Market Wraps

Morning Wrap: S&P 500 slips on hot producer price data, Pepsi earnings beat, ASX to fall

Thu 13 Oct 22, 8:36am (AEST)

ASX Futures (SPI 200) imply the ASX 200 will open 18 points lower, down -0.27%.

The S&P 500 extended its losing streak to six ahead of the key inflation report, US wholesale prices climbed in September, Pepsi beats earnings expectations as it passes higher prices to consumers, Fed minutes were ... still hawkish and insiders are buying their company stock again.

Let's dive in.

Overnight Summary

Thu 13 Oct 22, 8:36am (AEDT)

Name Value Chg %
Major Indices
S&P 500 3,577 -0.33%
Dow Jones 29,211 -0.10%
NASDAQ Comp 10,417 -0.09%
Russell 2000 1,688 -0.30%
Country Indices
Canada 18,206 -0.06%
China 3,026 +1.53%
Germany 12,172 -0.39%
Hong Kong 16,701 -0.78%
India 57,626 +0.84%
Japan 26,397 -0.02%
United Kingdom 6,826 -0.86%
Name Value Chg %
Commodities (USD)
Gold 1,680.10 -0.35%
Iron Ore 96.97 -
Copper 3.429 -0.97%
WTI Oil 87.10 -2.52%
AUD/USD 0.6275 -0.02%
Bitcoin (AUD) 30,548 +0.10%
Ethereum (AUD) 2,071 +0.73%
US 10 Yr T-bond 3.902 -0.94%
VIX 34 -0.18%


US stocks struggled to rally in the face of a hotter-than-expected producer price index and mostly hawkish commentary from Fed minutes.

We're starting to see some heavyweight US companies report their third quarter results. On Thursday we have Blackrock and semiconductor maker TSMC. On Friday there's JP Morgan, Morgan Stanley and Citi. So brace yourself for one of those 'xyz stock earnings moved the market' kind of days.

  • 8 out of 11 US sectors declined

  • Energy led to the upside despite another down day for oil prices

  • Staples and Discretionary were also positive, supported by the better-than-expected third quarter earnings from Pepsi 

  • Utilities fell an outsized -3.4%, now down -20.5% in the past month

    • The last three times the Utilities sector fell more than 20% in a month was in March 2020, October 2008, late 2002 and the 1930s, according to Bespoke 

  • Real Estate, Materials and Industrials also underperformed benchmarks

  • 52% of US stocks declined 

  • 71% of US stocks trade below their 200-day moving average (71% on Wednesday, 66% a week ago)


  • Moderna (+8.3%) announced it will partner with Merck to jointly develop and sell a cancer vaccine

  • American Airlines (+3.6%) said it expects a stronger profit in the third quarter thanks to higher ticket prices

  • Philips (-11.7%) shares tumbled after it said third-quarter core profit would be down -60% compared to a year ago. A respiratory device recall last year is expected to have a US$1.3bn hit on earnings 

  • Cameco (-13.6%) and Brookfield Renewable Partners formed a strategic partnership to acquire Westinghouse Electric Company, one of the world’s biggest nuclear service businesses, for US$7.9bn  


This section is back!

  • PepsiCo (+4.2%) posted 9% revenue growth in the third quarter to US$21.97bn, above Wall Street expectations. The snack and beverage maker also upgraded its full year guidance

    • Pepsi CEO: “We are very pleased with our results for Q3 as our global business momentum  remains strong. Given our YTD performance, we now expect our full-year organic  revenue to increase 12% (previously 10%)”

    • Pepsi achieved 16% organic revenue growth in the third quarter based on a -1.0% decline in organic volumes. This means that all growth came from its pricing power 

    • On the flip side, that’s a nasty ~17% increase in snacks and beverages for consumers 


  • Tiktok parent ByteDance plans music streaming expansion (WSJ)

  • Glencore settle Japanese coal contract price at record US$395/mt (S&P Global)

  • ECB starts talks on how to shrink 5.1tn euro asset hoard (Bloomberg)

  • UK pension funds step up fire sales as need for cash soars (Capital)

  • Eurozone bonds drop as gilt market chaos rattles global investors (Reuters)


  • UK GDP fell -0.3% month-on-month in August from 0.1% in September

    • Below analyst expectations of 0.1% growth

    • Month-on-month declines were let by production (-1.8%) and services (-0.1%)

    • “We have revised down significantly our forecast for the UK economy, and now expect a -0.5% contraction in GDP for 2023, compared with 1.0% growth previously,” said S&P Global 

  • US producer price index rose 0.4% month-on-month in September from -0.2% in August

    • Well above analyst expectations of flat price growth for manufacturers

    • Year-on-year, producer prices are up 8.5% in September, down from 8.7% in August and 11.7% in March

    • PPI is moderating but still hotter-than-expected and unacceptably high

    • PPI is a leading indicator which could tip to more sticky inflation in the coming months 

  • FOMC minutes highlights:

    • "Many participants emphasised that the cost of taking too little action to bring down inflation likely outweighed the cost of taking too much action. Several participants underlined the need to maintain a restrictive stance for as long as necessary..."

    • "... the unemployment rate would likely rise somewhat, importantly reflecting the effects of tighter monetary policy. Participants judged that a softening in the labor market would be needed to ease upward pressures on wages and prices"

    • "... activity in interest-sensitive sectors weakened appreciably ... a period of below-trend real GDP growth would help reduce inflationary pressures and set the stage for the sustained achievement of the Committee’s objectives of maximum employment & price stability"

    • "Several participants noted that... it would be important to calibrate the pace of further policy tightening with the aim of mitigating the risk of significant adverse effects on the economic outlook."

Fed speeches:

  • Minneapolis Fed President Kashkari:

    • The Fed will raise rates to possibly 4.5% and then remain there for some time as it assesses the economy

    • “I repeat that the Fed is a long way from stopping rate hikes”

    • A strong dollar is making US inflation a little less costly but creates challenges for other nations around the world  


  • Iron ore futures fell -0.03% to US$96 a tonne

  • Oil prices were under pressure after reports that Russia is selling oil at a discount

    • Russian oil has recently been trading at around US$75 a barrel

    •  “Oil was heavy all day as today’s news cycle was rather bleak for the crude demand outlook. A hot US PPI report suggests inflation is proving to be sticky and will keep the risk elevated that the Fed will send the economy into a recession,” said Oanda senior market analyst, Ed Moya

  • Gold managed to snap a five-day losing streak but remains at risk ahead of a pivotal inflation print

Other commodities of interest:

  • Copper -1.0% to US$3.43/lb

  • Aluminium +4.3% to US$2,337/t

  • Palladium +0.9% to US$2,142/oz

  • Platinum -0.8% to US$887/oz

  • Newcastle coal futures +4.3% to $403.6/t

  • Uranium futures +1.7% to US$49.1/lb


  • JPMorgan on rates: “We think last Friday’s US jobs report sealed the deal for a 75 bp hike at the Fed’s next meeting .. We now expect the upper band of the Fed’s target range to reach 4.75% early next year—and to remain there throughout 2023.”

  • Take your losses to the Metaverse: Facebook-parent Meta shares is now trading lower than where it closed on this day six years ago

  • An inflation adjusted loss: After adjusting S&P 500 performance for inflation, the US market is -7% from its pre-covid high, according to Bespoke

  • US dollar exposure: Graphic of how exposed S&P 500 sectors are to the surging US dollar. Semiconductors and tech-related hardware have the highest foreign revenue exposure.

S&P 500 revenue by USD exposure
Source: Factset
  • Insiders are stepping up again: "Corporate insiders are buying their company stock again in size during this latest sell-off. As the saying goes, insiders sell for all kinds of reasons, but they only buy for one. Given the historical accuracy of their timing, it’s a glass-half-full sign," said Jurrien Timmer, Director of Global Macro at Fidelity

US insider buying or selling
Source: Fidelity

US Sectors

Thu 13 Oct 22, 8:36am (AEDT)

Sector Chg %
Energy +0.75%
Consumer Staples +0.48%
Consumer Discretionary +0.23%
Communication Services 0.00
Financials -0.27%
Information Technology -0.34%
Health Care -0.53%
Materials -0.80%
Industrials -0.81%
Real Estate -1.39%
Utilities -3.42%

Industry ETFs

Thu 13 Oct 22, 8:36am (AEDT)

Description Last Chg %
Aluminum 47.02 +4.64%
Nickel 28.7749 +3.98%
Gold 155.16 +0.53%
Copper Miners 28.24 +0.53%
Steel 51.2 -0.45%
Strategic Metals 82.57 -0.51%
Silver 17.68 -0.51%
Lithium & Battery Tech 66.35 -1.25%
Uranium 19.55 -1.69%
Global Jets 15.37 +1.24%
Aerospace & Defense 96.01 -2.24%
Cannabis 13.35 +2.40%
Biotechnology 118.17 +0.73%
Description Last Chg %
Bitcoin 11.66 +0.94%
CleanTech 13.3178 -1.34%
Solar 69.12 -3.23%
Hydrogen 10.52 -3.99%
Sports Betting/Gaming 13.15 +0.84%
FinTech 20.0162 +0.22%
E-commerce 14.895 +0.03%
Robotics & AI 18.04 -0.17%
Cloud Computing 15.18 -0.46%
Video Games/eSports 39.86 -0.63%
Electric Vehicles 19.87 -0.86%
Cybersecurity 22.98 -0.91%
Semiconductor 305.92 -0.97%

ASX Morning Brief

Urgh. I spent way too much time on the stuff above which means this segment might get a little trim.

The ASX 200 got a massive boost from banks on Wednesday, with an upbeat FY22 result from Bank of Queensland (ASX: BOQ) lifting the Financials sector up 1.89%. In short, the bank said it expects strong margin momentum heading into FY23 and has yet to see any impacts on arrears as a result of rising interest rates.

This helped the ASX 200 close around breakeven, in what would have otherwise been another red day. It almost feels strange seeing good news prop the market up.

Still, there's so much negative news floating around. UK bonds are surging again, US producer inflation remains sticky, Putin is pissed off about his bridge getting blown up and so on. In recent months, the market has managed to bounce for a grasp of air before continuing to drown.

We have US inflation data due tonight. Consensus expects headline inflation to fall to 8.2% in September from 8.3% in August. Core inflation is expected to rise to 6.4% from 6.3% in August.

Sectors to watch

Notable overnight ETF gainers: Aluminium (+4.64%), Nickel (+4.59%), Jets (+1.24%)

Notable overnight ETF losers: Hydrogen (-3.99%), Solar (-3.2%), Uranium (-1.69%), Lithium (-1.25%)

Key Events

Stocks going ex-dividend:

  • Thu: TI1, D20, CGO 

  • Fri: LSX, HVN

  • Mon: WAA, CDM, CDO, FGX, WMA 

  • Tue: KSC

  • Wed: None

ASX corporate actions occurring today:

  • Dividends paid: ASB, CE1, BXB, IGL, S32 

  • Listing: BUS

Other things of interest (AEDT):

  • 11:00 am: Australia consumer inflation expectations

  • 11:30 pm: US inflation

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.

Get the latest news and insights direct to your inbox

Subscribe free