Market Wraps

Morning Wrap: S&P 500 sinks on Fed hike, Powell signals more to come, ASX to fall

Thu 15 Dec 22, 8:36am (AEST)

ASX Futures (SPI 200) imply the ASX 200 will open 57 points lower, down -0.80%.

The Fed delivered a widely expected 50 bp hike and pointed to no rate cuts in 2023, Powell said 'we're not at a restrictive enough stance even with today's move', Delta Airlines said the travel boom is not over and expects 2023 earnings to almost double and oil prices rally more than 8% in three days.

Let's dive in.

Overnight Summary

Thu 15 Dec 22, 8:36am (AEDT)

Name Value Chg %
Major Indices
S&P 500 3,995 -0.61%
Dow Jones 33,966 -0.42%
NASDAQ Comp 11,171 -0.76%
Russell 2000 1,820 -0.65%
Country Indices
Canada 19,892 -0.66%
China 3,177 +0.01%
Germany 14,460 -0.26%
Hong Kong 19,673 +0.39%
India 62,678 +0.23%
Japan 28,156 +0.72%
United Kingdom 7,496 -0.09%
Name Value Chg %
Commodities (USD)
Gold 1,811.80 -0.75%
Iron Ore 109.23 -
Copper 3.848 +0.14%
WTI Oil 77.11 +2.28%
AUD/USD 0.6864 +0.13%
Bitcoin (AUD) 25,977 -0.29%
Ethereum (AUD) 1,911 -1.26%
US 10 Yr T-bond 3.503 +0.06%
VIX 21 -5.14%

US Sectors

Thu 15 Dec 22, 8:36am (AEDT)

Sector Chg %
Health Care +0.14%
Consumer Staples -0.07%
Utilities -0.16%
Industrials -0.19%
Energy -0.64%
Consumer Discretionary -0.73%
Communication Services -0.86%
Information Technology -0.86%
Real Estate -1.01%
Materials -1.11%
Financials -1.29%


What a wild session. Major US benchmarks tumbled after the Fed downshifted to a widely expected half-point rate hike but everything else was rather hawkish. The Fed projections see a weaker economy in 2023 with upward revisions to near-term inflation expectations and unemployment as well as no rate cuts in 2023.

  • S&P 500 went from 0.8% to -1.3% shortly after the Fed's rate hike but managed to a little off session lows

  • Defensive sectors outperformed on a relative basis, notably Healthcare, Utilities, Staples and Industrials

  • Energy fell despite another big rally for oil prices, now up more than 8% in the last three sessions

  • Rate sensitive and growth sectors underperformed

  • 55% of stocks declined

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


Delta Airlines (+2.1%) management said the travel boom isn’t over and expects 2023 earnings to almost double. 

  • "Demand for air travel remains robust as we exit the year and Delta's momentum is building. Our 2023 outlook for 15 to 20%  revenue growth over 2022 and margin expansion support a near doubling of EPS to $5 to $6 per share ..." - CEO Ed Bastian


  • UK November CPI weaker-than-expected ahead of BoE decision (FT)

  • Japanese manufactures' mood in Q4 lowest since March 2021(Reuters)

  • Fed's tightening cycle expected to spark surge in junk loan defaults (FT)

  • China economic activity expected to show big contraction (Bloomberg)

  • IEA says oil could rally in 2023 as sanctions weigh (Bloomberg)

  • Chinese leaders to proceed with key economic policy meeting (Bloomberg)


UK inflation eased to 10.7% in November from 11.1% in October.

  • Beat analyst expectations of a fall to 10.9% 

The Fed raised interest rates by 50 bps to 4.25% - 4.50%. 

  • In-line with analyst expectations

  • Most officials see rates ending 2023 between 5.0% and 5.5%

  • Most officials project an unemployment rate that rises to 4.6% or higher by the end of 2023 and stays above 4.0% after that

  • FOMC dot plot suggests a “higher for longer” approach, with no rate cuts in 2023

  • FOMC projections expect inflation to fall to 2.1% by 2025 but projections for inflation in 2023 and 2024 ticked higher 

The Powell Press Conference highlights:

  • On CPI data: "So the data that we received so far ... they clearly show a welcome reduction in the month of price increases. It will take substantially more evidence to give confidence that inflation is on a sustained downward path.” 

  • On rate cuts: "Historical experience cautions strongly against prematurely loosening policy. I wouldn't say we're considering rate cuts in a sustained way ... you're correct, there are no rate cuts in … for 2023."

  • On labor markets: "... it feels like we have a structural labor shortage out there where there are … a little more than four million in the workforce available to work than there is demand for the workforce."

  • More hikes to come: “I've told you today, we have an assessment that we're not at a restrictive enough stance even with today's move and we laid out our individual assessments of what we would need to do to get there."

  • No painless way to do it: "What we're doing now is raising interest rates for people. So people are paying higher rates on mortgages ...There will be softening in the labor market conditions and I wish there were a completely painless way to restore price stability. There isn't."


Iron ore futures fell -0.3% to US$108.55 a tonne. 

Oil prices extended gains, now up around 8.3% in the last three sessions.

  • EIA crude oil report showed a massive jump in stockpiles, the weekly headline number was a 10.2 million barrel build compared to consensus expectations of a 3.4 million draw

Gold spot prices dipped after the hawkish FOMC decision and press conference.

  • Prices were quick to recoup losses and trading around breakeven for the session.

  • "Gold’s recent gains were mainly driven on hope that the Fed could be done with a last rate rise in February, but this FOMC decision shows that is not the case." - Oanda senior market analyst, Ed Moya


  • Dot plot reminder: This was the Fed's dot plot last December where they expected rates to rise to around 0.75% in 2022. Hmmm.

Fed dot plot 2021
  • Fed funds vs. 2-year yield: The Fed has rarely raised rates above the 2-year Treasury yield.

Fed funds rate versus 2-year yield
Source: TradingView, Game of Trades

Industry ETFs

Thu 15 Dec 22, 8:36am (AEDT)

Description Last Chg %
Nickel 37.1 +2.35%
Silver 21.83 +0.73%
Copper Miners 36.93 +0.19%
Gold 168.51 -0.24%
Aluminum 51.43 -0.35%
Uranium 19.85 -0.45%
Steel 61.97 -0.97%
Lithium & Battery Tech 66.14 -1.12%
Strategic Metals 90.21 -1.41%
Aerospace & Defense 111.36 +0.27%
Global Jets 18.07 -0.06%
Biotechnology 136 +0.54%
Cannabis 13.6 -2.94%
Description Last Chg %
Bitcoin 11.1 +0.36%
Hydrogen 12.23 +2.21%
CleanTech 16.0795 +2.18%
Solar 81.15 +1.95%
Cloud Computing 16.99 +0.12%
Video Games/eSports 46.03 +0.09%
E-commerce 17.21 +0.06%
FinTech 20.38 -0.10%
Electric Vehicles 22.34 -0.49%
Cybersecurity 23.17 -0.65%
Robotics & AI 21.95 -0.68%
Semiconductor 386.59 -1.50%
Sports Betting/Gaming 15.82 -1.64%

ASX Morning Brief

It's a game of chicken. The Fed's been saying the exact same thing for several months now, pushing back the idea of rate cuts, with plans to keep them 'higher for longer'.

The market refuses to call the bluff, with expectations of another 25 bps in February to 4.75% - 5.0% and that's it.

Markets were incredibly choppy overnight as the two narratives battled it out. Here are three intraday charts of interest.

  1. S&P 500 dives around -2.0% after the rate hike and tries to stabilise a little bit off session lows

  2. Gold falls around -0.8% but quickly recoups all its losses

  3. US 2-year Treasury yield rips 132 bps to 4.32% as the Fed pushes its fund rate projections 50 bps higher to 5.1% but quickly gave back a majority of those gains

S&P 500 intraday chart
S&P 500 intraday chart (Source: TradingView)
Gold intraday chart
Gold intraday chart (Source: TradingView)
US government bond yields
US 2-year Treasury yield intraday (Source: TradingView)

The ASX 200 is set to open -0.80% as it tries to absorb the Fed's latest rate hike and comments. Our overnight ETF watchlist was pretty tame, with most within the +/-2% range. Given the volatility, there will be no sectors to watch today. Let's see how the dust settles. See you all in the Evening Wrap.

XJO chart
XJO chart (Source: TradingView)

Key Events

Stocks going ex-dividend over the next week:

  • Thu: Plato Income Maximiser (PL8) 

  • Fri: None

  • Mon: None

  • Tue: Metcash (MTS) 

  • Wed: None

ASX corporate actions occurring today:

  • Dividends paid: Australia and New Zealand Bank (ANZ), Waterco (WAT), ResMed (RMD), Pendal Group (PDL), Liberty Financial Group (LFG) 

  •  Listing: None

Economic calendar:

  • 11:30 am: Australia unemployment rate

  • 1:00 pm: China industrial production, retail sales

  • 11:00 pm: UK interest rate decision

  • 12:15 am: Eurozone interest rate decision

  • 12:30 am: US 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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