Market Wraps

Morning Wrap: S&P 500 closes at a two year low, Credit Suisse in deep waters, ASX to rise

Mon 03 Oct 22, 8:34am (AEST)

ASX Futures (SPI 200) imply the ASX 200 will open 5 points higher, up 0.07%.

Major US benchmarks fizzled another rally, the S&P 500 is back at levels not seen since November 2020, Nike is dealing with a massive inventory problem, Credit Suisse flashes a 'Lehman moment', China kicks off a week long National Day holiday and RBA poised to hike rates by another 50 bps on Tuesday.

Let's get into it.

Overnight Summary

Mon 03 Oct 22, 8:34am (AEST)

Name Value Chg %
Major Indices
S&P 500 3,586 -1.51%
Dow Jones 28,726 -1.71%
NASDAQ Comp 10,576 -1.51%
Russell 2000 1,665 -0.61%
Country Indices
Canada 18,444 +0.01%
China 3,024 -0.55%
Germany 12,114 +1.16%
Hong Kong 17,223 +0.33%
India 57,427 +1.80%
Japan 25,937 -1.84%
United Kingdom 6,894 +0.18%
Name Value Chg %
Commodities (USD)
Gold 1,668.30 -0.02%
Iron Ore 95.30 -
Copper 3.389 -0.86%
WTI Oil 79.74 -1.83%
AUD/USD 0.6401 +0.03%
Bitcoin (AUD) 29,991 -0.88%
Ethereum (AUD) 2,030 -1.40%
US 10 Yr T-bond 3.804 +1.52%
VIX 32 -0.69%


September was the worst monthly drop for the S&P 500 since March 2020. All three major US benchmarks fell between 7-9% last month, trading at levels not seen since late 2020. Their year-to-date performances include:

  • S&P 500 -25.3%

  • Dow Jones -21.5%

  • Nasdaq -33.2%

US stocks failed to finish the brutal month of September on a positive note. All three major indices were up around 1% in early trade but closed sharply lower.

  • 10 out of 11 US sectors declined

  • Real Estate was the only green sector

  • Materials, Energy and Financials were relative outperformers

  • Staples, Discretionary, Tech and Utilities led to the downside

  • 55% of US stocks declined

  • 73% of US stocks trade below their 200-day moving average (73% last Friday, 73% a week ago)


  • Nike (-12.8%) shares tumbled after posting a -22% decline in quarterly net income. The retailer said it was overstocked, with inventory up 44% to US$9.7bn

    • Nike CFO: “In September, month-to-date retail sales are up double digits versus the prior year, following a strong back-to-school season. However, our North America inventory grew 65% versus the prior year, with in-transit inventory growing approximately 85%“ 

    • Nike CFO: "Because we have a portion of that inventory being seasonally out of relevance, we’ve decided to take that inventory and more aggressively liquidate it so that we can put the newest and best inventory in front of the consumer in the right locations"

  • Carnival Cruise (-23.3%) shares tumbled after missing quarterly revenue expectations and flagged a delay to its return to profitability as a result of high fuel prices and inflation

    • Carnival CEO: “Since announcing relaxation of our protocols last month, we’ve seen a meaningful improvement in booking volumes and are now running considerably ahead of strong 2019 levels. We expect to further capitalise on this momentum with renewed efforts to generate demand.” 


A 'Lehman moment' with Credit Suisse was the talk of the town this weekend. The company's stock is already down -56% year-to-date

  • Credit Suisse credit default swaps (CDS) are close to surpassing levels last seen during the Global Financial Crisis

Source: Bloomberg
  • Credit Suisse's new CEO Ulrich Koerner told employees not to confuse 'day-to-day' share price movements with the investment bank's "strong capital base and liquidity position"

  • But the market does not believe this given the CDS are pricing the highest likelihood of default since 2008

  • Credit Suisse has approximately US$160bn cash, US$400bn in call liabilities and US$900bn in leveraged exposure

  • Interesting post from Wall Street Silver: "The collapse in Credit Suisse's share price is of great concern. From $14.90 in February 2021, to $3.90 currently. And with a price-to-book of 0.22, markets are saying it's insolvent and probably bust."


  • OPEC+ to consider oil cut of over 1m barrels per day (Reuters)

  • Credit Suisse CEO seeks to calm as default swaps near 2009 level (Bloomberg)

  • Bank of Japan seeks to unload its 80% holding of domestic ETFs (Reuters)

  • Amazon to close all but one US customer call center (Bloomberg)

  • Porsche's 75bn euro IPO makes Volkswagen look cheap (Reuters)


  • Eurozone inflation jumped to 10% in September from 9.1% in August

    • Analysts expected a reading of 9.7%

    • “... this jump was more broad-based than expected and will provide extra fuel for ECB hawks as we head into the October meeting,” said ING

  • Eurozone core inflation accelerated to 4.8% in September from 4.3% in August

    • Analysts expected a rise to 4.5%

  • Eurozone unemployment was steady at 6.6% in August, unchanged compared to July

    • In-line with consensus expectations 

  • US personal spending rose 0.4% month-on-month in August from -0.2% in July

    • Ahead of expectations of a 0.2% increase

    • The increase was led by services, including transportation services, healthcare, dining out and accommodation

Highlights from key Fed speeches:

  • Fed Richmond President Barkin:

    • Risk of stopping too early on rates is a bigger risk than hiking too much

    • Favors rate moves being ‘a little aggressive’ to tame inflation

    • Sees a lag where costs come down before prices do

  • Fed Vice Chair Brainard:

    • Policy needs to be restrictive for some time

    • Fed is committed to avoid pulling back prematurely


  • Iron ore futures rose 0.7% to US$96.10 a tonne

    • China kicks off the week long Golden Week Holiday (1-7 October) which could see rather muted iron ore price action

  • Oil prices tumbled after reports that OPEC+ is considering a 1m barrels a day reduction in Group output

    • “OPEC+ will have an easy job next week, but oil prices won’t catch a bid until energy traders are confident an aggressive reduction of output at around 1 million bpd will be delivered.  Brent crude is poised to consolidate below the $90 level,” said Oanda senior market analyst, Ed Moya

  • Gold has been consolidating around the US$1,660 level as bond yields refuse to fall

Other commodity price movements of interest:

  • Aluminium spot prices fell -4.02% to US$2,134 a tonne

  • Newcastle coal futures fell -6.44% to US$407.7 a tonne

  • Uranium futures rose 0.2% to US$48.5/lb

US Sectors

Mon 03 Oct 22, 8:34am (AEST)

Sector Chg %
Real Estate +0.99%
Materials -0.35%
Energy -0.90%
Financials -1.10%
Industrials -1.31%
Health Care -1.40%
Communication Services -1.66%
Consumer Staples -1.79%
Consumer Discretionary -1.83%
Information Technology -1.94%
Utilities -1.97%

Industry ETFs

Mon 03 Oct 22, 8:34am (AEST)

Description Last Chg %
Silver 17.37 +0.75%
Steel 47.65 +0.21%
Gold 154.66 +0.01%
Copper Miners 28.34 -0.28%
Uranium 19.97 -0.75%
Strategic Metals 84.02 -0.82%
Lithium & Battery Tech 67.47 -2.05%
Aluminum 46.905 -4.23%
Nickel 29.998 -5.89%
Aerospace & Defense 91.91 -0.78%
Global Jets 15.21 -1.31%
Biotechnology 117.6 -0.54%
Cannabis 13.85 -1.08%
Description Last Chg %
Bitcoin 11.96 +0.25%
Hydrogen 11.02 +1.27%
Solar 73.27 +0.46%
CleanTech 13.85 +0.40%
Sports Betting/Gaming 13.06 -0.08%
Video Games/eSports 40.72 -0.29%
Robotics & AI 18.2 -0.66%
Cybersecurity 24.21 -0.70%
FinTech 20.46 -0.88%
E-commerce 15.32 -0.98%
Cloud Computing 16.17 -1.30%
Semiconductor 324.29 -1.71%
Electric Vehicles 20.48 -1.76%

ASX Morning Brief

Things just keep getting worse eh? We've now got this Debit Suisse problem in the background, which could unravel as some major financial contagion event. Keep an eye out for this one.

SPI futures imply the ASX 200 will open slightly higher, but that seems like wishful thinking after major US indices faded early gains and closed at fresh year-to-date lows.

The RBA also has its interest rate decision meeting on Tuesday at 1:30 pm. Westpac analysts expect another 50 bps rate hike to 2.85%.

"Rate hikes are expected to continue out to February 2023 as the December inflation report is likely to show consumer prices lifting strong in the December quarter," Westpac said in a report last Friday.

ASX sectors to watch

Most of the ETFs we track closed at session lows like the major US benchmarks. But at face value, they held up relatively well. Most ETFs fell around -1%, including Jets, Cloud, FinTech, Rare Earths/Strategic Metals and Uranium.

That said, it's not a good look when the S&P 500 and Nasdaq are struggling to bounce from oversold levels. Expect another volatile session.

Key Events

Stocks going ex-dividend:

  • Mon: VAS, LCE, IPC, WAR

  • Tue: SGM, WAX

  • Wed: CAM, X64, RIC 

  • Thu: ANG, ARB, BIS, N1H, WCG

  • Fri: COS, MFF 

ASX corporate actions occurring today:

  • Dividends paid: ALX, SNL, IPG

  • Listing: None

Other things of interest (AEST):

  • 11:05 pm: Fed Bostic Speech

  • 12:00 am: US ISM Manufacturing PMI

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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