ASX Futures (SPI 200) imply the ASX 200 will open 41 points higher, up 0.58%.
US stocks rose for a second consecutive session amid a bounce in consumer confidence data and strong corporate earnings, key quotes from Nike and FedEx, the average 2023 S&P 500 forecasts among investment banks is 4,038 and the US market is heading into one of the strongest times of the year.
Before we dive in, an important notice:
This is the last Morning Wrap for 2022. Our first edition for 2023 will be on Tuesday, 3 January. The Evening Wrap will resume a little later on Monday, 23 January. I would like to wish all readers a safe and enjoyable festive season.
Thu 22 Dec 22, 8:31am (AEST)
|US 10 Yr T-bond||3.684||0.00%|
Thu 22 Dec 22, 8:31am (AEST)
Major US benchmarks bounced alongside strong earnings from Nike and FedEx. Perhaps Santa was also facing some supply chain issues and covid-related restrictions.
Energy was the best performing S&P 500 sector after oil prices rallied on a larger-than-expected decline in US crude oil inventories
Growth-heavy sectors managed to bounce, notably Tech and Discretionary
Defensive and yield-sensitive sectors like Real Estate, Staples and Healthcare underperformed benchmarks
Materials was one of the worst performing sectors (still green), stalling after the Wednesday's US dollar inspired rally
76% of stocks advanced
51% of stocks trade below their 200-day moving average (54% on Wednesday, 47% a week ago)
Nike (+13.0%) topped analyst earnings expectations for the most recent quarter. All of the company's business divisions (by geography) posted double-digit revenue growth except for China.
"Given our strong second quarter performance, we now expect full-year revenue to grow low teens on a currency-neutral basis, an improvement from our low double-digit guidance in the prior quarter ... As of today, we expect ~700 bps of foreign exchange headwinds.” - CFO Matthew Friend
FedEx (+3.6%) shares struggled to hold onto session highs of 6.2%. The rally was fuelled by another round of aggressive cost cuts. Revenue missed earnings expectations, EPS beat and the company’s outlook was weaker-than-expected.
"As we look to the second half of our FY 23, we are accelerating our progress on cost actions, helping to offset continued global volume softness.” - CEO Raj Subramaniam
"On the macro aspects of it, the two things we flagged were that the industrial economy is slowing around the world and with Europe being the hardest hit and that there is an e-commerce reset, and both those things happened exactly like we said we're going to happen.” - CEO Raj Subramaniam
JGB 2Y yield turns positive for first time since 2015 (Bloomberg)
Elon Musk will resign as Twitter CEO (Bloomberg)
Dealmakers brace for slow 2023 recovery after global M&A sinks (Reuters)
Global economy bets on China learning to live with Covid (Reuters)
Strategists expect US stocks to fall back toward 2022 lows in first half of next year with more pain likely ahead (Bloomberg)
German consumer confidence rose to -37.8 heading into January from -40.1 in December.
Above analyst forecasts of -38.0
"With the third rise in a row, the consumer climate is slowly working its way out of the trough. The light at the end of the tunnel is getting a little brighter.” - GFK analyst Rolf Buerk
Canada’s inflation eased to 6.8% in November from 6.9% in October.
Missed analyst forecasts of a decline to 6.7%
Core inflation was unchanged at 5.8%
Iron ore futures rose 2.7% on Wednesday to US$112.30 a tonne.
“The arrival of winter in China and rising numbers of COVID-19 infections will likely negatively impact the country's steel demand going forward.” - China Iron & Steel Association
“Many regions have entered the traditional off season for steel consumption with the fall in temperatures, while at the same time, the central government's optimised policies on COVID-19 control will nonetheless see many people infected in the short term.” - China Iron & Steel Association
Oil prices rallied after US crude oil inventories fell by more than three times what consensus expected for the last week.
Crude inventories fell -5.894m barrels compared to expectations of a 1.657m barrel draw
The US Strategic Petroleum Reserve fell by 3.7m to 378m, the lowest since December 1983
“The path of least resistance is clearly higher for oil prices and it should continue if China’s reopening doesn’t have major obstacles.” - Oanda senior market analyst Ed Moya
Gold prices started to stall after reaching a fresh six month highs on Wednesday.
2023 forecasts: The average 2023 S&P 500 forecasts for 18 major investment banks and brokers is 4,038 or a gain of 4.1% compared to today's close. To add some perspective about how accurate these guys are, the average 2022 S&P 500 forecasts for 14 major investment banks was 4,953 or -21.8% lower than today's close.
Seasonally strong days: The S&P 500 is heading into one of the strongest times of the year, based off its average daily performance between 1950 to date. "With stocks quite oversold and sentiment extremely negative, we expect a rally quite soon," said Carson Investment Group's Chief Market Strategist Ryan Detrick.
Thu 22 Dec 22, 8:31am (AEST)
|Lithium & Battery Tech||62.57||-0.62%|
|Aerospace & Defense||110.23||+1.73%|
|Robotics & AI||20.75||+1.40%|
What a year – Around 251 Morning Wraps since I started them last December. For me, it's been an awesome journey in developing this mix of news, insights and charts in a way that's hopefully a little more market savvy.
I'll be back on Tuesday, 3 January but taking two weeks of leave from Monday, 9 January for a South Australia road trip – From Melbourne to Mt Gambier, up to Adelaide and the Eyre Peninsula (please send any cool suggestions my way).
My colleagues Chris Conway and Hans Lee from Livewire will be covering for the two weeks. We'll also be working closely together next year to take the Morning Wrap to the next level.
I wish you all a great holiday break, eat lots, recharge the batteries and I'll see you all in 2023.
ASX corporate actions occurring today:
Dividends paid: Orica (ORI), GQG Partners (GQG)
6:30 pm: Indonesia interest rate decision
10:00 pm: Turkey interest rate decision
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