TradingView)

SPI futures imply the ASX 200 will open -0.38%, which suggests a return to the key ~6,620 level that we've been trying to break out of.

At the index level, today will be about whether or not we see a bounce in banks after ANZ's (ASX: ANZ) -3.3% selloff on Thursday. And whether or not this can offset the losses among iron ore miners, after prices fell below US$90 a tonne overnight.

It's worth noting that US-listed BHP (ASX: BHP) and Rio Tinto (ASX: RIO) fell -2.3% and -3.8% respectively. So a weak open from iron ore heavyweights is expected.

XJO chart
XJO chart (Source: TradingView)

Key Events

Stocks going ex-dividend over the next week:

  • Fri: 360 Capital Enhanced Income Fund (TCF), Gryphon Capital Income Trust (GCI)

  • Mon: Autosports (ASG)

  • Tue: Brickworks (BKW)

  • Wed: Event Hospitality and Entertainment (EVT) 

  • Thu: EZZ Life Science (EZZ)

ASX corporate actions occurring today:

  • Dividends paid: Gowing Brothers (GOW), Bisalloy Steel (BIS), Tombador Iron (TI1), Regis Resources (RRL), Seven Group (SVW), Centuria Industrial (CIP), Centuria Office (COF), Cedar Woods (CWP)

  • Listing: None

Other things of interest (AEDT):

  • 2:00 pm: Japan interest rate decision

  • 4:30 pm: France Q3 GDP growth

  • 7:00 pm: Germany Q3 GDP growth

  • 11:00 pm: Germany inflation

  • 11:30 pm: US personal income growth

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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