Market Wraps

Morning Wrap: Wall St plunges after Powell crushes pivot hopes, ASX set to tumble

Thu 03 Nov 22, 8:34am (AEST)

ASX Futures (SPI 200) imply the ASX 200 will open 113 points lower, down -1.64%.

US stocks faltered under Powell's hawkish rhetoric, Airbnb tumbled despite posting its most profitable quarter ever, shipping giant Maersk cut its forecast for global container demand, oil prices managed to hold onto gains and how much of a bear market is priced in?

Let's dive in.

Overnight Summary

Thu 03 Nov 22, 8:34am (AEDT)

Name Value Chg %
Major Indices
S&P 500 3,760 -2.50%
Dow Jones 32,148 -1.55%
NASDAQ Comp 10,525 -3.36%
Russell 2000 1,789 -3.36%
Country Indices
Canada 19,277 -1.23%
China 3,003 +1.15%
Germany 13,257 -0.61%
Hong Kong 15,827 +2.41%
India 60,906 -0.35%
Japan 27,663 -0.06%
United Kingdom 7,144 -0.58%
Name Value Chg %
Commodities (USD)
Gold 1,637.70 -0.73%
Iron Ore 80.03 -
Copper 3.436 -1.07%
WTI Oil 89.35 +1.11%
AUD/USD 0.6349 -0.02%
Bitcoin (AUD) 31,723 -2.17%
Ethereum (AUD) 2,377 -4.75%
US 10 Yr T-bond 4.059 +0.17%
VIX 26 +0.19%

US Sectors

Thu 03 Nov 22, 8:34am (AEDT)

Sector Chg %
Utilities -1.02%
Financials -1.28%
Health Care -1.69%
Consumer Staples -1.73%
Industrials -1.76%
Energy -2.25%
Materials -2.57%
Real Estate -2.62%
Communication Services -3.04%
Information Technology -3.47%
Consumer Discretionary -3.79%


Powell pivoted alright. He pivoted from hawkish to even more hawkish, prompting a sharp nosedive for major US benchmarks.

  • All three major indices were trading around 1% higher roughly an hour before close but remarks about a narrower window for a soft landing and dismissing a pause sent stocks freefalling towards close

  • The risk-off attitude smashed growth heavy sectors, with Tech and Discretionary down more than -3%

  • The blue-chip Dow continues to outperform on a relative basis

  • This is also shown through the relative outperformance of defensive sectors like Utilities, Financials, Healthcare and Staples

  • 74% of stocks declined

  • 57% of stocks trade below their 200-day moving averages (53% on Wednesday, 59% a week ago) 


“We're now up to 792 earnings reports this season. Beat rates remain strong at 70% for EPS and 68% for sales. Slightly more companies lowering guidance than raising, and the average stock is up 0.3% on its earnings reaction day. Decent numbers,” said Bespoke Invest.

Advanced Micro Devices (-1.7%) earnings were a miss across the board, suffering from weakening PC sales. The company had already preannounced its quarterly earnings in October, where AMD shares fell -13.6%.

  •  "Results came in below our expectations due to the softening PC market and substantial inventory reduction actions across PC supply chain … grew revenue 29% YoY driven by increased sales of our data centre, embedded and game console products.” - AMD CEO Lisa Su

Airbnb (-13.4%) posted its most profitable quarter ever, with net income up 46% year-on-year to US$1.2bn. The results were ahead of Wall Street expectations but guidance was a miss for some analysts.

  • "We've seen a recovery in urban and cross-border travel, two of our strongest segments before the pandemic. And just like during the great recession in 2008, when everybody started, people today are especially interested in earning extra income through hosting.” - Airbnb CEO Brian Chesky 

  • "On the YoY for Q4, the Q4 pressure average daily rate is year-over-year. In terms of the backlog for 2023, it’s a little early to tell, but really, what we’re seeing is continued strong demand for travel overall … We have strong bookings on the books for Q4.” - Airbnb CFO Dave Stephenson 


  • China locks down area around 'iPhone city' in blow to Apple (Bloomberg)

  • Maersk sees Europe close to a recession with US not far behind (Bloomberg)


US raised interest rates by 75 bps to 4.0%, in-line with consensus expectations. Here are the highlights from the Fed’s press conference:

  • “At some point … it will become prudent to slow the pace of increases. There is significant uncertainty around that level of interest rates. Even so, we still have some ways to go.”

  • “Has it narrowed? (referring to the window for a soft landing) Yes. Is it still possible? Yes. We’ve always said it was going to be difficult. I think to the extent rates have to go higher and stay higher for longer, it becomes harder to see the path.”

  • “I would also say it’s premature to discuss pausing. It’s not something that we’re thinking about. That’s really not a conversation to be had now. We have a ways to go.” 

  • “Consumer spending is still positive. It's at pretty modest growth levels. It's not shrinking. But the banks that deal with retail customers and many retailers will tell you that the consumers are still buying, and they're still fine."


Iron ore futures rose 0.4% to US$82.5 a tonne.

  • “Chinese steel prices are likely to drop further during November under the pressure of a slowing global economy and the mismatch domestically between steel supply and demand,” said Wang Jianhua, chief analyst at Mysteel 

  • “While steel prices lost ground last month, prices of some raw materials including coking coal and coke had been standing largely stable, causing profit margins among steelmakers to keep shrinking.”

Oil prices held onto gains in the face of a more hawkish Fed.

  • The US Energy Information Agency reported a 1.26m barrel fall in gasoline inventories, which was slightly below analyst estimates

  • The Pentagon predicts that Iran will attack Saudi Arabia in 48 hours, while Iran dismisses the report

Gold briefly rallied to US$1,700 after Powell’s initial dovish remarks before catering to the US$1,630 level.

Other commodities of interest:

  • Natural gas +5.7% to US$6.2/MMboe


  • Shipping rates: "Shipping giant Maersk cuts its forecast for worldwide container demand, saying usage will shrink as much as 4% this year because of an economic slowdown," according to Bloomberg. Container spot rates out of Shanghai have fallen from a peak of ~US$5,000 to now US$1,697, the lowest level since late 2020.

  • Are we still in a bear market: "Is the bear market over? It's hard to say, but a lot of bad news has been priced in. At its max drawdown of -28%, the SPX discounted 85% of a typical 33% bear market decline and 78% of a recession bear market," said Jurrien Timmer, Director of Global Macro at Fidelity

  • JPMorgan on stock market bottoms: The market tends to bottom before earnings, GDP and payrolls improve.

JPMorgan on market bottoms

Industry ETFs

Thu 03 Nov 22, 8:34am (AEDT)

Description Last Chg %
Nickel 30.8051 +2.22%
Aluminum 46.775 +0.99%
Gold 153.46 -0.70%
Silver 18.05 -1.77%
Lithium & Battery Tech 68.33 -1.95%
Strategic Metals 88.75 -2.86%
Uranium 20.3 -3.20%
Copper Miners 30.08 -3.46%
Steel 54.48 -4.83%
Aerospace & Defense 107.34 -1.44%
Global Jets 17.83 -2.86%
Biotechnology 129.75 -1.67%
Cannabis 15.8 -5.06%
Description Last Chg %
Bitcoin 12.63 -1.27%
CleanTech 14.19 -2.40%
Solar 71.75 -2.54%
Hydrogen 11.02 -3.99%
Video Games/eSports 40.43 -1.31%
Sports Betting/Gaming 15.11 -2.18%
Electric Vehicles 21.41 -2.99%
Semiconductor 329.11 -3.16%
E-commerce 15.42 -3.89%
Robotics & AI 19.8 -4.29%
FinTech 21.2 -4.67%
Cybersecurity 24.54 -4.85%
Cloud Computing 16.44 -5.17%

ASX Morning Brief

Welcome to another episode of 'bear market things' featuring the Powell rugpull. This is yet another powerful rally that's hit a wall.

The problem here is that the market got way too drunk on the pivot narrative. And when it didn't happen, it has to recalibrate, rather abruptly, for the new outcome. Which is also the outcome that the Fed's been reiterating time and time again.

In a lot of these Wraps, we've talked about how the pullback is just as important as the rally. It shows that the recent buying was genuine, that volatility is settling and weakness is being supported.

Instead, we got the opposite, with US benchmarks freefalling in the last hour of trade. Its important to note the state of the individual benchmarks, with the Nasdaq basically back at June lows while the Dow still has plenty of breathing room.

Nasdaq composite chart
Nasdaq Composite chart (Source: TradingView)
Dow Jones chart
Dow Jones Industrial Average chart (Source: TradingView)

The ASX 200 looks much more like the Dow, given its weighting towards financials and materials. We'd need to fall around -7.6% from current levels to retest June lows. So there's plenty of breathing room. The question is, where does this pullback stop. Let's see how the rest of the week pans out.

XJO chart
XJO chart (Source: TradingView)

Sectors to watch

Today's a rather easy one: Brace for a sea of red.

All US sectors were red with growth leading to the downside. Our ETF list is all red except for nickel, most were down at least -2%.

Key Events

Stocks going ex-dividend over the next week:

  • Thu: Qualitas Real Estate Income Fund (QRI), EZZ Life Science (EZZ)

  • Fri: Janus Henderson (JHG)

  • Mon: Australia and New Zealand Bank (ANZ), Champion Iron (CIA), Macquarie (MQG) 

  • Tue: Reckon (RKN)

  • Wed: KMD Brands (KMD), ResMed (RMD), Waterco (WAT)

ASX corporate actions occurring today:

  • Dividends paid: Arena REIT (ARF), K&S Corp (KSC)

  • Listing: None

Other things of interest (AEDT):

  • 11:30 am: Australia balance of trade

  • 12:45 pm: China services PMI

  • 9:00 pm: Eurozone unemployment rate

  • 11:30 pm: US balance of trade

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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