Market Wraps

Morning Wrap: Slowdown for Microsoft and Alphabet earnings, ASX to fall ahead of inflation data

Wed 27 Jul 22, 8:35am (AEDT)

ASX Futures (SPI 200) imply the ASX 200 will open 36 points lower, down -0.54%.

Soft earnings and intensifying recession pressures weigh on Wall Street, heavyweights Microsoft and Alphabet release results after hours and European gas prices are skyrocketing.

Let’s dive in.

Overnight Summary

Wed 27 Jul 22, 8:35am (AEDT)

Name Value Chg %
Major Indices
S&P 500 3,921 -1.15%
Dow Jones 31,762 -0.71%
NASDAQ Comp 11,563 -1.87%
Russell 2000 1,805 -0.69%
Country Indices
Canada 18,973 -0.69%
China 3,277 +0.83%
Germany 13,097 -0.86%
Hong Kong 20,906 +1.67%
India 55,268 -0.89%
Japan 27,655 -0.16%
United Kingdom 7,306 0.00%
Name Value Chg %
Commodities (USD)
Gold 1,715.60 -0.12%
Iron Ore 106.01 -
Copper 3.394 +0.27%
WTI Oil 95.62 +0.67%
AUD/USD 0.6941 +0.10%
Bitcoin (AUD) 30,256 -5.08%
Ethereum (AUD) 2,001 -8.61%
US 10 Yr T-bond 2.787 -1.17%
VIX 25 +5.69%


  • 8 out of 11 US sectors declined

  • Defensives sectors outperformed

  • Utilities, Healthcare and Real Estate were the only green sectors

  • Discretionary, Communication Services and Tech underperformed

  • 57% of US stocks declined

  • 67% of US stocks trade below their 200-day moving averages (68% on Tuesday, 70% a week ago) 


  • General Electric (+4.6%) earnings beat Wall Street expectations thanks to a recovery in its jet engine business. The industrial conglomerate warned that its full-year results will likely hit the low end of its guidance due to supply chain and inflationary challenges

    • “Working capital will be pressured as GE protects customers from the impact of supply chain challenges, as well as Renewable Energy-related orders,” said GE 

  • McDonalds (+2.6%) reported second quarter earnings of US$2.55 per share, ahead of Wall St expectations of US$2.47. Global comparable sales for the quarter rose 9.7%, ahead of analyst estimates of 6.8%, according to FactSet

  • Coca Cola (+1.6%) quarterly earnings topped expectations as sales from restaurants, theaters and other venues began to recover from the pandemic

    • Coke upgraded its full-year organic revenue growth forecast from 7-8% to 12-13% thanks to higher pricing and volumes

  • General Motors (-3.4%) second quarter earnings missed Wall St expectations as supply chain issues led to fewer vehicle shipments. The company maintained its full-year guidance and confident that it will be able to ramp up production in the second half

    • GM CEO Mary Barra said the company has “binding agreements” in place to build 1m electric vehicles annually by 2025

  • United Parcel Service (-3.4%) said higher prices offset lower-than-expected delivery volumes in the second quarter. Volumes fell short of internal forecasts by 222,000 packages per day, partially due to reductions in contracts from customers like Amazon

  • Shopify (-14.1%) shares tumbled after announcing plans to lay off around 1,000 employees or 10% of its workforce

After hours announcements include:

  • Alphabet (-2.3%, after hours: +5.3%) reported earnings per share of US$1.21 vs. US$1.28 expected. Advertising and Google Cloud revenues fell short of analyst expectations

    • Advertising revenue increased 12% to US$56.3bn, a massive slowdown compared to last year. This was most notable in its Youtube division, where sales rose 5% compared  to 84% a year ago

    • Google Cloud lost US$858m in the quarter as it tries to take market share from Amazon Web Services and Microsoft Azure

  • Microsoft (-2.7%, after hours: +4.8%) quarterly earnings fell just shy of Wall Street consensus. Revenue growth was at its slowest since 2020, at 12% year-on-year

    • A strong US dollar reduced revenue by US$595m


US corporate earnings we’re watching next week:

  • Wednesday: Boeing, Shopify, Etsy, Ford, Meta Platforms

  • Thursday: Pfizer, Mastercard, Amazon, Intel, Apple

  • Friday: Exxon Mobil, Chevron, Procter & Gamble 


  • The International Monetary Fund trimmed its global economic growth forecast to 3.2% in 2022, down from 3.6%

    • The IMF warned that the global economy is facing a possible severe downturn that would rank in the bottom 10% of outcomes since 1970

    • ““Tighter monetary policy will inevitably have real economic costs, but delay will only exacerbate them,” said the IMF report

  • US new home sales fell -8.1% month-on-month to 590,000 in June, down from 642,000 in May

    • New home sales is at the lowest since April 2020

    • Sales have almost halved from a peak of 1.04m in August 2020

    • Year-on-year, new home sales are down -17.4%


  • Iron ore futures rose 1.3% to US$106.4 a tonne

    • Iron ore is making a comeback amid a stream of positive news from China including the proposed real estate fund to support property developers, positive home sales in Beijing and two of China’s largest policy banks announcing their first projects under a recent 300bn yuan stimulus plan

  • Oil prices faded from session highs of 2.8% and now -0.8% lower at US$95.5 a barrel. Recession concerns are again beginning to set in amid a slump in corporate earnings and consumer confidence

  • Gold is trying to consolidate around the US$1,700 level ahead of another pivotal Fed interest rate decision


US Sectors

Wed 27 Jul 22, 8:35am (AEDT)

Sector Chg %
Utilities +0.61%
Health Care +0.55%
Real Estate +0.20%
Consumer Staples -0.47%
Industrials -0.53%
Materials -0.66%
Energy -0.88%
Financials -1.39%
Information Technology -1.58%
Communication Services -2.05%
Consumer Discretionary -3.31%

Industry ETFs

Wed 27 Jul 22, 8:35am (AEDT)

Description Last Chg %
Silver 16.98 +1.06%
Uranium 19.72 0.00%
Gold 160.23 -0.12%
Steel 50.69 -0.22%
Copper Miners 28.28 -0.78%
Lithium & Battery Tech 72.89 -1.07%
Strategic Metals 87.62 -1.18%
Nickel 29.3 -2.70%
Aluminum 51.8616 -2.70%
Aerospace & Defense 100.38 -1.47%
Global Jets 17.31 -2.02%
Biotechnology 122.62 +0.20%
Cannabis 17.05 -4.16%
Description Last Chg %
Bitcoin 13.54 -4.58%
Solar 73.21 -0.79%
Hydrogen 12.86 -2.18%
CleanTech 14.16 -2.61%
Electric Vehicles 22.86 -1.66%
Semiconductor 388.3 -1.67%
Robotics & AI 21.64 -2.31%
Video Games/eSports 49.51 -2.34%
Sports Betting/Gaming 15.25 -2.69%
E-commerce 17.54 -3.25%
FinTech 23.4 -3.42%
Cybersecurity 26.31 -4.33%
Cloud Computing 17.08 -4.45%

ASX Morning Brief

#1 Tech

The Nasdaq fell an outsized -1.9% but futures are currently up 1.4% as Alphabet and Microsoft shares rally in extended trading. This creates a rather confusing session for the local tech sector.

Notable overnight fallers include:

  • Affirm -11.7%

  • Block -7.1%

  • PayPal -5.7%

  • Zoom -5.4%

  • Amazon -5.2%

It will be interesting to see if the positive futures can outweigh the weak overnight session.

From a chart perspective, the S&P/ASX 200 Info Tech Index is staging a slight pullback from the 100-day (yellow) and channel. It's worth keeping an eye out for how it behaves around these levels (i.e. does it hold up or does it freefall).

ASX 200 Info Tech Index Chart
ASX 200 Info Tech Index (Source: TradingView, Annotations by Market Index)

#2 Materials

Commodities held up relatively well amid a rather risk-off session on Wall Street.

ETFs including Rare Earth/Strategic Metals, Lithium & Battery Tech, Copper Miners, Steel and Uranium all traded around flat to -1.2%.

Local lithium stocks had a very strong day on Tuesday. As we pointed out in yesterday's wrap, the Rare Earth/Strategic Metals ETF is trying to turn bullish, rallying above the trendline (black) and 20-day moving average (red).

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

Still, most of these ETFs are coming out of massive downtrends. More consolidation and strength is needed.

Key Events

ASX corporate actions occurring today:

  • Ex-dividend: MIR, PSC

  • Dividends paid: PMV, TGP, TOT

  • Listing: SRX


Other things of interest (AEST): 

  • Australia Inflation Rate (Q2) at 11:30 am

  • German Consumer Confidence (August) at 4:00 pm

  • US Durable Goods Orders (June) at 10:30 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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