Morning Wrap: US stocks tried to bounce, ASX to open flat ahead Fed rate hike

ASX Futures (SPI 200) imply the ASX 200 will open 2 points lower, down -0.03%.

Major US benchmarks bounced off session lows but still red, some of the S&P 500's weakest historical days are coming up, FedEx CEO warns of a 'worldwide recession' and all eyes on the Fed's interest rate hike on Thursday.

Let's get into it.

MARKETS

• Major US benchmarks bounced off session lows including:

  • S&P 500 -1.65%

  • Dow -1.33%

  • Nasdaq -2.04%

• 2 out of 11 US sectors advanced

• Consumer Staples and Real Estate were the only green sectors

• Defensive sectors were relative outperformers

• Materials and Energy led to the downside

• 65% of US stocks declined

• 64% of US stocks trade below their 200-day moving average (62% last Friday, 57% a week ago)

STOCKS

• Tesla (-0.1%) reversed early declines of almost -3%. Morgan Stanley said the company would likely benefit from the Inflation Reduction Act

• Uber (-3.6%) said its investigating a cybersecurity incident after databases, cloud services and team chats were reportedly breached by an individual 18 year old hacker 

• FedEx (-21.4%) preannounced weaker-than-expected quarterly results. Cost cutting initiatives were introduced including the closing of 90 locations, 5 corporate offices and park all aircrafts

  • CEO: "Global volumes declined as macroeconomic trends significantly worsened later in the quarter … given the speed at which conditions shifted, Q1 results are below our expectations.”

  • “We’re seeing that volume decline in every segment around the world … The weekly numbers are not looking so good so we just assume at this point that the economic conditions are not really good. We are a reflection of everybody else’s business, especially the high-value economy."

QUICK BITES

• An abysmal FedEx: A "horrible, miserable report ... It’s a bit strange to hear FedEx speak so negatively following ... conference presentations when no one else hinted at an environment like this ... investors should assume EPS estimates across the board are at risk,” said Vital Knowledge

• Fed to front-load: "It’s fairly clear that the Fed is going to front-load rate hikes more than in our September baseline and the terminal rate, or the peak for the fed funds rate this cycle, will also be higher," said Moody's Analytics

• Can't ignore tight oil supply: "While oil prices have dropped recently, alongside global demand, we suspect that limited oil supplies should keep prices from falling too far," according to Wells Fargo

Source: Wells Fargo

• Rough days ahead: Some of the S&P 500's weakest days of the year are coming up based on average returns between 1950 and 2021, according to Carson Investment Research

Source: Carson Investment Research

WORLD NEWS 

• Option traders pile into hawkish Fed eyeing 5% peak rate (Bloomberg)

• A 6.8 magnitude earthquake hits southeast Taiwan (Reuters)

• Indian billionaire Gautam Adani overtakes Jeff Bezos (Bloomberg)

• Bank of America sees new lows for US stocks (Bloomberg)

ECONOMY

• UK sales fell -1.6% month-on-month in August from 0.4% in July

  • Consensus expected a smaller decline of -0.5%

  • All main retail segments including food, non-food, non-store retailing and fuel experienced month-on-month declines for the first time since July 2021

• Eurozone inflation up 9.1% year-on-year in August from 8.9% in July

  • In-line with consensus expectations

  • Inflation in Europe is at its highest since the euro was created in 1999

• US consumer sentiment was 59.5 in September from 58.2 in August

  • Consensus expected a reading of 60

  • Consumer sentiment has rebounded to a 5-month high amid a rapid decline in gasoline prices 

  • "The one-year economic outlook continued lifting from the extremely low readings earlier in the summer, but these gains were largely offset by modest declines in the long run outlook," said the survey’s director, Joanna Hsu 

COMMODITIES

• Iron ore futures fell -1.5% last Friday to US$99.05 a tonne

  • The easing of Chengdu lockdowns aided optimism that there won’t be another repeat of Shanghai’s two-month lockdown

  • More than 120 Chinese cities have loosened their policies around housing finance this year, according to ANZ senior commodity strategist, Daniel Hynes

  • ArcelorMittal is in talks to lay off part of its Spanish workforce as Europe’s energy crisis weighs on industrial demand. The world’s second largest steelmaker said it expects Q4 steel production across its European operations to fall -17%

• Oil steadied with Brent crude sitting around the low US$90s

• Gold tried to bounce but remains under heavy selling pressure as it tries to price in higher rates

US markets bounced off session lows, a somewhat positive move amid trying times. The ASX 200 is pointing to a rather flat open, so let's see if the market can try to hold the recent lows.

Nickel trying to break out: The Bloomberg Nickel Subindex has been range bound for the past three months. It's now rallied to a key price point.

Bloomberg Nickel Subindex ETN (Source: TradingView, Annotations by Market Index)

Uranium back below the 200: Uranium has been a sector filled with bullish headlines but choppy price action for the past 12 months. It's now back below the 200-day moving average.

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

Airlines sold off: The US Global Jets ETF is comprised of mostly US-listed airlines. It also has exposure to various international airlines including Qantas (ASX: QAN). The ETF held up relatively well amid the selloffs last week. It's finally started to cave in on rather high volumes.

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

Unphased solar: Remains strong amid all the selling and bearishness. Can it stay rangebound?

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

Stocks going ex-dividend:

• Mon: IPG, QUB, SSM

• Tue: BGP, EZL, HNG

• Wed: ABC, AHX, ALX, CAJ, CCV, COG, CUP, KPG, LAU, LYL, MAH, NWH, SHJ

• Thu: COH, CWY, EMB, GNE, KPG, VSL

• Fri: BFL, LFS, VLS 

ASX corporate actions occurring today:

• Dividends paid: BKL, CIN, JLG, OCL, SDI, SNZ, TER

• Listing: None

• Issued shares: APZ, ARG, AVL, BLG, BTI, BXB, C79, DRE, DTM, EXP, FME, FPH, HFR, HLA, HPG, ICN, IMR, IOD, LME, LPI, LRT, MAY, MFG, MR1, MRL, NAB, NBI, NYM, NZM, OFX, PAI, PH2, PIA, PMC, RCE, STK, SWP, SZL, TAS, TNT