Market Wrap

Morning Wrap: Wall St falls on inflation jitters, fresh restrictions in China, ASX to rise

Tue 12 Jul 22, 8:34am (AEST)

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ASX Futures (SPI 200) imply the ASX 200 will open 18 points higher, up 0.27%. 

All three major US indices were red, investors brace for the likelihood of another hot US inflation reading on Wednesday, Chinese cities face another round of covid restrictions and Elon Musk terminates his Twitter takeover deal. 

Let’s dive in.  

Overnight summary

Mon 11 Jul 22, 10:34pm (AEST)

Name Value Chg %
Major Indices
S&P 500 3,854 -1.15%
Dow Jones 31,174 -0.52%
NASDAQ Comp 11,373 -2.26%
Russell 2000 1,732 -2.11%
Country Indices
Canada 18,817 -1.08%
China 3,314 -1.27%
Germany 12,832 -1.40%
Hong Kong 21,124 -2.77%
India 54,395 -0.16%
Japan 26,812 +1.11%
United Kingdom 7,197 +0.00%
Name Value Chg %
Commodities (USD)
Gold 1,731.70 0.00%
Iron Ore 109.97 -
Copper 3.425 -0.17%
WTI Oil 103.33 -0.73%
AUD/USD 0.6735 +0.05%
Bitcoin (AUD) 29,861 -4.11%
Ethereum (AUD) 1,651 -5.29%
US 10 Yr T-bond 2.991 -3.55%
VIX 26 +6.21%


The relief rally is coming to an end as Wall Street braces for a hard-hitting earnings season. White House Press Secretary Karine Jean-Pierre told the media to “expect new CPI data to be highly elevated.”

Interestingly, since the start of 2021, US month-on-month CPI prints have beat consensus expectations 11 times, and below expectation only once for August 2021, according to Bank of America.

  • Utilities and Real Estate were the only green sectors

  • Defensives including Staples and Healthcare were relative safe-havens

  • Growth and cyclical sectors sold off sharply

  • 70% of US stocks declined

  • 74% of US stocks trade below their 200-day moving average (73% on Monday, 75% a week ago)


  • US earnings season is beginning to kick off. Companies in the S&P 500 are forecast to report year-on-year earnings growth of 5.7% in the second quarter, according to Refinitiv

  • AMC Entertainment (+2%) had its busiest weekend of 2022 thanks to Thor: Love and Thunder 

  • Amazon (-3.3%) shares sank after a Bloomberg report said that the number of US Prime customers plateaued in the first-half of 2022, most likely due to the US$20 membership price hike in February 

  • Under Armour (-4.7%) was downgraded by Jefferies to Neutral from Buy, citing rising competition and 'lagging' fundamentals

  • Uber (-5.2%) was hit by a report from the International Consortium of Investigative Journalists, that said Uber has lobbied extensively to relax labour and tax laws

  • Wynn Resources (-6.5%) and Las Vegas Sands (-6.3%) are under pressure after Macao introduced a week-long covid lockdown. This is the first time in two years that Macao has shut down all of its casinos

  • Nio (-9%) shares tumbled as China battles another wave of covid

  • Twitter (-11.3%) shares dipped after Elon Musk abandoned his US$44bn takeover offer. Musk alleged that Twitter under-reported the number of spam bots on the platform. Musk now faces a long court battle that could see him paying a $1bn breakup fee


  • China lockdown tracker

    • At least 6 cities have widespread restrictions, according to Bloomberg

    • Approximately 30m people face covid curbs

    • Cases have climbed to a 1-month high of around 300 (7-day trailing average)

  • China M2 money supply rose 11.4% year-on-year in June

  • China outstanding loan growth rose 11.2% year-on-year in June

    • Very strong loan growth but uncertainty remains on economic recovery, said ING China

    • “We question whether all of the loan growth went to economic activity,” said ING analysts 


  • Iron ore prices continue to deteriorate as Chinese cities face new covid restrictions. The commercial hub of Shanghai faces another mass testing campaign after the BA.5 omicron subvariant was detected

  • Oil prices are weakening amid a double whammy of US inflation jitters and China’s rising covid cases

  • Gold prices hit a fresh 9-month low as the US dollar continues to surge. A hot inflation report on Wednesday will embolden the Fed to aggressively hike interest rates, creating a difficult environment for the yellow metal


US Sectors

Mon 11 Jul 22, 10:34pm (AEST)

Sector Chg %
Communication Services -2.80%
Consumer Discretionary -2.76%
Consumer Staples -0.14%
Energy -0.89%
Financials -0.83%
Health Care -0.23%
Sector Chg %
Industrials -0.67%
Information Technology -1.42%
Materials -0.27%
Real Estate +0.01%
Utilities +0.64%

Industry ETFs

Mon 11 Jul 22, 10:34pm (AEST)

Description Last Chg %
Aluminum 50.9993 -2.99%
Copper Miners 29.45 -4.52%
Gold 162.3 -0.54%
Lithium & Battery Tech 74.81 -5.13%
Nickel 28.72 +0.92%
Strategic Metals 85.58 -5.43%
Steel 49.02 -1.86%
Silver 17.79 -1.18%
Uranium 19.31 -3.47%
Aerospace & Defense 99.32 -0.83%
Global Jets 16.83 -2.32%
Biotechnology 126.66 -1.86%
Cannabis 16.98 -2.24%
Description Last Chg %
Bitcoin 13.48 -6.08%
CleanTech 14.36 -3.97%
Hydrogen 13.14 -4.11%
Solar 76.68 -4.73%
Cloud Computing 17.81 -4.72%
Cybersecurity 26.91 -1.75%
E-commerce 17.54 -4.56%
Electric Vehicles 22.21 -3.29%
FinTech 22.57 -3.06%
Robotics & AI 21.25 -2.78%
Semiconductor 358.55 -2.30%
Sports Betting/Gaming 14.49 -4.21%
Video Games/eSports 49.2 -3.46%

ASX Sectors to watch

SPI futures point towards a questionable 0.27% open. Perhaps a bounce is on the cards after the S&P/ASX 200 fell -1.14% on Monday.

All the ETFs we track were red (except nickel). ETFs that were more growth and risk-oriented fell the most.

#1 Lithium

The Rare Earth/Strategic Metals ETF headlined losses, down -5.4% to a fresh 13-month low.

Not a good for ASX lithium names, many of which are clinging onto recent lows.

REMX 2022-07-12 08-07-26
VanEck Rare Earth/Strategic Metals ETF (Source: TradingView)

#2 Tech

The risk-off attitude and inflation jitters did not bode well with US tech names. Notable overnight declines include:

  • Zoom -9.5%

  • Affirm -8.4%

  • Tesla -6.6%

  • Block -5.7%

  • Meta -4.7%

The Cloud, FinTech and eCommerce ETFs all fell between 3-5%.

#3 Copper

Copper can't seem to hold itself together, down another -2.6% to US$3.43/lb on Monday.

The Copper Miners ETF is still 40% above pre-covid levels, but down almost -40% from April all-time highs.

2022-07-12 08 12 59-COPX 2022-07-12 08-12-22.png ‎- Photos
Global X Copper Miners ETF (Source: TradingView)

ASX-listed copper heavyweights Oz Minerals (ASX: OZL) and Sandfire Resources (ASX: SFR) both declined -4% on Monday.

#4 Uranium

Uranium spot prices have deteriorated to 2-month lows of US$46.75, according to fuel brokers Numerco.

The Uranium ETF snapped a 2-day winning streak, down -3.5% overnight.

#5 Energy

"Oil will struggle to hold the US$100 level if China’s Covid situation deteriorates much further," said Oanda senior market analyst, Ed Moya.

"Macau shutting down all non-essential businesses including casinos for one week caught everyone’s attention and could be a big red flag that we could see harsher restrictions down the road.

Interestingly, JP Morgan expects to see oil prices in the low US$100s in the second-half of 2022 and in the high US$90s in 2023.

Today's events

ASX corporate actions occurring today:

  • Ex-dividend: MTS, SDG

  • Dividends paid: NZM

  • Listing: None


Other things of interest (AEST): 

  • Australia Business Confidence (June) at 11:30 am

  • Germany ZEW Economic Sentiment Index (July) at 7:00 pm


Written By

Kerry Sun

Finance Writer & Social Media

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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