Market Wraps

Morning Wrap: Wall St dips on US-China tensions, PayPal beats earnings, ASX to fall

Wed 03 Aug 22, 8:41am (AEDT)

ASX Futures (SPI 200) imply the ASX 200 will open 11 points lower, down -0.16%.

US House Speaker Nancy Pelosi lands in Taiwan, China kicks off "important military exercises", US job openings hit a 9-month low and key quarterly earnings from names like PayPal, Airbnb and Uber.

Let’s dive in.

Overnight Summary

Wed 03 Aug 22, 8:41am (AEDT)

Name Value Chg %
Major Indices
S&P 500 4,091 -0.67%
Dow Jones 32,396 -1.23%
NASDAQ Comp 12,349 -0.16%
Russell 2000 1,882 -0.05%
Country Indices
Canada 19,505 -0.95%
China 3,186 -2.26%
Germany 13,449 -0.23%
Hong Kong 19,689 -2.36%
India 58,136 +0.04%
Japan 27,595 -1.42%
United Kingdom 7,409 -0.06%
Name Value Chg %
Commodities (USD)
Gold 1,777.80 -0.66%
Iron Ore 113.36 -
Copper 3.476 -1.22%
WTI Oil 93.73 -0.73%
AUD/USD 0.6921 +0.04%
Bitcoin (AUD) 33,383 -0.08%
Ethereum (AUD) 2,389 +1.63%
US 10 Yr T-bond 2.741 +5.18%
VIX 24 +4.77%


Geopolitical tensions run high after Nancy Pelosi safely landed in Taiwan last night, the first time that a US House speaker has visited Taiwan in 25 years. In parallel, China has commenced “important military exercises”, including live-fire air and sea drills. Perhaps more importantly, the decline in US and China relations could impact supply chains and demand, which could further elevate inflationary pressures. 

Adding further insult to injury were comments from the Fed’s San Francisco President Mary Daly, who opened up the possibility of another large interest rate hike.

“Nowhere near almost done,” Daly said during an interview with CNBC . “We have made a good start and I feel really pleased with where we’ve gotten to at this point.”

  • All 11 US sectors declined

  • Communication Services, Utilities and Healthcare were relative outperformers

  • Interest rate sensitive sectors including Real Estate, Financials and Industrials underperformed

  • 52% of US stocks declined

  • 58% of US stocks trade below their 200-day moving average (57% on Tuesday, 67% a week ago) 


  • Uber (+18.9%) posted a net loss of -US$2.6bn, mostly attributed to loss making investments in Aurora, Grab and Zomato. Still, the company topped revenue expectations as spending shifted from retail to services

    • Uber posted US$382m in free cash flow for the first time ever

  • Caterpillar (-5.9%) shares slumped on disappointing earnings, with profit beating expectations but revenue missed

    • “Sales to users were…below our expectations, largely due to the impact of supply chain constraints,” said CEO Jim Umpleby

    • “These constraints were mostly due to component shortages which resulted in production delays and shortfalls against our schedules.”

After hours earnings:

  • PayPal (+1.2%, after hours: +11.6%) posted better-than-expected results, with revenue up 9% to US$6.81bn and active customers up 6% to 429m users 

  • AMD (+2.6%, after hours: -5.3%) slightly beat both revenue and earnings expectations but forward looking guidance fell short of Wall St expectations 

    • “We delivered our eighth straight quarter of record revenue based on our strong execution and expanded product portfolio. Each of our segments grew significantly year-over-year, led by higher sales of our data centre and embedded products,” said CEO Lisa Su

  • Airbnb (+4.6%, after hours: -8.7%) quarterly revenue jumped 58% to US$2.1bn and net income of US$379m compared to a US$68m loss a year ago. Still Wall St was expecting faster growth and revenue was slightly below expectations

    • “We did see some elevated cancellations in the back of the quarter relative to our forecast,” warned Airbnb CFO Dave Stephenson 

    • “From a growth perspective, we exceeded 103M Nights and Experiences Booked, our largest quarterly number ever. We generated $2.1 billion in revenue, growing 58% year-over-year. Our revenue and GBV are 73% larger than in Q2 2019.”


US corporate earnings we’re watching this week:

  • Wednesday: Moderna,, Siemens, eBay 

  • Thursday: Alibaba, Block, Beyond Meat, Virgin Galactic, DoorDash 

  • Friday: DraftKings, Norwegian Cruise Line 


  • RBA hiked interest rates by 50 bps to 1.85%, in-line with expectations

    • “The Board expects to take further steps in the process of normalising monetary conditions over the months ahead, but it is not on a pre-set path,” said Governor Philip Lowe in a statement

  • US job openings fell -605,000 to 10.7m in June, below expectations of 11m

    • Fresh nine month low and the largest decline in over two years as demand for workers eased in wholesale and retail industries

    • Job openings have been declining since reaching a record high of 11.9m in March


  • Iron ore futures fell -0.1% to US$114.7 a tonne

    • Chinese iron ore port inventories and seaborne cargoes recovered in late July in response to improved market sentiment, according to Mysteel

    • Price movement remains subdued as market seeks clarity on August outlook

  • Oil briefly rallied on expectations that tomorrow’s OPEC+ meeting and weekly US oil inventory data will show that the supply side remains tight

  • Gold was close to a 1-month high of US$1,788 but fell sharply as Treasury yields rebounded and the US dollar got a kick from hawkish Fed comments


US Sectors

Wed 03 Aug 22, 8:41am (AEDT)

Sector Chg %
Communication Services -0.18%
Energy -0.21%
Utilities -0.22%
Health Care -0.37%
Information Technology -0.69%
Consumer Discretionary -0.70%
Consumer Staples -0.74%
Materials -1.01%
Industrials -1.05%
Financials -1.07%
Real Estate -1.30%

Industry ETFs

Wed 03 Aug 22, 8:41am (AEDT)

Description Last Chg %
Uranium 21.06 0.00%
Lithium & Battery Tech 75.47 -0.19%
Gold 165.03 -0.59%
Steel 53.37 -1.33%
Aluminum 51.3351 -1.53%
Silver 18.79 -2.02%
Strategic Metals 93.07 -2.58%
Copper Miners 29.82 -3.19%
Nickel 32.3283 -8.53%
Aerospace & Defense 104.58 +0.08%
Global Jets 17.89 -1.01%
Cannabis 17.05 +5.04%
Biotechnology 122.27 +0.29%
Description Last Chg %
Bitcoin 14.21 -0.14%
Hydrogen 14.23 +2.74%
CleanTech 15.9 +2.08%
Solar 83.35 +0.98%
Sports Betting/Gaming 15.46 +2.13%
Cloud Computing 17.53 +1.31%
Cybersecurity 25.83 +1.08%
E-commerce 17.77 +1.07%
FinTech 24.38 +0.78%
Electric Vehicles 24.17 +0.21%
Semiconductor 408.9 -0.19%
Video Games/eSports 50.35 -0.28%
Robotics & AI 22.77 -0.53%

ASX Morning Brief

Markets have plenty of reasons to stage a pullback. In the event of a pullback, it'll be interesting to see what kind we get - the constructive, garden variety 3-5% pullback or a tumble towards fresh lows.

Geopolitical tensions run high, but we have yet to see the full extent of how China will respond to Pelosi's visit. US Treasury yields ripped higher overnight and the VIX is starting to creep upwards. You might want to put the seat belt on.

#1 Tech

The Nasdaq held up relatively well amid rising geopolitical tensions and hawkish Fed talk. Though, it still has to face rather disappointing earnings from AMD and Airbnb tomorrow.

The S&P/ASX 200 Info Tech Index is starting to get comfortable above the trendline and 100-day moving average (yellow).

ASX 200 Info Tech Index chart
ASX 200 Info Tech Index Chart (Source: TradingView, Annotations by Market Index)

#2 Hydrogen

Talking technicals, it's interesting to see the Hydrogen ETF hold the gap up from last Friday, when it rallied 11.1% on optimism that a US$369bn bill for clean energy would make it through Senate and Congress.

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

There's been some strength coming back into speculative ASX-listed hydrogen names like Pure Hydrogen (ASX: PH2) and Sparc Technologies (ASX: SPN).

#3 Copper

The Copper Miners ETF is down -5.3% in the last two sessions as copper prices begin to pull back. It will be interesting to see whether or not the rebound was just a 'dead cat bounce' or if copper can stabilise around these levels.

#4 PayPal and Airbnb

On a side note, PayPal shares are up 11.6% in after hours on better-than-expected results.

Might be worth watching how local BNPL performing on Wednesday. It was interesting to see BNPL names rip higher after the RBA rate hike, with names like Zip (ASX: ZIP) adding 15.1%.

The same goes for Airbnb and local travel companies.

Key Events

ASX corporate actions occurring today:

  • Ex-dividend: AMH, CBC, QRI

  • Dividends paid: None

  • Listing: None


Other things of interest (AEST): 

  • Eurozone Services PMI (July) at 5:50 pm

  • UK Services PMI (July) at 6:30 pm

  • Eurozone Retail Sales (June) at 7:00 pm

  • US Services PMI (July) at 11:45 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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