Market Wraps

Morning Wrap: Wall St dips ahead of inflation data, chip stocks struggle, ASX to fall

Wed 10 Aug 22, 8:30am (AEDT)

ASX Futures (SPI 200) imply the ASX 200 will open 39 points lower, down -0.57%.

Investors are taking some chips off the table ahead of tomorrow’s inflation print, Australian consumer confidence 'on par' with GFC levels but business confidence remains intact, Warren Buffet’s Berkshire Hathaway loads up on oil stocks and another chipmaker downgrades earnings.

Let’s dive in.

Overnight Summary

Wed 10 Aug 22, 8:30am (AEDT)

Name Value Chg %
Major Indices
S&P 500 4,122 -0.42%
Dow Jones 32,774 -0.18%
NASDAQ Comp 12,494 -1.19%
Russell 2000 1,913 -1.46%
Country Indices
Canada 19,578 -0.46%
China 3,247 +0.32%
Germany 13,535 -1.12%
Hong Kong 20,003 -0.21%
India 58,853 +0.80%
Japan 28,000 -0.88%
United Kingdom 7,488 +0.08%
Name Value Chg %
Commodities (USD)
Gold 1,810.90 -0.08%
Iron Ore 109.85 -
Copper 3.586 0.00%
WTI Oil 90.45 -0.06%
AUD/USD 0.6963 -0.02%
Bitcoin (AUD) 33,283 -3.31%
Ethereum (AUD) 2,450 -4.21%
US 10 Yr T-bond 2.797 +1.16%
VIX 22 +2.25%


We’re seeing a bit of de-risking ahead of the US CPI print, with poor chipmaker earnings adding further insult to injury. The recent rally is starting to feel fatigued and its resolve will be tested in the coming days as key US inflation data comes out. In the event of a pullback, will it be an orderly, garden variety pullback, or was this just another bear market rally?

  • 4 out of 11 US sectors advanced

  • Energy led gains as oil prices rebounded

  • Utilities, Real Estate and Financials also green

  • Growth-heavy sectors fell the most

  • 60% of US stocks declined

  • 55% of US stocks trade below their 200-day moving average (53% on Tuesday, 58% a week ago) 


  • Occidental Petroleum (+3.95%) shares rallied after reports that Berkshire Hathaway raised its stake in the oil and gas company to over 20%

  • Micron (-3.7%) said it expects “challenging” market conditions for the next two quarters, with current quarter revenue “at or below” the guidance provided in June

    • "We anticipated there would be inventory adjustments in PC & smartphones and then some isolated adjustments in some other areas like enterprise … it's broadened & actually weakened more,” said CFO Mark Murphy 

    • "We're seeing inventory adjustments across most end markets. That includes the cloud..We're also beginning to see some inventory adjustments occurring in automotive and industrial markets"

  • Ralph Lauren (-4.3%) posted better-than-expected quarterly results, with adjusted earnings per share of $1.88 vs. $1.71 expected. Ralph Lauren reaffirmed its full-year guidance and expects high single digit revenue growth. Though, margins were flagged to contract 40 to 80 bps due to inflation

  • Norwegian Cruise Line (-10.6%) posted a wider-than-expected loss and revenue miss, with occupancy rates of just 65% compared to more than 100% in the same quarter in 2019. The cruise line said it doesn’t expect to return to pre-pandemic occupancy levels until 2023

  • Novavax (-29.6%) cut its sales outlook from US$4-5bn to US$2-2.3bn, with no new covid vaccine sales expected for the rest of the year. Management expected to book around 460m shots but was late to the market where people opted for Pfizer or Moderna shots 

After hours trading: 

  • Coinbase (-10.6%, after hours: -4.3%) posted a loss of over -US$1bn in the second quarter, well below analyst expectations. Revenue declined by almost -64% as investors left the crypto market

    • "Soft crypto market conditions from Q2 are continuing into Q3 and are reflected in our Q3 outlook,” said Coinbase 

  • Roblox (-3.2%, after hours: -17.7%) missed both revenue and earnings expectations. The gaming company reported 52.2m average daily active users, up 21% compared to last year but down from 54.1m reported in the first quarter. Free cash flows slumped to -US$57.3m compared to US$104.6m in the first quarter 

    • "As a result of strong results in July, we are now at peak numbers globally for users and hours, and in the US/Canada - the absolute level of users and engagement hours in July exceeded those of any prior month even during the peak lockdown periods of the pandemic,” said the company

    • "Bookings in Q2 2022, totaled US$639.9m which was -4% lower than Q2 2021. In July 2022, bookings were between US$243m and US$247m, 8% - 10% higher than in July 2021 and bookings in US/Canada grew by 14% over July 2021"


S&P 500 companies are not seeing an average share price decrease in reaction to negative earnings surprises for the first time in more than 10 years, according to FactSet. The average decline has been 0% compared to a 5-year average of around -2.3%.

US corporate earnings we’re watching this week:

  • Wednesday: Walt Disney

  • Thursday: Rivian

  • Friday: None


  • Australian consumer confidence fell to 81.2 in August from 83.8 in July

    • On par with Global Financial Crisis and pandemic lows

    • “A strong message from the collapse in the Index over the last nine months has been the negative attitude to major household purchases, where confidence has fallen almost as fast as the 12 month economic outlook,” said Westpac Chief Economist Bill Evans

    • “It seems likely that inflation, which we still see as the major negative for confidence over this period has been weighing particularly heavily on the attractiveness of consumer durables.”

  • Australian business confidence was 7 pts in July from 1 pt in June

    • Sentiment strengthened across most sectors including construction, retail, wholesale, manufacturing and mining

    • “Overall, the survey suggests that despite global and domestic headwinds, demand has remained strong – and inflationary pressure continues to build suggesting that inflation is yet to peak,” said NAB Group Chief Economist Alan Oster

  • US inflation data is due on Wednesday night

    • Consensus expects inflation to ease to 8.7% in July from 9.1% in June

    • Core inflation - which excludes volatile categories like food and energy - is forecast to rise to 6.1% in July from 5.9% in June

    • Every single CPI reading this year, except January, has been hotter-than-expected

    • On the day of the CPI print, the S&P 500 has fallen an average -1.04% this year


  • Iron ore futures fell -1.5% to $109 a tonne

    • China’s Jan-July steel exports and iron ore imports fell -7% and -3.4% year-on-year respectively

  • Oil prices rallied after Russian oil exports were halted to Eastern Europe

  • Gold inched closer towards US$1,800 amid a softening dollar, safe haven flows and a potential turning point for inflation


US Sectors

Wed 10 Aug 22, 8:30am (AEDT)

Sector Chg %
Energy +1.77%
Utilities +1.06%
Real Estate +0.74%
Financials +0.57%
Consumer Staples -0.08%
Health Care -0.29%
Industrials -0.37%
Materials -0.51%
Communication Services -0.72%
Information Technology -1.00%
Consumer Discretionary -1.54%

Industry ETFs

Wed 10 Aug 22, 8:30am (AEDT)

Description Last Chg %
Steel 54.12 +1.40%
Aluminum 51.245 +1.32%
Strategic Metals 98.98 +0.52%
Gold 166.69 +0.31%
Nickel 28.7323 +0.22%
Lithium & Battery Tech 76.95 +0.04%
Silver 19.03 -0.53%
Copper Miners 30.72 -1.01%
Uranium 21.62 -2.59%
Aerospace & Defense 103.76 +0.15%
Global Jets 18.47 -1.73%
Biotechnology 132.03 -1.61%
Cannabis 19.72 -6.24%
Description Last Chg %
Bitcoin 14.79 -3.79%
Solar 85.37 +0.56%
CleanTech 16.65 -0.48%
Hydrogen 15.37 -3.12%
Cybersecurity 27.23 -0.70%
Video Games/eSports 50.91 -1.75%
Cloud Computing 18.77 -1.86%
Electric Vehicles 24.82 -2.34%
FinTech 26.12 -2.37%
Robotics & AI 22.98 -2.57%
Sports Betting/Gaming 16.65 -2.64%
E-commerce 19.12 -3.19%
Semiconductor 412.86 -4.58%

ASX Morning Brief

#1 Battery metals

There was quite a sharp reversal for several hot trending sectors like lithium, uranium, cobalt and nickel on Tuesday.

Lake Resources (ASX: LKE) was one of the more abrupt movers, closing 15.4% higher from a 28.6% intraday high. While high profile explorers like Arizona Lithium (ASX: AZL), Essential Metals (ASX: ESS) and Global Lithium (ASX: GL1) all closed red.

Still, most of these stocks have moved in a V-shaped fashion. So seeing some profit taking and volatile price action leading into the US CPI print makes sense.

After a bullish 20-30% upward move for most of these stocks, it will be interesting to see if they can hold these gains or ...?

#2 Energy

Energy was the best performing US sector as oil prices bounced back around 2%.

"Whatever crude demand destruction that occurs from a weakening global economy, won’t be able to drag down oil prices much lower given how low the supply outlook remains," said Oanda senior market analyst, Ed Moya.

"Crude prices should eventually find a home above the US$100 level, especially in the winter when the SPR release stops and if China demand roars back."

Oil price chart
Source: TradingView

#3 Gold

Gold continues to firm up, closing in on the psychological US$1,800 level.

"If inflation eases a little more than expected, gold could make a run towards the $1850 region," said Moya.

Though, its worth noting that most gold names have rallied pretty hard since July.

Gold price chart
Source: TradingView


Key Events

Stocks going ex-dividend:

  • Wed: AFI 

  • Thurs: RIO, SSR

  • Fri: SUN

  • Mon: QVE, WOT

  • Tues: ASW, GMA, PL8

ASX corporate actions occurring today:

  • Dividends paid: MTS PPS

  • Listing: None


Other things of interest (AEST): 

  • China Inflation Rate (July) at 11:30 am

  • German Inflation Rate (July) at 4:00 pm

  • US Inflation Rate (July) 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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