Market Wraps

Morning Wrap: S&P 500 slumps further, IMF warns 'worst is yet to come', ASX to fall

Wed 12 Oct 22, 8:34am (AEST)

ASX Futures (SPI 200) imply the ASX 200 will open 22 points lower, -0.33%.

The S&P 500 fizzles another rally while the Nasdaq hits a fresh two year low, rideshare stocks like Uber tank after the Labour Department seeks to reclassify contractors as employees, the IMF downgrades its global growth outlook and the Bank of England ends hopes for more bailouts.

Overnight Summary

Wed 12 Oct 22, 8:34am (AEDT)

Name Value Chg %
Major Indices
S&P 500 3,589 -0.65%
Dow Jones 29,239 +0.12%
NASDAQ Comp 10,426 -1.10%
Russell 2000 1,693 +0.06%
Country Indices
Canada 18,217 -1.97%
China 2,980 +0.19%
Germany 12,220 -0.43%
Hong Kong 16,832 -2.23%
India 57,147 -1.46%
Japan 26,401 -2.64%
United Kingdom 6,885 -1.06%
Name Value Chg %
Commodities (USD)
Gold 1,673.20 -0.12%
Iron Ore 97.35 -
Copper 3.421 -0.29%
WTI Oil 88.59 -2.79%
AUD/USD 0.6270 +0.10%
Bitcoin (AUD) 30,464 -1.85%
Ethereum (AUD) 2,058 -2.42%
US 10 Yr T-bond 3.939 +1.31%
VIX 34 +3.64%


Major US benchmarks were green around midday but gains fizzled towards close. The blue chip Dow managed to close in positive territory thanks to gains from healthcare-related constituents. Whereas the Nasdaq continued to tumble, trading at levels not seen since September 2020.

  • 7 out of 11 US sectors declined

  • Defensive sectors including Real Estate, Staples, Health Care and Industrials managed to weather the storm

  • Growth-heavy Tech and Discretionary sectors led to the downside

  • Financials also fell an outsized -1.30%

  • 51% of US stocks declined 

  • 71% of US stocks trade below their 200-day moving average (70% on Tuesday, 66% a week ago)


  • Walgreens Boots Alliance (+2.4%) is accelerating its plans to acquire the remaining 45% stake of post acute and home care company CareCentrix for US$392m

  • Taiwan Semiconductor Manufacturing Co (-5.9%) and other semiconductor stocks continue to tank after Biden’s new restrictions on exports to China   

  • Netflix (-6.8%) shares slumped after Bank of America retained an underperform rating ahead of its earnings next week. Analysts said the introduction of a new advertising tier appears to “come across a bit rushed.”

    • Xperi Solutions: Consumers are starting to show subscription fatigue as they now engage with close to 9 streaming services per household. As a result, it's expected that most content owners will follow Netflix and make more high-quality ad-supported programming available without a subscription"

  • Uber (-10.4%) and Lyft (-12%) shares tanked after the US Labour Department proposed a new rule that could make it more challenging to classify delivery workers as independent contractors  


  • China's building-season flop dents hope of iron ore market boost (Bloomberg)

  • IMF warns "worst is yet to come" as steps to slow inflation raise risks (Bloomberg)

  • New York City rents jump faster than any other major US city (Bloomberg)

  • Ark extends an open letter to the Fed (Ark Invest)

  • Bank of England rules out extending intervention (Financial Times)


  • UK unemployment unexpectedly declined to 3.5% in August from 3.6% in September

    • Analysts expected unemployment to remain unchanged at 3.6%

    • The lowest reading since 1974

    • The number of unemployed people per vacancy fell to a record low of 0.9

  • The IMF downgraded its global growth forecasts and warned “the worst is yet to come”

    • Latest forecasts project global growth to remain unchanged in 2022 at 3.2% and slow to 2.7% in 2023 - 0.2 percentage points lower than the July forecast

    • There is a 25% probability that global growth could fall below 2% in 2023

    • “More than a third of the global economy will contract this year or the next, while the three largest economies - the US, EU and China - will continue to stall.”

    • “The worst is yet to come, and for many people, 2023 will feel like a recession.” 

Fed speeches:

  • Cleveland President Mester:

    • “Despite some moderation on the demand side of the economy and nascent signs of improvement in supply-side conditions, there has been no progress on inflation.”

    • “Monetary policy is moving into restrictive territory and will need to be there for some time in order to put inflation on a sustained downward path to our 2% goal.”

    • “I do not anticipate any cuts in the fed funds target range next year.” 


  • Iron ore futures fell -0.3% to US$96.2 a tonne

    • “China’s usual boom period for infrastructure construction and steel-related demand in September and October has so far offered no reprieve for investors in the iron ore market,” Bloomberg reported

  • Gold prices briefly rallied 1% to US$1,684 before closing the session slightly lower

    • “Gold prices remain vulnerable to further selling pressure as no one wants to abandon the strong dollar trade given the current macro backdrop,” said Oanda senior market analyst, Ed Moya

    • “​Bullion will struggle here as the dollar will easily be supported given the war in Ukraine is intensifying and the financial plumbing abroad is a big risk.”

  • Oil is on a two-day losing streak, down around -4.8%

    •  “Oil prices are lower as the crude demand outlook got bombarded with bearish drivers; the IMF’s outlook is fearful of a global recession next year, European (Czech and Hungary) inflation remains hot and raises the risk central banks will trigger severe recessions, China maintains zero COVID strategy as cases rise, and as Wall Street remains very bearish risky assets over the short-term,” said Moya

Other commodities of interest:

  • Copper -0.3% to US$3.42/lb

  • Aluminium -0.3% to US$2,240/t

  • Palladium -2.4% to US$2,120/oz

  • Platinum +0.1% to US$893/oz

  • Newcastle coal futures +2.5% to $387/t

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


  • JP Morgan's Kolanovic: "Resilient US labour markets pressure the Fed to continue aggressive hikes ... we look for 75 bp each from the Fed, ECB and BoE ... the September jobs report also reinforced the Fed's commitment to slowing job growth sharply from its current pace. Equally important, the Fed's sensitivity to better inflation news will remain limited until the unemployment rate moves higher."

  • Bank of America spending data: "Total credit and debit card spend, which makes up over 20% of total payments, was up 9% year-on-year in September ... Card spending per household increase 4.4% year-on-year, down from 5.0% in August. While some of this monthly decrease can be attributed to Hurricane Ian, it appears "real spending" continues to be under pressure."

  • BoE isn't bailing out nobody: Governor Bailey told pension fund managers they have three more days to finish rebalancing their positions

  • EU top diplomat's hard truth: "Our prosperity has been based on cheap energy coming from Russia ... And the access to the big China market, for exports and imports, for technological transfers, for investments, for having cheap goods ... You - the United States - take care of our security. You - China and Russia - provided the basis of our prosperity. This is a world that is no longer here." You can find the full speech here.

US Sectors

Wed 12 Oct 22, 8:34am (AEDT)

Sector Chg %
Real Estate +1.02%
Consumer Staples +0.93%
Health Care +0.58%
Industrials +0.01%
Utilities -0.27%
Materials -0.74%
Energy -0.75%
Consumer Discretionary -0.81%
Financials -1.30%
Information Technology -1.52%
Communication Services -1.64%

Industry ETFs

Wed 12 Oct 22, 8:34am (AEDT)

Description Last Chg %
Uranium 19.39 +0.83%
Lithium & Battery Tech 65.84 +0.77%
Gold 155.48 -0.21%
Strategic Metals 82.82 -0.30%
Aluminum 47.1652 -0.31%
Steel 51.66 -0.89%
Copper Miners 28.76 -1.81%
Silver 18.09 -2.27%
Nickel 29.6263 -2.87%
Aerospace & Defense 96.04 -0.03%
Global Jets 15.47 -0.65%
Biotechnology 117.95 +0.19%
Cannabis 13.51 -1.18%
Description Last Chg %
Bitcoin 11.79 -1.10%
CleanTech 13.45 -0.98%
Solar 70.09 -1.38%
Hydrogen 10.71 -1.77%
Cybersecurity 23.28 -1.29%
Robotics & AI 18.28 -1.31%
Electric Vehicles 20.16 -1.44%
Sports Betting/Gaming 13.35 -1.50%
FinTech 20.38 -1.79%
Cloud Computing 15.5 -2.06%
Video Games/eSports 40.72 -2.11%
E-commerce 15.25 -2.33%
Semiconductor 314.77 -2.81%

ASX Morning Brief

The S&P 500 and Nasdaq faded from session highs as US markets enter a catalyst rich second half of the week with FOMC minutes, inflation data and the commencement of quarterly earnings season. While the IMF didn't say anything we don't already know, it certainly added to the doom and gloom.

On Tuesday, the ASX 200 rallied 0.67% in early trade, only to close -0.34% lower. The market remains in a volatile and fragile state. SPI futures suggest a -0.33% open, which would extend our losing streak to four.

As the losing streak keeps on growing, we end up in a similar situation as the selloffs from previous weeks/months:

  • Is the market becoming increasingly oversold? Yes.

  • Are we stretched towards the downside? More and more.

  • Are we due for a bounce? Eventually.

  • But what about momentum? Clearly downward.

Sectors to watch

Notable overnight ETF gainers: Uranium (+0.8%), Lithium (+0.8%)

Notable overnight ETF losers: Nickel (-2.9%), Semiconductors (-2.8%), eCommerce (-2.3%), Cloud (-2.1%)

Overall, there weren't too many interesting overnight catalysts. Markets continue to see a risk sector led move to the downside. So expect that trend to continue to impact local sectors like Tech and Discretionary. As well as the relative outperformance of defensives, notably Staples.

Key Events

Stocks going ex-dividend:

  • Wed: WGB, HZN, RRL, GOW

  • Thu: TI1, D20, CGO 

  • Fri: LSX, HVN

  • Mon: WAA, CDM, CDO, FGX, WMA 

  • Tue: KSC

ASX corporate actions occurring today:

  • Dividends paid: NWH, CUP, NWS, BGP, BSL, PRU, PSI, TPG, MGH

  • Listing: None

Other things of interest (AEDT):

  • 9:00 am: RBA Ellis Speech

  • 5:00 pm: UK August GDP

  • 11:30 pm: US producer price index

  • 5:00 am: FOMC minutes

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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