Market Wraps

Morning Wrap: Wall St extends gains, Chinese stocks sold into oblivion, ASX to rise

Tue 25 Oct 22, 8:32am (AEST)

ASX Futures (SPI 200) imply the ASX 200 will open 28 points higher, up 0.41%.

US stocks rallied ahead of a massive week for corporate earnings where 30% of the S&P 500's market capitalisation is due to report, Chinese stocks freefall on Xi's power grab, Eurozone and US PMIs slump and European natural gas prices go negative.

Let's dive in.

Overnight Summary

Tue 25 Oct 22, 8:32am (AEDT)

Name Value Chg %
Major Indices
S&P 500 3,797 +1.19%
Dow Jones 31,500 +1.34%
NASDAQ Comp 10,953 +0.86%
Russell 2000 1,748 +0.35%
Country Indices
Canada 18,918 +0.30%
China 2,978 -2.02%
Germany 12,931 +1.58%
Hong Kong 15,181 -6.36%
India 59,832 +0.88%
Japan 26,975 +0.31%
United Kingdom 7,014 +0.64%
Name Value Chg %
Commodities (USD)
Gold 1,654.10 -0.13%
Iron Ore 94.86 -
Copper 3.435 -1.15%
WTI Oil 84.89 -0.19%
AUD/USD 0.6310 -0.03%
Bitcoin (AUD) 30,754 -1.20%
Ethereum (AUD) 2,149 +1.04%
US 10 Yr T-bond 4.234 +0.50%
VIX 30 +0.54%


Major US benchmarks continued to rally as traders buy into the narrative that the Fed will begin to ease the pace of rate hikes after the November meeting.

  • 9 out of 11 sectors advanced

  • Defensives including Health Care and Staples led to the upside

  • Tech also outperformed benchmarks, up 1.38%

  • Materials and Real Estate underperformed, down -0.62% and -0.1% respectively

  • 56% of stocks higher

  • 62% of stocks trade below their 200-day moving average (63% on Monday, 66% a week ago)


  • Alibaba (-12.5%), Baidu (12.6%) and (-13%) are among several Chinese companies listed in the US that tumbled after President Xi Jinping locked in an unprecedented third term

  • Starbucks (-5.5%) shares tumbled due to its exposure to China. It operates more than 6,000 stores in the country

  • Tesla (-1.5%) cut the price of some of its cars in China. The starting price for the Model 3 sedan was lowered to 265,900 yuan from 279,900 yuan


Nothing too exciting on the earnings front, but brace yourself for a massive week.

  • 20% of S&P 500 companies have reported so far, earnings are 5.4% above consensus estimates, according to Liz Young, Head of Investment Strategy at SoFi bank

  • This week over 30% of the S&P 500's market capitalisation is set to report. "Given that the Tech sector accounts for ~20% of the S&P 500's earnings, the reports from Visa, Alphabet, Microsoft and Apple will be closely watched," said Raymond James financial services.


  • Copper buyers want long-term deals amid supply concerns (Bloomberg)

  • Japan's suspected intervention estimated at record $37bn (Bloomberg)

  • UK firms struggling with costs churn out more profit warnings (Bloomberg)

  • Xi's power grab spurs historic market rout as foreigners flee (Bloomberg)













Industrial Production YoY Sep





Retail Sales YoY Sep





Manufacturing PMI Oct





Services PMI Oct





Manufacturing PMI Oct





Services PMI Oct




Source: TradingEconomics | Table: Market Index

Key comments:

  • Eurozone PMIs: "The drop in the composite PMI clearly signals that the pace of decline in Eurozone GDP intensified moving into Q4. This is in line with our base scenario for the Eurozone economy of a modest contraction in GDP in Q3 and a sharper contraction in Q4," said Dutch bank, ABN Amro

  • Looking ahead: "The more forward looking details of the PMI report reveal that there is more weakness ahead. The new orders component of the manufacturing PMI dropped to 37.8 in October, down from 41.3 in September and the new business component of the services PMI fell to 47.6, down from 48.2."

  • US services PMIs: "The fall in business activity was solid and stronger than that seen in September, as service providers signalled a quicker decline ... With the exception of the initial pandemic period, the rate of decrease was the second-fastest since 2009," said S&P Global Platts

  • US manufacturing PMIs: "New orders returned to contraction territory in October. The decrease in new business was only marginal, but was broad based as manufacturers and service providers alike recorded weaker client demand."

  • US costs: "On the price front, input cost inflation picked up at the start of the fourth quarter, following a four-month period of softer price rises."


  • Iron ore futures rose 0.1% to US$94.75 a tonne

    • China’s September crude steel output rose 17.6% year-on-year to 86.95m tonnes. Although it's worth noting year-on-year comparisons are easing given last year’s collapse

  • Oil prices tumbled after bearish PMIs flagged that global manufacturing is contracting

    • “The short-term crude outlook has been heavy mostly on European weakness and China’s COVID woes, but now the US outlook is softening very quickly,” said Oanda senior market analyst, Ed Moya

  • Gold faded from session highs of US$1,670 as the US dollar and yields began to bounce

    • “Gold traders are buckling in for a bumpy ride as this week’s risk flows will be determined by some heavyweight earnings and from a couple massive rate decisions from the ECB and BOJ,” said Moya     

Other commodities of interest (US$):

  • Natural gas +5.7% to $5.71/MMboe

  • Zinc +1.7% to $347.8/t

  • Aluminium -1.7% to $2,171/t

  • Palladium -1.8% to $1,972/oz


  • What's needed to bring down inflation: Bloomberg Economics estimates it would take net job losses of about 35,000 per month for a year to bring inflation back to the Fed's 2% target and even more if prices remain entrenched

  • Closed off Chinese data: China has significantly reduced the quantity of economic data it publishes over time

China economic data
Source: Financial Times
  • Mutual funds to stop selling: "October is the year-end for 24% of mutual funds, representing US$1.7 trillion in assets. Starting next week, that big net seller goes away," according to Lance Roberts, Chief Strategist at RIA Advisors

Mutual funds selling aum
Source: Goldman Sachs
  • Gas prices turn negative: European next hour Dutch TTF natural gas prices (the prices under 'Commodities' refer to US prices) are now negative. This is because European storage is effectively full (same narrative with oil during covid) and there's low demand for gas because its not winter yet.

European natural gas prices

Industry ETFs

Tue 25 Oct 22, 8:32am (AEDT)

Description Last Chg %
Gold 154.15 -0.32%
Nickel 29.35 -0.41%
Silver 17.76 -0.45%
Uranium 20.35 -1.38%
Lithium & Battery Tech 68.07 -1.88%
Steel 54.95 -2.35%
Aluminum 46.6768 -2.48%
Strategic Metals 88.285 -2.86%
Copper Miners 29.22 -3.66%
Global Jets 16.73 +1.32%
Aerospace & Defense 101.95 +1.08%
Biotechnology 120.9 +1.06%
Cannabis 14.0323 -2.72%
Description Last Chg %
Bitcoin 11.84 +0.84%
Hydrogen 10.49 -1.24%
CleanTech 13.23 -1.44%
Solar 66.55 -2.54%
Sports Betting/Gaming 13.81 +0.94%
Semiconductor 321.45 +0.43%
FinTech 20.58 +0.24%
Robotics & AI 18.73 +0.16%
Cybersecurity 24.13 -0.37%
Electric Vehicles 20.77 -0.58%
Cloud Computing 16.19 -0.62%
Video Games/eSports 39.71 -2.25%
E-commerce 15 -3.87%

ASX Morning Brief

It's not even a pivot this time. Stocks are rallying on the back of expectations of one last 75 bp rate hike in November, followed by 50 bps in December and possibly a few 25 bp hikes next year.

You can't help but feel a little but suspicious given how many rallies have been rugpulled from pivot hopes.

Flash PMIs from Europe and the US showed significant weakness across both services and manufacturing - which is bad news for the economy but good news for the Fed's pivot/pause narrative.

Sectors to watch

Today was one of those days where the US market might've rallied, but that strength did not show across our ETF watchlist. This suggests the strength might have been isolated towards large caps.

Overnight ETF gainers: Jets (+1.32%), Biotech (+1.06%)

Overnight ETF losers: Copper (-3.66%), Rare Earths/Strategic Metals (-2.86%), Steel (-2.35%)

Copper: Copper spot prices continue to decline even as inventories plunge to critical levels. You can see copper prices consistently sell off from the 50-day moving average (green) below. The weakness could see some negative flows for local copper names

Copper spot price
Copper futures (Source: TradingView)

Lithium: Just thinking out loud. US-listed companies with exposure to China like Starbucks were sold off rather aggressively overnight. Most lithium names have established joint ventures, offtake or equity with Chinese companies. Could this be the underlying reasons as to why the Rare Earth and Lithium ETFs sold off overnight?

Key Events

Stocks going ex-dividend over the next week:

  • Tue: Clover Corp (CLV)

  • Wed: McMillian Shakespeare (MMS)

  • Thu: Bank of Queensland (BOQ), Acrow (ACF), Genusplus (GNP

  • Fri: 360 Capital Enhanced Income Fund (TCF), Gryphon Capital Income Trust (GCI)

  • Mon: Autosports (ASG)

See all upcoming ex-dividend stocks

ASX corporate actions occurring today:

  • Dividends paid: None

  • Listing: H&H High Conviction (HCF), Omega Oil & Gas (OMA)  

Other things of interest (AEDT):

  • 7:00 pm: Germany IFO business climate index

  • 7:30 pm: Australia Federal budget

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.

Get the latest news and insights direct to your inbox

Subscribe free