Market Wraps

Morning Wrap: S&P 500 falls on hawkish Fed comments, oil tumbles, ASX futures flat

Fri 18 Nov 22, 8:32am (AEST)

ASX Futures (SPI 200) imply the ASX 200 will open 2 points lower, down -0.03%. 

US benchmarks pulled back slightly after the Fed blasted the market with more hawkish comments, oil prices tumbled as China fights a losing battle against covid, US manufacturing index unexpectedly nosedives and why the 1940s might be a good comparison against current market performance.

Let's dive in.

Overnight Summary

Fri 18 Nov 22, 8:32am (AEST)

Name Value Chg %
Major Indices
S&P 500 3,947 -0.31%
Dow Jones 33,546 -0.02%
NASDAQ Comp 11,145 -0.35%
Russell 2000 1,839 -0.77%
Country Indices
Canada 19,885 -0.37%
China 3,115 -0.15%
Germany 14,266 +0.23%
Hong Kong 18,046 -1.15%
India 61,751 -0.37%
Japan 27,931 -0.35%
United Kingdom 7,347 -0.06%
Name Value Chg %
Commodities (USD)
Gold 1,761.90 -0.78%
Iron Ore 92.34 -
Copper 3.674 -2.64%
WTI Oil 82.64 -3.45%
AUD/USD 0.6690 -0.75%
Bitcoin (AUD) 24,951 +0.02%
Ethereum (AUD) 1,800 -1.27%
US 10 Yr T-bond 3.775 +2.25%
VIX 24 -1.00%

US Sectors

Fri 18 Nov 22, 8:32am (AEST)

Sector Chg %
Information Technology +0.21%
Energy +0.12%
Consumer Staples +0.02%
Health Care -0.04%
Industrials -0.25%
Financials -0.54%
Communication Services -0.66%
Real Estate -0.82%
Materials -0.95%
Consumer Discretionary -1.27%
Utilities -1.79%


US stocks extended their decline as the Fed refuses to shift from anything but hawkish. Fed policymakers including Bullard, George and Kashkari reiterated that current rates are not ‘sufficiently restrictive’ and it's too early to call victory over inflation after just one month’s data.

  • Major US benchmarks closed well-above session lows including S&P 500 (-1.32%) Dow (-0.94%) and Nasdaq (-1.56%) 

  • Tech managed to finish in positive territory as most megacap names were down less than -1% and Apple closed 1.3% higher

  • Energy was another surprising sector to see green after oil prices tumbled 3-4% as China's covid cases continue to skyrocket

  • 63% of US stocks declined 

  • 48% of US stocks trade below their 200-day moving average (47% on Thursday, 46% a week ago)


Bed & Body Works (+23.3%) beat earnings expectations and lifted its FY22 profit guidance

Macy’s (+13.9%) earnings and comparable sales growth beat analyst expectations. The high-end department store provided a mixed guidance, cutting its fourth quarter expectations but raising its full year outlook. Management was positive about the holiday period.

Alibaba (+7.7%) posted a revenue miss but earnings beat and raised its buybacks by a further US$15bn. 

  • "... another quarter of healthy revenue growth of 3% year-on-year in spite of the impact on consumption demand by the COVID-19 resurgence in China as well as slowing cross border commerce due to increasing logistics costs and forex volatility.” - CEO Daniel Zhang

Cisco Systems (+5.3%) earnings beat analyst expectations; its current quarter and FY23 revenue outlook topped expectations. A restructuring plan is set to begin in 2023, management said is not focused on reducing its workforce but adding resources on its enterprise networking and security business.


US housing starts fell -4.2% month-on-month in October from -1.3% in September. 

  • Missed analyst expectations of a -2.7% decline

  • The lowest number of single-family projects in two-and-a-half years  

  • The US 30-year fixed mortgage rate is averaging around 7.0%, the highest since 2002 

The Philadelphia Fed manufacturing index unexpectedly slumped to -19.4 in November from -8.7 in October. 

  • Well below analyst expectations of -6.2

  • The index measures manufacturing activity in the US mid-Atlantic region

  • Outside the pandemic lows, this is the lowest reading since 2011 and below the 2015 manufacturing recession lows

  • “The survey’s future indexes improved but continued to suggest that firms expect overall declines over the next six months.” - Philadelphia Fed manufacturing statement 

Minneapolis Fed President Neel Kashkari speaks at the Minnesota Chamber of Commerce:

  • "I need to be convinced that inflation has at least stopped climbing, that we're not falling further behind the curve, before I would advocate stopping the progression of future rate hikes.”

  • “Some evidence that inflation is at least plateauing … we cannot be overly persuaded by one month’s data.”

St Louis Fed President James Bullard:

  • “To attain a sufficiently restrictive level, the policy rate will need to be increased further.”

  • Bullard said he is targeting a minimum of another 125 bps in rate hikes, which would bring the target rate to 5.0% - 5.25% 

Kansas City Fed Bank President Esther George

  • "I'm looking at a labor market that is so tight, I don't know how you continue to bring this level of inflation down without having some real slowing, and maybe we even have contraction in the economy to get there.”


Iron ore futures rose 1.4% to US$94.6 a tonne. 

Oil prices tumbled following a firmer US dollar and a deteriorating covid battlefront in China.

  • China’s daily covid cases surpassed 23,000, the highest since April 

  •  “The world’s two largest economies are struggling here as China battles COVID and the US is seeing a significant drop in manufacturing activity … Inventory levels remain a key concern for the oil market so we might see limited downside from here.” - Oanda senior market analyst, Ed Moya 

Gold is beginning to give back its gains as the Fed reiterates its hawkish intentions, which pushed up bond yields and the US dollar. 

  • “Fed’s Bullard’s comment that the policy rate is not yet ‘sufficiently restrictive’ is a big reminder that we need to see the labor market weaken significantly before we can price in the end of its tightening cycle.” - Moya


  • The 1946-49 analog: "This market continues to remind me of the period following the end of WWII. That period saw a massive inflation spike (20%) and produced a 27% bear market, but also several 15% counter-trend rallies." - Jurrien Timmer, Director of Global Macro at Fidelity

S&P 500 1940s analog
Source: Fidelity

Industry ETFs

Fri 18 Nov 22, 8:32am (AEST)

Description Last Chg %
Steel 59.21 -0.19%
Gold 165.12 -0.73%
Aluminum 50.6151 -0.82%
Uranium 20.77 -1.40%
Strategic Metals 92.62 -2.18%
Lithium & Battery Tech 70.06 -2.24%
Silver 19.74 -2.28%
Copper Miners 34.59 -2.49%
Nickel 35.2494 -4.45%
Aerospace & Defense 108.4 +0.51%
Global Jets 18.2 -0.38%
Biotechnology 134.21 -0.69%
Cannabis 15.49 -1.55%
Description Last Chg %
Bitcoin 10 +1.40%
Solar 81.54 +1.32%
CleanTech 15.96 0.00%
Hydrogen 12.02 -2.16%
Semiconductor 368.98 +0.78%
Video Games/eSports 44.41 -0.34%
Sports Betting/Gaming 15.61 -0.90%
E-commerce 16.66 -0.93%
Electric Vehicles 22.62 -1.02%
Robotics & AI 21.22 -1.08%
FinTech 20.53 -1.36%
Cybersecurity 23.33 -1.84%
Cloud Computing 16.41 -2.56%

ASX Morning Brief

Another day, another minor pullback.

It was positive to see US benchmarks bounce from session lows (but still red). The S&P 500 is pulling back towards key moving averages like the 20 and 50 day. So let's see how it behaves around those levels.

Like I mentioned in previous wraps, the pullback is just as important as the rally. It's a good opportunity to see if buying steps up at key levels, as opposed to what we've experienced in the last few months.

S&P 500 chart
S&P 500 chart (Source: TradingView)

The ASX 200 is in much better shape thanks to a rebound in banks and higher iron ore prices. Still, we're sitting in this 'no man's land' territory, stalling after a frothy 'peak inflation' inspired run.

There's nothing wrong with the market chopping around these overextended levels. The next few days will provide us with more data as to whether or not the market's established a more convincing low or if this was just another bear market rally.

XJO chart
XJO chart (Source: TradingView)

Sectors to watch

It was a rather quiet overnight session. Our overnight ETF watchlist was generally the same, with most names down 1-2%. Things like Copper, Lithium, Hydrogen, Uranium and Tech led to the downside.

Key Events

Stocks going ex-dividend over the next week:

  • Fri: Coronado Global (CRN), Washington H Soul Pattinson (SOL), Orica (ORI) 

  • Mon:Elders (ELD)

  • Tue: Amcor (AMC), Sunland Group (SDG), Tamawood (TWD)

  • Wed: Embark Education (EVO)  

  • Thu: ALS (ALQ), Nufarm (NUF), Australian Vintage (AVG) 

ASX corporate actions occurring today:

  • Dividends paid: Cromwell Property (CMW)

  •  Listing: Nightingale Intelligent Systems (NGL) 

Other things of interest (AEDT):

  • 10:30 am: Japan inflation rate

  • 11:00 am: UK consumer confidence

  • 6:00 pm: UK retail sales

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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