Market Wraps

Morning Wrap: Recession fears push S&P 500 lower, travel stocks tumble, ASX to fall

Thu 08 Dec 22, 8:33am (AEST)

ASX Futures (SPI 200) imply the ASX 200 will open 11 points lower, down -0.15%.

US stocks closed mostly lower as selling pressure continues, oil prices are firmly negative year-to-date, travel stocks tumble on bearish broker notes, China's trade figures further stoke recession fears and what's the difference between a recession and non-recession bear market?

Let's dive in.

Overnight Summary

Thu 08 Dec 22, 8:33am (AEST)

Name Value Chg %
Major Indices
S&P 500 3,934 -0.19%
Dow Jones 33,598 +0.00%
NASDAQ Comp 10,959 -0.51%
Russell 2000 1,807 -0.29%
Country Indices
Canada 19,973 -0.08%
China 3,200 -0.40%
Germany 14,261 -0.57%
Hong Kong 18,815 -3.22%
India 62,411 -0.34%
Japan 27,686 -0.72%
United Kingdom 7,489 -0.43%
Name Value Chg %
Commodities (USD)
Gold 1,802.20 +1.11%
Iron Ore 108.49 -
Copper 3.857 +1.01%
WTI Oil 72.25 -2.69%
AUD/USD 0.6729 +0.63%
Bitcoin (AUD) 25,004 -1.64%
Ethereum (AUD) 1,832 -2.32%
US 10 Yr T-bond 3.408 -2.99%
VIX 23 +1.94%

US Sectors

Thu 08 Dec 22, 8:33am (AEST)

Sector Chg %
Health Care +0.85%
Consumer Staples +0.38%
Real Estate +0.26%
Industrials -0.14%
Materials -0.24%
Energy -0.29%
Financials -0.45%
Utilities -0.47%
Consumer Discretionary -0.48%
Information Technology -0.51%
Communication Services -0.93%


The S&P 500 is down for a fifth straight day as markets begin to look beyond the Fed pivot. The yield curve is inverting to levels not seen in four decades which screams a recession. US stocks finished in negative territory after mustering up a small gain in early trade. We continue to see the market switch to defensive mode, with value sectors and the Dow outperforming in the last few days.  

  • Session highs include: S&P 500 (+0.41%), Nasdaq (+0.23%) and Dow (+0.53%)

  • Three defensive sectors finished in positive territory: Healthcare, Consumer Staples and Real Estate

  • Energy declined as oil prices tanked another -3.0% overnight. Brent crude is down -11% in the last four sessions

  • Growth heavy sectors continue to lead to the downside, notably Tech and Discretionary

  • Utilities was the odd one out, finishing as the second worst performing sector on the S&P 500 

  • 47% of stocks advanced

  • 47% of stocks trade below their 200-day moving average (42% on Wednesday, 47% a week ago) 


Lowe’s (+2.6%) reaffirmed its FY22 sales outlook and authorised a US$15bn share buyback program.

  • The company plans for growth across five key areas: Deepening Pro penetration, accelerate online business, expand installation services, drive localisation and elevate product assortment 

Airbnb (-2.2%), Booking (-4.2%) and Expedia (-6.5%) shares tanked after Wolfe Research downgraded the sector to Underweight from Market Weight.

  • In parallel, Morgan Stanley downgraded Airbnb to Underperform with a $60 bear case target price (around 30% downside)


  • China confirms easing of Covid testing (Bloomberg)

  • STOXX 600 seen rising less than 2% in 2023 (Bloomberg)

  • Strategists bearish on 2023 outlook, citing recession and lower earnings (Bloomberg)


China’s trade surplus was US$69.8bn in November, down from US$85.2bn in October. 

  • Well-below analyst expectations of US$78.1bn

  • Exports contracted -8.7% year-on-year in November, compared to a -0.3% decline in October

  • Inbound shipments were down -10.6% from a -0.7% fall in October

  • China is getting hit from all angles: Slowing global demand, rising interest rates, Covid restrictions and real estate sector troubles

German industrial production fell -0.1% month-on-month in October from 1.1% in September. 

  • Above analyst expectations of a -0.6% decline

  • “Today’s industrial production data has two messages: German industry, excluding energy-intensive sectors, is more resilient than some pessimists had thought but at the same time, the gradual slide into recession still looks unavoidable.” - ING

Canada raised interest rates by 50 bps to 4.25%, the highest since 2008. 

  • In-line with consensus expectations

  • “... it will be considering whether the policy interest rate needs to rise further to bring supply and demand back into balance.” - Bank of Canada


Iron ore futures rose 0.66% to US$106.5 a tonne.

  • Prices fell -2.3% on Wednesday

  • “A broad-based downturn by region in November brought overall business conditions at global steel users to their worst since May 2020.” - S&P Global Platts

Oil prices continue to tumble as recession fears outweigh the prospect of China reopening.

  • WTI is down -4.7% year-to-date and Brent crude -1.95%

  • "The latest EIA crude oil inventory report showed inventories dropped less than expected and exports tumbled ... This report shows the economy is clearly weakening and does not give energy bulls any reasons to buy into this weakness." - Oanda senior market analyst, Ed Moya

Gold rallied as the US dollar softened and bond yields tumbled.

  • "Non-interest-bearing gold will continue to thrive if Treasury yields continue to slide. ​ This is a good environment for gold as safe-haven flows seem like they will be the theme of the new year." - Moya

Industry ETFs

Thu 08 Dec 22, 8:33am (AEST)

Description Last Chg %
Nickel 38.365 +7.62%
Silver 20.44 +2.35%
Lithium & Battery Tech 66.96 +1.43%
Strategic Metals 91.57 +1.21%
Gold 164.84 +0.90%
Aluminum 52.46 +0.27%
Uranium 19.49 -0.28%
Copper Miners 36.07 -0.36%
Steel 62.88 -1.35%
Aerospace & Defense 110.86 -0.32%
Global Jets 18.7 -3.26%
Biotechnology 133.25 +0.66%
Cannabis 15.26 -8.91%
Description Last Chg %
Bitcoin 10.61 -1.32%
Solar 79.09 -0.87%
CleanTech 15.7 -1.08%
Hydrogen 11.79 -1.95%
Electric Vehicles 22.02 +0.14%
FinTech 19.45 +0.10%
Robotics & AI 20.87 -0.14%
Video Games/eSports 44.42 -0.18%
Semiconductor 368.16 -0.21%
Cloud Computing 16.02 -0.31%
Sports Betting/Gaming 15.48 -0.45%
Cybersecurity 22.3 -0.67%
E-commerce 16.95 -1.42%

ASX Morning Brief

US benchmarks tried to bounce but failed to do so. Was the Fed pivot just a dangling carrot this whole time?

In Wednesday's Evening Wrap, I noted some research by Jurrien Timmer, Director of Global Macro at Fidelity, that the difference between the median recession and non-recession bear market is -35% versus -22% for the S&P 500. From January peak to October trough, the S&P 500 fell -27.5%. So it priced in almost 80% of a recession.

The ASX 200 is set to open -0.15% lower, in search of a floor for this pullback. When will selling subside and buyers step up? Will it be the 20-day? The 7,130 level? The 50-day?

XJO chart
XJO chart (Source: TradingView)

Sectors to watch

  • Defensives: The market is back on the defensive, which puts sectors like Staples and Healthcare in the spotlight.

  • Gold: Spot prices rallied 0.84% to US$1,786 overnight. This could see some positive flow for local gold miners

  • Nickel: The Bloomberg Nickel Subindex ETN (tracks the performance of a bunch of nickel future contracts) rallied 7.6% to a seven month high

  • Travel: US travel management and airline stocks tumbled overnight following bearish notes from Morgan Stanley and Wolfe Research. This could see some negative flow for local travel names

  • Lithium: Nothing too special but Lithium & Battery Tech ETF rose 1.4% and Rare Earths/Strategic Metals up 0.86%

Key Events

Stocks going ex-dividend over the next week:

  • Thu: Hitech Group (HIT), Fisher & Paykel (FPH), Select Harvests (SHV), Hitech Group (HIT)

  • Fri: None

  • Mon: None 

  • Tue: None

  • Wed: None

ASX corporate actions occurring today:

  • Dividends paid: None

  •  Listing: None

Economic calendar: 

  • 8:45 am: RBA Jones Speech

  • 11:30 am: Australia balance of trade

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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