Market Wraps

Morning Wrap: Wall St fades on weak economic data, oil prices jump, ASX to rise

Wed 24 Aug 22, 8:40am (AEDT)

ASX Futures (SPI 200) imply the ASX 200 will open 15 points higher, up 0.21%.

US stocks edged lower as weak data fuels recession concerns, oil prices rally back towards $100 a barrel, Intel and Brookfield team up to build chip factories in Arizona and the Euro hits a 20-year low against the US dollar. 

Let’s dive in.

Overnight Summary

Wed 24 Aug 22, 8:40am (AEDT)

Name Value Chg %
Major Indices
S&P 500 4,129 -0.22%
Dow Jones 32,910 -0.47%
NASDAQ Comp 12,381 0.00%
Russell 2000 1,919 +0.18%
Country Indices
Canada 19,985 +0.05%
China 3,276 -0.05%
Germany 13,194 -0.27%
Hong Kong 19,503 -0.78%
India 59,031 +0.44%
Japan 28,453 -1.19%
United Kingdom 7,488 -0.61%
Name Value Chg %
Commodities (USD)
Gold 1,761.20 0.00%
Iron Ore 105.57 -
Copper 3.683 -0.34%
WTI Oil 93.73 -0.01%
AUD/USD 0.6929 -0.01%
Bitcoin (AUD) 31,074 +1.09%
Ethereum (AUD) 2,388 +4.18%
US 10 Yr T-bond 3.054 +0.56%
VIX 24 +1.30%


Major US indices inched lower from session highs between 0.2% and 0.9%. A messy pullback is underway as the VIX begins to climb, the 2-and-10 year Treasury yields reclaim the 3.0% level and indices slice through key moving averages like the 200-day.

VIX and US 10 year Treasury yield chart
Volatility S&P 500 Index (left) and US 10-year Treasury Yield (right)

"If this is a new bull market, why does it look so defensive. Indeed, defensive (referring to sectors/stocks including utilities, low vol high div and energy) is displaying the best strength here on a percentile-of-range basis. This is not confidence-inspiring for the bullish thesis," said Director of Global Macro at Fidelity, Jurrien Timmer.

Markets will likely be choppy at best leading up to Fed Chair Powell's Jackson Hole speech on Friday. Goldman said "we expect Powell to reiterate the case for slowing the pace of tightening laid out in his July press conference .. Softer-than-expected CPI and PPI reports since the July meeting should also make the leadership more comfortable proceeding with its plan to slow down.”

  • 7 out of 11 US sectors declined

  • Energy surged higher alongside oil prices

  • A mix of defensive and growth led the downside

  • 50% of US stocks advanced

  • 54% of US stocks trade below their 200-day moving average (54% on Monday, 43% a week ago)


  • (+3.4%) posted stronger-than-expected revenue growth with US$39.1bn sales in the second quarter compared to analyst expectations of US$38.3bn. The result defies the narrative that China’s economy is facing a substantial slowdown

  • Intel (-0.33%) and Canada’s Brookfield Asset Management have signed a definitive agreement to invest up to US$30bn in leading-edge chip factories in Arizona

    • Intel CFO: “It will allow us to increase flexibility while maintaining capacity on our balance sheet to create a more distributed and resilient supply chain." 

  • Twitter (-7.3%) shares tumbled after a whistleblower at the company failed complaints to the US Securities and Exchange Commission, alleging “extreme, egregious deficiencies by Twitter” related to privacy, security and content moderation, CNBC reported 

  • Zoom (-16.5%) shares tanked after posting US$1.1bn for the second quarter, below analyst expectations of US$1.12bn. The company downgraded its full year revenue forecast from no growth to -7% to -8%

    • Zoom CEO: “We have moved beyond the pandemic buying patterns, we are returning to more normalised enterprise sales cycles.”

    • "In Q2, we delivered our fifth straight quarter with revenue of over one billion dollars … Our revenue was impacted by the strengthening of the US dollar, performance of the online business, and to a lesser extent sales weighted to the backend of the quarter.”


Earnings we’re watching this week: 

  • Wed: Nvidia, Salesforce, Snowflake, Autodesk

  • Thu: Dollar tree, Peloton, VMware, Affirm, Dell, Workday, GAP

  • Fri: Sinopec, Pinduoduo


  • European power prices have soared so much that they’re now equal to more than US$1,000 a barrel of oil, according to Bloomberg

    • “A gas crunch is the main driver while heat waves and drought boosted electricity demand and cut hydro and nuclear output.”

  • Eurozone Manufacturing PMI fell to 49.7 in August from 49.8 in July

    • Consensus expected a reading of 48.6

    • “New orders continue to fall and inventory build-up is very strong, which reflects the squeeze in demand that the Eurozone economy is currently experiencing,” said ING

  • Eurozone Services PMI fell to 50.2 in August from 51.2 in July

    • Consensus expected a reading of 50.8

    • “Demand also weakened for the service sector as the post-pandemic rebound in consumer spending on services is fading rapidly,” said ING

    • “Weaker demand and easing input prices are helping selling price inflation moderate a bit, but the question is whether this can last now that natural gas prices are reaching new records again.”

  • US Manufacturing PMI slipped to 51.3 in August from 52.2 in July

    • Consensus expected a reading of 51.1

  • US Services PMI tumbled to 44.1 in August from 47.3 in July

    • Consensus expected a reading of 48

    • Overall PMIs have contracted for a second straight month to a 27-month low due to weakening consumer demand amid rising price pressure, material shortages and higher interest rates

  • US new home sales tumbled -12.6% to a seasonally adjusted annual rate of 511,000 units in July, the lowest since January 2016

    • “The housing market is in much worse shape than the Fed has been willing to admit. But policymakers have made it clear that inflation is their primary objective, and housing is collateral damage,” said Pantheon Macro 


  • Iron ore futures rose 0.7% to US$ 105.1 a tonne

    • Iron ore prices at risk of halving by next year amid China’s deepening property crisis, according to the Australian Financial Review

    • China’s mid-August daily steel output rises further, up 88,500 tonnes a day or 3.4% to 2.7m tonnes a day on average, according to Mysteel

  • Oil prices rallied as the US dollar rally fizzled

    • “A weakening US economy should be bad news for oil, but today’s soft economic readings suggest that OPEC+ will easily be able to justify production cuts soon,” said Oanda senior market analyst, Ed Moya

  • Gold also rallied thanks to a weaker US dollar. Another round of weak US economic data suggests that the Fed might not be able to maintain an aggressive tightening stance for much longer

US Sectors

Wed 24 Aug 22, 8:40am (AEDT)

Sector Chg %
Energy +3.62%
Materials +0.98%
Consumer Discretionary +0.32%
Industrials +0.19%
Information Technology -0.25%
Financials -0.38%
Consumer Staples -0.45%
Utilities -0.63%
Communication Services -0.71%
Health Care -1.39%
Real Estate -1.45%

Industry ETFs

Wed 24 Aug 22, 8:40am (AEDT)

Description Last Chg %
Copper Miners 30.23 +4.83%
Strategic Metals 96.52 +3.96%
Steel 53.83 +3.60%
Uranium 19.53 +3.17%
Lithium & Battery Tech 77.8 +1.94%
Gold 161.64 +0.70%
Silver 17.5 +0.69%
Aluminum 50.175 +0.40%
Nickel 29.71 -2.91%
Global Jets 17.61 +0.74%
Aerospace & Defense 104.45 +0.22%
Cannabis 16.7 +0.54%
Biotechnology 125.61 -0.19%
Description Last Chg %
Bitcoin 12.93 +2.47%
Solar 83.33 +0.71%
Hydrogen 14.35 +0.70%
CleanTech 16.1 +0.56%
Cybersecurity 27.33 +1.68%
Sports Betting/Gaming 15.66 +1.21%
Electric Vehicles 23.87 +0.84%
Semiconductor 391.59 +0.50%
Robotics & AI 21.61 -0.05%
E-commerce 17.88 -0.17%
FinTech 24.27 -0.33%
Video Games/eSports 48.49 -0.47%
Cloud Computing 17.73 -1.35%

ASX Morning Brief

#1 Energy

Energy was the best performing sector on Wall Street, up 3.6% compared to the S&P 500's 0.22% decline.

Oil is breaking above the downward channel that's been taking shape since mid June. It's also had a rather decisive rally above the 20-day moving average. Though, previous rallies in late June and late July both briefly pushed above the 20-day before tumbling even lower. Perhaps a bit more right hand side is needed to confirm the change in short-term trend.

Oil price chart
Source: TradingView, Annotations by Market Index

#2 Copper

Global X Copper Miners ETF added an outsized 4.8%. Copper prices are starting to stabilise, form some lower lows and testing the 50-day moving average.

Still, these bearish economic headlines about contracting PMIs does not bode well for industrial activity and consequently copper demand.

Interestingly, Citi's global allocation team is recommending a long position in Chinese stocks, predicting a 19.6% total return through mid-2023. The analysts said that "while we are as concerned as the next person about the underlying dynamics (or lack thereof), we think that Chinese policy makers are uniquely placed to react to disappointing economic outcomes by adding stimulus, given that inflation is not (yet) a limiting factor."

Copper futures
Copper futures (Source: TradingView)

#3 Lithium

Unsurprisingly, the Rare Earth/Strategic Metals ETF rallied 3.96%, reflecting the strength across most large cap ASX-listed lithium miners on Tuesday.

We've seen a recent outperformance of large cap, producing names like Allkem (ASX: AKE) and Pilbara Minerals (ASX: PLS) relative to smaller names and explorers. It shows us where the money is going. Will this trend continue? How much longer can lithium names run for amid this market?

#4 Uranium

Global X Uranium ETF added +3.17% overnight. A solid face value increase.

Still, most uranium stocks have gone nowhere for almost a year now. The ETF itself is trendless, judging by its longer-term moving averages and showed an ugly rejection of the 200-day (blue) earlier this month.

Global X Uranium price chart
Global X Uranium ETF (Source: TradingView)

Key Events

Stocks going ex-dividend:

  • Wed: PGH, SGF, TLS, BWF, TGA


  • Fri: ARG, AWC, GUD, NCM, LLC

  • Mon: ANN, CGF, CRN, PNI, VG8


ASX corporate actions occurring today:

  • Dividends paid: JHG

  • Listing: HRE


Other things of interest (AEST): 

  • US Fed Kashkari Speech at 9:00 am 

  • US Durable Goods Orders (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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