Market Wraps

Morning Wrap: S&P 500 flat, UK inflation holds above 10% for 7th straight month, ASX to fall

Thu 20 Apr 23, 8:38am (AEST)

ASX 200 futures are trading 7 points lower, down -0.01% as of 8:20 am AEDT.

The S&P 500 was unchanged as the market awaits more earnings results, the VIX falls for a fifth straight sessions to levels not seen since November 2021, US earnings rise 6.1% in the first quarter and outpaced inflation, UK inflation unexpectedly remains above 10% in March and a closer look at Netflix's earnings rollercoaster.

Let's dive in.

Overnight Summary

Thu 20 Apr 23, 8:38am (AEST)

Name Value Chg %
Major Indices
S&P 500 4,155 +0.09%
Dow Jones 33,977 -0.03%
NASDAQ Comp 12,153 -0.04%
Russell 2000 1,796 -0.40%
Country Indices
Canada 20,685 +0.21%
China 3,393 +0.23%
Germany 15,883 +0.59%
Hong Kong 20,368 -1.37%
India 59,727 -0.31%
Japan 28,607 -0.18%
United Kingdom 7,909 +0.38%
Name Value Chg %
Commodities (USD)
Gold 2,007.40 -0.61%
Iron Ore 120.26 -
Copper 4.074 -0.44%
WTI Oil 78.96 -2.35%
AUD/USD 0.6715 0.00%
Bitcoin (AUD) 45,053 +2.78%
Ethereum (AUD) 3,112 +0.76%
US 10 Yr T-bond 3.572 -0.53%
VIX 17 -0.71%

US Sectors

Thu 20 Apr 23, 8:38am (AEST)

Sector Chg %
Industrials +0.46%
Energy +0.45%
Information Technology +0.41%
Materials +0.40%
Consumer Staples +0.33%
Financials +0.31%
Consumer Discretionary +0.13%
Real Estate -0.15%
Utilities -0.51%
Communication Services -0.65%
Health Care -0.65%


S&P 500 intraday
S&P 500 claws back early weakness to close around breakeven (Source: TradingView)


  • S&P 500 bounces off early lows of -0.5% to close around breakeven

  • VIX down for a fifth straight session to levels not seen since November 2021

  • Gold recovers from session lows of -1.8% or US$1,969

  • Bulls in latest Investors Intelligence survey ticked up to 50.7% for the week ended 18 April, the highest since November 2021 

  • Treasury bets diverging on uncertainty over Fed's rate path (Bloomberg)

  • Atlanta Fed President Bostic favours one more rate hike and long pause (Bloomberg)


  • Tesla cuts some Model Y and Model 3 US prices for sixth time this year (Reuters)

  • Meta plans another round of layoffs, potentially up to 4,000 jobs (Vox)

  • Disney to eliminate thousands of jobs next week (Bloomberg)


Some interesting stats for US reporting season:

  • “Of the 23 companies that reported since Tuesday's close, the EPS beat rate was 65%. Backing out the Financials, the EPS beat rate was 100%.” – Bespoke Investment

  • “... 82% of companies are beating and by a margin of 7.6% ... the earnings recession wallop the bears are expecting has not materialised. ... 1Q23 earnings season will ultimately enable the S&P 500 to push to new highs for the year. YTD up 8% and we see the uptrend intact.” – Fundstrat 

Western Alliance Bank (+24.1%): Earnings per share, net interest margins and net interest income all beat analyst expectations. The regional bank said its deposits rose by US$2bn since the end of the first quarter, suggesting deposit outflows have stabilised.

United Airlines (+7.5%): Posted a US$256m pre-tax loss, consistent with expectations provided in March. Operating revenue jumped 51.1% year-on-year to US$11.43bn, in-line with analyst expectations. CEO Scott Kirby expects a profit in the second quarter. 

Morgan Stanley (+0.7%): Bet earnings and revenue expectations, provision for credit losses was greater-than-expected due to commercial real estate exposure. Net income fell 17%, reflecting weak performances for investment managing and institutional segments.

Netflix (-3.2%): First quarter revenue rose 3.7% year-on-year, the second lowest growth rate in the company’s history. Net income was US$1.3bn, down 18% and operating margins eased from 25% to 21%. EPS was ahead of expectations, revenue broadly in-line but net subscriber additions missed. Second quarter guidance was also softer than expected.


  • US weekly earnings growth rose 6.1% in 1Q23, outpacing inflation (Bloomberg)

  • Eurozone core inflation edges up to 7.5% in March, keeping ECB on alert (Reuters

  • UK inflation unexpectedly stuck above 10% in March (FT)

  • Bank executives observe rising US delinquencies (Reuters)

Deeper Dive

US Bank Earnings So Far

The first quarter has been a resilient one for the major financial institutions stateside. Here are just some of the top numbers so far:

  • Bank of America: Profits +15%, EPS +18%, Net interest income +25%

  • JPMorgan: Profits +52%, Net interest income +49%, guiding for more NII upgrades

  • Wells Fargo: Profits +30%, Net interest income +45%, resumes share buyback

  • Citi: Net interest income +23%, EPS of $1.86/share handily beat analyst estimates

Then, there's Goldman Sachs and Morgan Stanley. The investment banks posted first quarter net income declines of 19% and 18.7% respectively, brought down by weak fixed income trading and sluggish dealmaking activity. It also didn't help that its one-time adventure into consumer banking is still being wound down.

So far, so good among the majors. But it's the regional banks that are of more interest this time and all eyes are on First Republic Bank which reports next Monday. Compatriots Western Alliance and Zions have both reported a bump in EPS but unsurprisingly, a fall in total deposits.

Netflix's Earnings Rollercoaster

Netflix reported results after hours on Wednesday and to say its results caused a wild ride for its share price is a gross understatement. But this is far from the first time this has happened.

  • It's fallen in each of its last four Q1 earnings, including a 35% drop last April

  • In its 83 prior earnings since 2002, 23 have triggered declines of more than 8%

  • Average one-day reaction to earnings is a gain or loss of 12.3%

Looking at more recent result:

  • The stock plunged by as much as 12% after hours but recovered all its losses as investors chose to focus on its cash balance rather than the miss in revenues and new subscriber additions

  • In the Q4 2022 result, net subscriber additions soared as they introduced a lower-cost, ad-supported tier to its offering.  Even though the EPS forecast missed analyst estimates, the share price soared by nearly 7% immediately after the result

  • In the Q4 2021 result, shares collapsed by more than 10% after the net subscriber additions forecast came in at less than half of analyst expectations and the then-EPS forecast fell short by more than 50 cents/share

Sectors to Watch

The last four US sessions have been rather uneventful, with the S&P 500 creeping a little higher or lower. Markets are in limbo right now, looking for more clues about the potential recession later this year.

Travel: The 7.5% rally from United Airlines helped the US Global Jets ETF rise 1.6%. Also, China's domestic flight travel bookings for May Day holiday exceeded 2019 levels, outbound travel bookings hit a new record high, according to Fliggy. Does this see some positive flow for local travel names like Qantas, Flight Centre, Webjet and Corporate Travel?

Other: Overall, it was another uneventful session. A lot of commodity-related ETFs eased 1-2% overnight including Steel, Copper, Uranium and Gold.

Key Events

ASX corporate actions occurring today:

  • Trading ex-div: Wingara (WNR) – $0.006, Plato Income Maximiser (PL8) – $0.006, Spheria Emerging Companies (SEC) – $0.022, Oz Minerals (OZL) – $1.75 

  • Dividends paid: Austal (ASB) – $0.04, Nine Entertainment (NEC) – $0.06, Lovisa (LOV) – $0.38, Rio Tinto (RIO) – $3.26, Imdex (IMD) – $0.015, Restaurant Brands (RBD) – $0.16 

  • Listing: None

Economic calendar (AEST):

  • 9:50 am: Japan Balance of Trade

  • 4:00 pm: Germany Producer Price Index

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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