Market Wraps

Morning Wrap: S&P 500 plunges after rate hikes, US retail sales slump, ASX set to tumble

Fri 16 Dec 22, 8:34am (AEST)

ASX Futures (SPI 200) imply the ASX 200 will open 85 points lower, down -1.2%.

The Dow posted its worst day in three months amid a series of weak economic data: US retail sales marked its biggest decline in nearly a year, almost the same for US manufacturing production and the ECB hiked by 50 bps and took a hawkish turn.

Let's dive in.

Overnight Summary

Fri 16 Dec 22, 8:34am (AEDT)

Name Value Chg %
Major Indices
S&P 500 3,896 -2.49%
Dow Jones 33,202 -2.25%
NASDAQ Comp 10,811 -3.23%
Russell 2000 1,775 -2.50%
Country Indices
Canada 19,601 -1.46%
China 3,169 -0.25%
Germany 13,986 -3.28%
Hong Kong 19,369 -1.55%
India 61,799 -1.40%
Japan 28,052 -0.37%
United Kingdom 7,426 -0.93%
Name Value Chg %
Commodities (USD)
Gold 1,787.80 -1.70%
Iron Ore 109.26 -
Copper 3.776 -2.64%
WTI Oil 76.14 -1.48%
AUD/USD 0.6700 -2.38%
Bitcoin (AUD) 25,997 -2.91%
Ethereum (AUD) 1,898 -3.61%
US 10 Yr T-bond 3.45 -1.51%
VIX 23 +7.62%

US Sectors

Fri 16 Dec 22, 8:34am (AEDT)

Sector Chg %
Energy -0.53%
Utilities -1.27%
Real Estate -1.28%
Consumer Staples -1.66%
Consumer Discretionary -1.78%
Health Care -1.86%
Financials -2.01%
Industrials -2.45%
Materials -3.02%
Information Technology -3.78%
Communication Services -3.84%


Choppy on Thursday and get chopped on Friday. US markets didn’t stand a chance after another round of rate hikes by the Bank of England and European Central Bank. US retail sales data posted the largest drop in 11 months and manufacturing data fell into negative territory for the first time since June.

  • Major US benchmarks sold off quite hard intraday. Opening levels include: S&P 500 (-0.93%), Dow Jones (-0.57%) and Nasdaq Composite (-1.42%)

  • Energy stocks held up the best, a few interesting comments from IBs including:

    • JPMorgan CEO said the world needs oil, “we need cheap, reliable, safe, secure energy, of which 80% comes from oil and gas. And that number’s going to be very high for 10 or 20 years.”

    • Goldman Sachs lowered its 1Q23 oil forecasts to US$90 a barrel from US$110

  • Defensives outperformed on a relative basis, including Utilities, Real Estate and Stables

  • Risk sectors and Materials led to the downside 

  • 73% of stocks declined

  • 51% of stocks trade below their 200-day moving average (47% on Thursday, 47% a week ago) 


Lennar (+4.0%) posted mixed results for the most recent quarter, with revenue beating analyst expectations but earnings below. The homebuilder said the outlook for new orders has been weaker-than-expected.

  • The availability of labor and materials is improving dramatically, “very quickly turning the shortages of the last two years into excesses.” 

Tesla (+0.4%) CEO Elon Musk sold at least US$3.5bn worth of shares according to an SEC filing. Tesla shares are down -60.6% year-to-date.

  • “The nightmare of Musk owning Twitter has been an episode out of the Twilight Zone .. a train wreck situation.. We believe .. more activism and growing investor frustration will force the Board of Tesla to confront some of these issues head on ..” - Wedbush Securities 

Netflix (-8.6%) is refunding advertising customers due to missing viewership targets for its recently launched ad-supported service, according to Digiday.


  • FOMC downshifts to 50bp but lifts terminal rate (Bloomberg)

  • ECB to slow rate hikes, but far from done (Reuters)

  • BoE tempers policy outlook (Bloomberg)

  • Bond markets still doubts Fed's higher-for-longer messaging (Bloomberg)

  • China’s Nov factory output, retail sales miss expectations (Reuters)

  • Musk sells over US$3.5B of Tesla stock (CNBC)


The Bank of England raised interest rates by 50 bps to 3.5%.

  • In-line with consensus expectations 

  • “The labour market remains tight and there has been evidence of inflationary pressures in domestic prices and wages that could indicate greater persistence and thus justifies a further forceful monetary policy response.” - Bank of England 

The European Central Bank raised interest rates by 50 bps to 2.5%.

  • In-line with consensus expectations

  • "Based on the information that we have available today, that predicates another 50 basis point rise at our next meeting and possibly at the one after that, and possibly thereafter.” - ECB President Christine Lagarde 

  • “If you compare with the Fed, we have more ground to cover. We have longer to go … We’re not slowing down. We’re in for the long game.”

US retail sales fell -0.6% month-on-month in November from 1.3% in October.

  • Missed analyst expectations of a -0.1% decline

  • The largest decline in 11 months and worst print of the year

  • “Retail sales can be quite a volatile report, but this is a disappointing outcome … [the Fed] is signalling another 75bp of hikes from here on, it is going to reinforce market concerns about the prospect of a recession.” - ING Economics 

US industrial production fell -0.2% month-on-month in November from -0.1% in October. 

  • Missed analyst expectations of a 0.1% increase

  • Manufacturing output fell -0.6% – the first decline since June             


Iron ore futures fell -0.5% to US$110.70 a tonne. 

  • China’s steel production fell -6.5% month-on-month in November, the weakest figure reported this year

  • Over the last 11 months, output is down -1.4% compared to 2021 levels

Oil prices snapped a three-day winning streak amid hawkish central bank rhetoric which further stoked recession fears.

  • “Oil’s recent rally is running out of steam as risk aversion runs wild. ​ The dollar might be poised to rally here and that should keep some pressure on oil prices.” - Oanda senior market analyst Ed Moya 

Gold weakened amid another wave of central bank rate hikes and higher US dollar. 

  • “Gold is weakening as markets worry that global central bank tightening will drive recessionary fears and keep the dollar supported here … Gold will eventually resume its safe-haven status, but first we need to see more traders convinced that the Fed won’t follow through with their hawkish threats.” - Oanda senior market analyst Ed Moya 

Industry ETFs

Fri 16 Dec 22, 8:34am (AEDT)

Description Last Chg %
Nickel 37.4899 +0.69%
Gold 168.1 -1.63%
Lithium & Battery Tech 65.47 -1.86%
Aluminum 51.0551 -2.01%
Uranium 19.76 -2.02%
Steel 61.32 -2.92%
Silver 21.99 -3.41%
Copper Miners 37 -3.76%
Strategic Metals 88.94 -4.95%
Aerospace & Defense 111.65 -1.76%
Global Jets 18.06 -2.57%
Biotechnology 136.73 -1.82%
Cannabis 13.3 -3.99%
Description Last Chg %
Bitcoin 11.14 -2.24%
CleanTech 16.43 -2.50%
Solar 82.73 -3.01%
Hydrogen 12.52 -3.27%
Sports Betting/Gaming 15.56 -3.28%
E-commerce 17.14 -3.33%
Cloud Computing 17.01 -3.59%
Electric Vehicles 22.23 -3.73%
Robotics & AI 21.8 -3.99%
Semiconductor 380.79 -4.23%
Cybersecurity 23.02 -4.30%
Video Games/eSports 46.07 -4.71%
FinTech 20.36 -4.81%

ASX Morning Brief

A little bit of a chart dump today. Several overnight ETFs fell to key inflection points, broke key trendlines etc.

Lithium: Local lithium names are leading the decline, with Pilbara Minerals falling an outsized -11.4% on Thursday. The VanEck Rare Earths/Strategic Metals ETF followed suite, down -5.2% overnight.


Tech: Risk barometers like the Nasdaq and the Ark ETF led to the downside overnight. The Ark ETF has made a swift return to recent lows.


Materials: Commodities was another point of weakness, faltering under a wall of worries: Higher US dollar, hawkish central bank commentary, fall in Chinese steel output and missed industrial production expectations, weak US manufacturing data etc. Copper fell -2.7% but iron ore futures held up relatively well, down -0.4%.

Key Events

Stocks going ex-dividend over the next week:

  • Fri: None

  • Mon: None

  • Tue: Metcash (MTS) 

  • Wed: None

  • Thu: None

ASX corporate actions occurring today:

  • Dividends paid: Aristocrat Leisure (ALL), Elders (ELD), Technology One (TNE), Australian Vintage (AVG), ALS (ALQ) 

  •  Listing: Desoto Resources (DES) 

Economic calendar:

  • 9:00 am: Australia manufacturing and services PMI

  • 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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