Market Wraps

Morning Wrap: US enters technical recession, iron ore prices soar, ASX set to jump

Fri 29 Jul 22, 8:39am (AEDT)

ASX Futures (SPI 200) imply the ASX 200 will open 70 points higher, up 1.03%.

The US enters a technical recession, US futures rally as Apple reports better-than-expected earnings and iron ore jumps on China’s efforts to support its property sector. 

Let’s dive in.

Overnight Summary

Fri 29 Jul 22, 8:39am (AEDT)

Name Value Chg %
Major Indices
S&P 500 4,072 +1.21%
Dow Jones 32,530 +1.03%
NASDAQ Comp 12,163 +1.08%
Russell 2000 1,873 +1.34%
Country Indices
Canada 19,457 +1.05%
China 3,283 +0.21%
Germany 13,282 +0.88%
Hong Kong 20,623 -0.23%
India 56,858 +1.87%
Japan 27,815 +0.36%
United Kingdom 7,345 -0.04%
Name Value Chg %
Commodities (USD)
Gold 1,753.60 +0.19%
Iron Ore 106.89 -
Copper 3.493 +0.53%
WTI Oil 97.32 +0.93%
AUD/USD 0.6989 -0.02%
Bitcoin (AUD) 34,145 +4.19%
Ethereum (AUD) 2,480 +6.03%
US 10 Yr T-bond 2.681 -1.94%
VIX 22 -3.92%


I’m having a little bit of an existential crisis over whether this is a bear market rally in a longer term downtrend or signs of a potential bottom.

The US economy entered a technical recession as Q2 GDP fell much faster than anyone expected, which complicates the Fed’s plan to aggressively fight inflation. Though, markets are happy that the Fed may soon have to pivot out of its tightening stance.

  • 10 out of 11 US sectors higher

  • Defensives outperformed

  • Real Estate and Utilities rallied more than 3%

  • Financials, Healthcare and Energy lagged (but still green)

  • Communication Services was the only red sector

  • 65% of US stocks advanced

  • 60% of US stocks trade below their 200-day moving average (68% on Thursday, 68% a week ago) 


  • Etsy (+9.9%) beat top and bottom-line expectations, with revenue up 10% to US$585m. The marketplace added approximately 6m new buyers, meaning the platform has managed to maintain most of its pandemic gains 

  • Qualcomm (-4.5%) posted a 37% year-on-year rise in revenue to US$10.9bn, slightly ahead of consensus expectations. Optimism was weighed by a weaker-than-expected guidance, which flagged a slowdown in smartphone and chip demand

  • Meta Platforms (-5.2%) reported a wider-than-expected drop in quarterly revenue, down -1% from a year earlier. Facebook was investing in Instagram Reels to compete with short video apps like TikTok. Though, Reels are a lower margin product compared to Instagram Stories and the main news feed

    • “In the near term, the faster that Reels grows, the more revenue that actually displaces from higher monetizing” products, said CEO Mark Zuckerberg

After hours movers:

  • Apple (+0.4%, after hours: +2.9%) revenues rose 2% during the quarter, down from 8% in the March quarter and 36% a year ago. Still, revenue and profits were ahead of Wall Street expectations

    • “In terms of an outlook in the aggregate, we expect revenue to accelerate in the September quarter despite seeing some pockets of softness,” Apple CEO Tim Cook told CNBC

  • Intel (-1.2%, after hours: -8.3%) posted a -22% year-on-year decline in revenue and lowered its full-year guidance. Notable comments from management include:

    • “The sudden and rapid decline in economic activity was the largest driver, but the shortfall also reflects our own execution issues”

    • “We do think we’re on the bottom”


As of Thursday, nearly 50% of S&P 500 companies have reported quarterly earnings. Of those companies, 71.5% have beaten estimates, according to FactSet.

US corporate earnings we’re watching this week:

  • Friday: Chevron, Exxon Mobil, Procter & Gamble

US corporate earnings we’re watching next week:

  • Monday: Activision Blizzard, Pinterest

  • Tuesday: Caterpillar, Advanced Micro Devices, Airbnb, PayPal, Starbucks, Uber

  • Wednesday: Moderna

  • Thursday: Alibaba, Block

  • Friday: None


  • Australia retail sales rose 0.2% month-on-month in June, down from 0.7% in May

    • Below consensus expectations of a 0.5% rise

    • “Results were mixed across the six industries, with turnover rising in three of them and falling in the others, as cost-of-living pressures appear to be slowing the growth in spending,” the ABS said

  • German inflation was 7.5% in July, down from 7.6% in June

    • Consensus was expecting inflation to cool further to 7.4%

    • "German headline inflation dropped for the second month in a row in July. However, this is not yet the end of surging inflation rates," ING economist Carsten Brzeski told Reuters

  • US GDP growth was -0.9% in the second quarter compared to -1.6% in the first quarter

    • Biden and White House officials downplayed the definition of a recession, pointing to record job openings, unemployment at 50-year lows and solid manufacturing data

    • "We are on the right path and we will come through this transition stronger and more secure,” said Biden

    • The last 10 times the US had 2 or more consecutive quarters of negative real GDP growth, the economy was in a recession. You have to go back to 1947 to find an exception, according to Compound Capital

    • In the mid-70s recession, the US economy was in a recession from Nov 73 to Mar 75. Yet, the economy added jobs in each of the recession’s first nine months


  • Iron ore futures rallied 10% to US$118.3 after China plans to help troubled property developers by issuing US$148bn worth of loans for stalled projects

    • The People’s Bank of China will initially issue around 200bn yuan of low-interest loans, charging just 1.75% per annum, to state commercial banks, the Financial Times reported  

  • Oil prices were volatile thanks to the push and pull of a second consecutive contraction for the US economy and reports that OPEC will likely keep production steady

  • Gold is making a push towards US$1,800 as recession risks further validate the view that the Fed will need to slower its pace of tightening 


US Sectors

Fri 29 Jul 22, 8:39am (AEDT)

Sector Chg %
Real Estate +3.70%
Utilities +3.53%
Industrials +2.07%
Materials +1.69%
Consumer Discretionary +1.67%
Consumer Staples +1.59%
Information Technology +1.43%
Financials +0.70%
Health Care +0.55%
Energy +0.45%
Communication Services -0.74%

Industry ETFs

Fri 29 Jul 22, 8:39am (AEDT)

Description Last Chg %
Silver 17.6 +4.72%
Aluminum 49.9007 +2.83%
Uranium 21.09 +1.61%
Steel 51.89 +1.37%
Gold 161.67 +1.22%
Copper Miners 28.9 +1.07%
Strategic Metals 90.47 +1.05%
Lithium & Battery Tech 74.09 +0.32%
Nickel 29.125 -1.29%
Aerospace & Defense 99.62 +2.14%
Global Jets 17.48 +0.46%
Cannabis 16.4511 +4.86%
Biotechnology 124 +0.10%
Description Last Chg %
Bitcoin 14.12 +4.75%
Hydrogen 13.06 +11.10%
CleanTech 14.56 +8.04%
Solar 77.09 +7.51%
Electric Vehicles 23.25 +2.15%
Cloud Computing 17.03 +1.70%
Cybersecurity 25.36 +1.50%
Semiconductor 399.3 +1.23%
FinTech 23.87 +1.21%
Sports Betting/Gaming 15.44 +1.17%
Robotics & AI 21.96 +1.05%
Video Games/eSports 49.9 +0.42%
E-commerce 17.71 +0.28%

ASX Morning Brief

#1 Tech

Nasdaq futures are up more than 1% thanks to solid earnings from Apple.

Tech stocks are in an awkward place, with several ex-leaders (top performers from last year) rallying double digit percentages on Thursday.

Local tech names could continue to see positive flow thanks to a another solid session on Wall St, higher Nasdaq futures and the growing view that the Fed might need to take a breather from aggressive interest rate hikes.

Still, its worth considering that:

  • The re-rate is someone inconsequential compared to how much some tech names have declined

  • If you look at an indicator like RSI, they're approaching (or deeply in) overbought territory

  • There's a ton of price history left to navigate

    • Another way of saying this is 'trapped' holders (aka look at the left hand side of the chart)

#2 Hydrogen

The Hydrogen ETF rallied an outsized 11.1%, close to a 2-month high.

Shares in US clean energy and hydrogen companies soared on optimism that the US$369bn bill for clean energy would make it through the Senate and both houses of Congress.

The bill has largely been blocked by Democratic Senator Joe Manchin, who is an advocate for fossil fuels. Manchin reversed his stance, saying that the upcoming bill will invest in technologies both carbon-based and clean energy, while reducing carbon emissions.

See a full list of ASX hydrogen companies here.

Global X Hydrogen ETF
Global X Hydrogen ETF (Source: TradingView)

#3 Gold

Gold is staging a decent rally, up 2.3% in the past two days to US$1,750.

"Gold is breaking out now that a peak in Treasury yields is firmly in place. ​ Stagflation is here to stay and that should be good news for gold prices," said Oanda senior market analyst, Ed Moya.

"The US economy is heading towards a recession and as long as Wall Street believes the Fed will deliver a slower pace of tightening, gold should start seeing safe-haven flows again."

Gold price chart
Gold price chart (Source: TradingView)


Key Events

ASX corporate actions occurring today:

  • Ex-dividend: PGG

  • Dividends paid: JHX, PL8, RFF, SST

  • Listing: None

  • Issued shares: A1M, AEG, AL8, ASR, BIO, BIR, COL, FAU, LYK, MRI, NAB, NBI, PRU, REC, RFX, RRR, TOT, XRO

Other things of interest (AEST): 

  • Australia Producer Price Index (Q2) at 11:30 am

  • France GDP Growth Rate (Q2) at 3:30 pm

  • Germany GDP Growth Rate (Q2) at 6:00 pm

  • Eurozone Inflation Rate (July) at 7:00 pm 

  • US Personal Spending (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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