Market Wraps

Morning Wrap: S&P 500 wipes away all the gains from 2021, oil tanks, ASX to fall

Mon 26 Sep 22, 8:29am (AEST)

ASX Futures (SPI 200) imply the ASX 200 will open 82 points lower, down -1.27%.

Welcome back! Major US indices revisited June lows as the Fed's fight with inflation starts to get ugly. The S&P 500 has now wiped away all the gains from 2021. Volatility remains high. Brace yourself for another difficult session.

Let's get into it.

Overnight Summary

Mon 26 Sep 22, 8:29am (AEDT)

Name Value Chg %
Major Indices
S&P 500 3,693 -1.72%
Dow Jones 29,590 -1.62%
NASDAQ Comp 10,868 -1.80%
Russell 2000 1,680 -2.48%
Country Indices
Canada 18,481 -2.75%
China 3,088 -0.66%
Germany 12,284 -1.97%
Hong Kong 17,933 -1.18%
India 58,099 -1.73%
Japan 27,154 -0.58%
United Kingdom 7,019 -1.97%
Name Value Chg %
Commodities (USD)
Gold 1,650.80 -0.29%
Iron Ore 98.89 -
Copper 3.343 -0.02%
WTI Oil 79.21 +0.60%
AUD/USD 0.6510 -0.23%
Bitcoin (AUD) 28,724 -1.60%
Ethereum (AUD) 1,963 -3.57%
US 10 Yr T-bond 3.697 -0.30%
VIX 30 +9.40%


  • Major US benchmarks dipped to June lows but bounce off session lows including:

    • S&P 500 -2.94% 

    • Dow Jones -2.75%

    • Nasdaq -3.02%

  • The Energy sector fell an outsized -6.75% after oil prices collapsed to levels not seen since January

  • Healthcare was the strongest sector, down -0.54%

  • Defensive sectors including Utilities and Real Estate also outperformed

  • Discretionary and Materials underperformed benchmarks  

  • 78% of US stocks declined

  • 73% of US stocks trade below their 200-day moving average (70% last Friday, 64% a week ago)


  • FedEx (-3.4%) said that its Express, Ground and Home Delivery rates will increase by an average of 6.9%. Last week, the company’s shares fell -21.4% after posting weaker-than-expected preliminary earnings

  • Costco (-4.3%) shares continued to sell off after releasing its earnings on Thursday. Costco said it will hold off raising its membership fees after fourth-quarter earnings came in ahead of expectations

    • Costco CFO: “We've seen minor improvement in a few areas. But all in, pressures from higher commodity prices, higher wages and higher transportation costs and supply chain disruptions. They're still present, but we are seeing just a little light at the end of the tunnel.”

  • Boeing (-5.4%) reached a US$200m settlement over misleading investors after two deadly crashes of 737 Max jetliners in October 2018 and March 2019 


  • Breadth thrust gone wrong: “Only 3.6% of S&P 500 components are above their respective 50-day moving average currently. This was more than 90% as recently as 18 August. This is a fair test of the June lows when the readings were 2.0% on 16 June and 2.2% on 17 June,” said Jonathan Harrier, Chief Investment Officer at CFG Wealth Management

S&P 500 breadth
Source: Jonathan Harrier
  • A glance at the 1940s: “If, as indicators suggest, the S&P 500 is facing a new cycle low of 3,500 (producing a drawdown of 27% vs the current 25%), it would be exactly in-line with the 1946 post-WWII analog below,” said Jurrien Timmer, Director of Global Macro at Fidelity 

S&P 500 1940s
Source: Fidelity


  • Chinese President Xi Jinping possibly removed from power in a coup (Economic Times)


  • Eurozone manufacturing PMI declined to 48.5 in September from 49.1 in August

  • Eurozone services PMI declined to 48.9 in September from 49.8 in August

    • “The rate of decline accelerated to a pace which, barring pandemic lockdowns, was the steepest since 2013,” said S&P Global

    • “Forward-looking indicators, such as new order inflows, backlogs of work and future output expectations, point to the decline gathering momentum in coming months.”

  • US manufacturing PMI rose to 51.8 in September from 51.5 in August

  • US services PMI jumped to 49.2 in September from 43.7 in August

    • “New orders received by private sector firms returned to expansionary territory in September, with growth broad-based across the manufacturing and service sectors,” said S&P Global

    • “... supplier shortages  easing to the lowest since October 2020 … the rate of inflation of both firms’ costs and average selling prices for goods and services to the lowest since early-2021.”


  • Iron ore futures rose 1.4% to US$98.9 last Friday

    • Inventories of finished steel products in warehouses of Chinese traders fell -1.8% between 16 - 22 September, according to Mysteel

    • “Behind the decline was the near-term improvement in steel demand and some end-users building inventory in advance of the approaching National Day holiday,” sources said

  • Oil prices tumbled -3.9% as growth concerns behind to hit commodity prices

    • “It seems central banks are poised to remain aggressive with rate hikes and that will weaken both economic activity and the short-term crude demand outlook. The dollar rally is about to enter another level that could keep the pressure on commodities, especially oil prices,” said Oanda senior market analyst, Ed Moya

  • Gold fell to fresh two-and-a-half year lows

    • “Everything is going wrong for gold; Strong dollar, weakening jewellery demand as China’s outlook continues to deteriorate, central banks are not focusing on buying bullion, and the bond market remains its worst enemy,” said Moya

  • Newcastle coal futures fell -0.1% to US$435 a tonne

  • Uranium futures fell -1% to US$49/lb

US Sectors

Mon 26 Sep 22, 8:29am (AEDT)

Sector Chg %
Health Care -0.54%
Utilities -1.18%
Real Estate -1.30%
Information Technology -1.35%
Financials -1.56%
Consumer Staples -1.73%
Communication Services -1.77%
Industrials -1.87%
Materials -2.05%
Consumer Discretionary -2.29%
Energy -6.75%

Industry ETFs

Mon 26 Sep 22, 8:29am (AEDT)

Description Last Chg %
Gold 155.7 -1.73%
Aluminum 46.795 -2.62%
Lithium & Battery Tech 71.66 -3.53%
Silver 18.09 -4.04%
Nickel 32.235 -4.20%
Steel 49.95 -4.44%
Copper Miners 29.19 -5.76%
Uranium 20.66 -6.68%
Strategic Metals 92 -6.68%
Aerospace & Defense 97.04 -2.59%
Global Jets 16.02 -3.50%
Biotechnology 116.73 -1.21%
Cannabis 14.31 -3.63%
Description Last Chg %
Bitcoin 11.87 -2.70%
Solar 78.47 -3.53%
CleanTech 15.15 -4.62%
Hydrogen 12.1 -5.21%
Semiconductor 338.29 -1.34%
Cloud Computing 16.05 -1.74%
Robotics & AI 18.65 -1.77%
Cybersecurity 24.29 -1.89%
E-commerce 15.77 -2.03%
FinTech 21.23 -2.21%
Video Games/eSports 42.26 -2.60%
Electric Vehicles 21.94 -3.83%
Sports Betting/Gaming 13.56 -4.35%

ASX Morning Brief

Well, it feels like the stock market is going to zero.

Things are looking very grim as the market tries to price in the new narrative of higher for longer interest rates. US PMIs were rather encouraging as activity improved and costs cooled. But the rest of the world continues to post mostly contraction readings.

The bounce off session lows for US benchmarks last Friday was a band-aid for traumatic wound. Momentum is clearly pointed towards the downside and volatility remains high, with the S&P 500 VIX Index briefly spiking to 32.3.

Interesting line from Smart Karma: "Sentiment readings are sufficiently washed out that a relief equity rally can happen at any time. However, the intermediate-term direction is still down."

ASX sectors to watch

Pretty much all the ETFs we track got wrecked. Growth-heavy ETFs fell the most. The ones that fell less than -2% include Cloud, Gold, Semiconductors and Biotech.

Energy: Oil prices and US oil stocks got smashed last Friday. So expect another weak session for local names.

Brent crude oil price chart
Brent crude chart (Source: TradingView, Annotations by Market Index)

Lithium: VanEck Rare Earth/Strategic Metals ETF gaps down and sells off intraday, closing -6.7% lower. Hardly bounced off lows. Not a good look for local lithium names.

VanEck Rare Earths Strategic Metals ETF chart
VanEck Rare Earth/Strategic Metals ETF (Source: TradingView, Annotations by Market Index)

Uranium: Global X Uranium ETF also gapped down and sold off intraday. On rather above average volumes too.

Global X Uranium ETF chart
Global X Uranium ETF chart (Source: TradingView, Annotations by Market Index)

Copper: Global X Copper Miners ETF broke the wedge, towards the downside. Same gap down into intraday selling as well. Largest volume day since 25 April.

Global X Copper Miners ETF chart
Global X Copper Miners ETF chart (Source: TradingView, Annotations by Market Index)

Solar: The Invesco Solar ETF was one the last ETFs that had some shape to it, managing to hold its post Inflation Reduction Act gains pretty well. It's now caved in.

Invesco Solar ETF chart
Invesco Solar ETF chart (Source: TradingView, Annotations by Market Index)

Travel: US Global Jets ETF facing heavy distribution. Not a good look for local travel names that are starting to test the lower bound of recent trading ranges.

US Global Jets ETF chart
US Global Jets ETF chart (Source: TradingView, Annotations by Market Index)

Key Events

Stocks going ex-dividend:

  • Mon: IMD

  • Tue: PIC, SXE

  • Wed: CIW, CWP, MYR

  • Thu: EP1, GVF, NCK, SST

  • Fri: IPC, LCE, VAS

ASX corporate actions occurring today:

  • Dividends paid: ECL

  • Listing: A11


Other things of interest (AEST):

  • Germany September IFO Business Climate Indicator at 6:00 pm

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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