Market Wraps

Morning Wrap: US stocks give up early gains, ASX set to fall, Morgan Stanley's top consumer picks

Tue 07 Mar 23, 8:26am (AEST)

ASX 200 futures are trading 12 points lower, down -0.17% as of 8:20 am AEDT.

Major US benchmarks fade from session highs to close around breakeven, markets brace for four major events (Powell testimony, payrolls, US inflation and FOMC) over the next 13 trading days, the RBA is set to hike rates by another 25 bps to 3.6% and Morgan Stanley's top consumer staples picks.

Let's dive in.

Overnight Summary

Tue 07 Mar 23, 8:26am (AEST)

Name Value Chg %
Major Indices
S&P 500 4,048 +0.07%
Dow Jones 33,431 +0.12%
NASDAQ Comp 11,676 -0.11%
Russell 2000 1,900 -1.48%
Country Indices
Canada 20,515 -0.32%
China 3,322 -0.19%
Germany 15,654 +0.48%
Hong Kong 20,603 +0.17%
India 60,224 +0.69%
Japan 28,238 +1.11%
United Kingdom 7,930 -0.22%
Name Value Chg %
Commodities (USD)
Gold 1,852.50 -0.11%
Iron Ore 125.80 -
Copper 4.077 +0.23%
WTI Oil 80.59 +1.14%
AUD/USD 0.6727 -0.62%
Bitcoin (AUD) 33,243 -0.25%
Ethereum (AUD) 2,322 -0.51%
US 10 Yr T-bond 3.983 +0.48%
VIX 19 +0.97%

US Sectors

Tue 07 Mar 23, 8:26am (AEST)

Sector Chg %
Information Technology +0.53%
Communication Services +0.46%
Utilities +0.43%
Consumer Staples +0.33%
Energy +0.10%
Financials +0.05%
Health Care -0.06%
Industrials -0.20%
Real Estate -0.40%
Consumer Discretionary -0.71%
Materials -1.65%


SPX intraday
S&P 500 falls from session highs of 0.8% to close around breakeven (Source: TradingView)


  • S&P 500 and Nasdaq fell from session highs of 0.8% and 1.2% respectively

  • S&P 500 showing supportive technicals as it defends the 200-day moving average and a key trendline from October

  • Markets in waiting mode ahead of several high-profile drivers including Powell’s semiannual monetary policy testimony on Wednesday, US JOLTS report on Thursday and February unemployment data on Friday

  • Money managers increasingly focused on shifting away from growth to companies that can withstand higher rates and have some pricing power (Reuters)

  • Holding cash will be a winning strategy in 2023, investors say (Bloomberg)

  • Fear of ratings downgrades puts US and European companies off debt-driven deals (FT)

  • LIBOR rises above 5% for first time since December 2007 (Bloomberg)


  • Snap stock surges as push to ban TikTok gains steam in US congress (Bloomberg)

  • Credit Suisse top shareholder sells full stake in bank (Reuters)

  • Tesla cutting US prices for its most expensive models to try and boost demand (CNBC)


The consensus estimate for 2023 S&P 500 earnings per share fell 3.4% to $222.80 over the first two months of the year, according to FactSet. By comparison, the five-year average increase during the first two months is 1.6%. 


  • Eurozone retail sales weaker than expected in January (Reuters)

  • Eurozone investor morale unexpectedly falls in March (Reuters)

  • South Korea inflation decelerates in boost for BoK wary of Fed risks (Bloomberg)

Industry ETFs

Tue 07 Mar 23, 8:26am (AEST)

Description Last Chg %
Nickel 32.628 +0.59%
Aluminum 49.91 -0.40%
Gold 172.49 -0.49%
Lithium & Battery Tech 65.38 -0.61%
Silver 19.55 -1.18%
Copper Miners 40.37 -2.50%
Strategic Metals 87.58 -2.57%
Steel 70.37 -2.57%
Uranium 21.67 -3.41%
Aerospace & Defense 117.74 -0.20%
Global Jets 20.12 -0.65%
Biotechnology 130.52 -0.93%
Cannabis 10.65 -2.35%
Description Last Chg %
Bitcoin 13.69 +0.37%
Solar 78.2 +1.83%
CleanTech 16.28 +1.11%
Hydrogen 12.27 -0.65%
Cloud Computing 17.75 -0.34%
Robotics & AI 24.41 -0.45%
Sports Betting/Gaming 16.58 -0.51%
FinTech 21.42 -0.51%
Video Games/eSports 48.71 -0.66%
E-commerce 18.2774 -0.70%
Cybersecurity 23.42 -0.81%
Electric Vehicles 24.19 -1.16%
Semiconductor 419.59 -1.16%

Deeper Dive

Sectors to Watch

Not too much to see overnight as the markets brace for four major events (Powell testimony, payrolls, US CPI and FOMC) over the next 13 trading days. Our overnight sector ETF watchlist showed a little more weakness despite major US benchmarks closing relatively flat. Some notable losers include:

  • Uranium -3.60%

  • Steel -2.67%

  • Copper -2.58%

  • Rare Earths and Strategic Metals -2.39%

It's worth noting that US-listed BHP and Rio Tinto fell 2.8% and -3.3% respectively.

RBA preview

27 out of 27 economists in the Bloomberg survey expect the Reserve Bank will hike interest rates by another 25 basis points later today to 3.6%. Of course, there's a whole other debate about whether it should be a 50 basis points hike and another separate debate on how many more rate hikes are coming. But we may have some clues already, and more clues should be revealed at 2:30 pm this afternoon.

  • Rates traders are pricing in two more rate hikes this year after today's hike

  • GDP is moderating while the ABS monthly inflation indicator is showing a decline

  • Wages are not out of control but the labour market is showing its first signs of contraction

So what will the RBA do? Here's my top tip: Scroll to the last paragraph. All the answers are there. And if it's not there, then Governor Phil Lowe is speaking at the AFR Business Summit on Wednesday morning.

Broker Watch

Today's broker watch comes from a comprehensive consumer sector note penned by Morgan Stanley. In short, their view is that discretionary-linked companies are under far more pressure than their staples-linked counterparts. But it's also true that no two companies are alike. So let's go through their top conviction positions:

  • Treasury Wine Estates (ASX: TWE) - Overweight, price target of $15.40/share. Continuing improvements in margins and its multi-country of origin approach to revenues should drive growth. The company has also in-built inflation protection thanks to its cost out program. It's also getting lucky with lower grape costs (obviously grapes are its largest single-good cost).

  • Domino's Pizza (ASX: DMP) - Overweight, price target of $75/share. Despite an earnings result that disappointed every metric (and most investors), there is reason to believe high-single digit store growth as well as a significant P/E re-rate after its earnings will provide a buy-the-dip style opportunity. If soft/agri-commodities did also really peak in mid-2022, that will also be a tailwind for its products.

  • IDP Education (ASX: IEL) - Overweight, price target of $36.80/share. A structural growth story buoyed by border reopening, the pathway for IEL will likely depend on whether students are coming back to Australia and can harness its leverage/market leadership.

And now, their underweight calls (see if you can spot the theme):

  • Woolworths (ASX: WOW) - Underweight, price target of $29.70/share. Food disinflation, risks of operational de-leverage, and a higher-than-average P/E ratio doesn't make for a satisfying investment case.

  • Coles (ASX: COL) - Underweight, price target of $14/share. Many of the same reasons that apply to Woolworths also apply to Coles, but Coles has the added disadvantage of elevated CAPEX requirements in the near term.

  • Endeavour (ASX: EDV) - Underweight, price target of $6.20/share. It turns out we're not buying as much liquor as we did during the depths of the COVID-19 pandemic. Plus, its exposure to the gaming sector is seen as undesirable especially if planned reforms in NSW/TAS further affect other states/sources of revenues.

Key Events

ASX corporate actions occurring today:

  • Trading ex-div: Sonic Healthcare (SHL) – $0.42, Universal Store (UNI) – $0.14, Meridian Energy (MEZ) – $0.053, Shine Justice (SHJ) – $0.015, Perseus Mining (PRU) – $0.011, QUBE Holdings (QUB) – $0.037, Lovisa (LOV) – $0.38, PSC Insurance (PSI) – $0.052, Northern Star (NST) – $0.11, Viva Energy (VEA) – $0.133 

  • Dividends paid: GWA Group (GWA) – $0.06, Vicinity Centres (VCX) – $0.0575

  • Listing: None

Economic calendar (AEDT):

  • 11:30 am: Australia Balance of Trade

  • 2:00 pm: China Balance of Trade

  • 2:30 pm: RBA Interest Rate Decision

  • 2:00 am: Fed Chair Powell Testimony 

Written By

Hans Lee

Senior Editor

Hans is one of the Senior Editors at Livewire Markets and Market Index. He created Signal or Noise and leads the team's coverage of the global economy and fixed income markets.

Get the latest news and insights direct to your inbox

Subscribe free