Market Wrap

Morning Wrap: Wall St rallies, Biden considers reducing tariffs on China, ASX set to rise

Tue 24 May 22, 8:34am (AEST)

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ASX Futures (SPI 200) imply the ASX will open 19 points higher, up 0.26%.

Wall Street bounces back after a prolonged losing streak, President Joe Biden considers reducing tariffs on China, India increases export taxes on iron ore, the world is operating with less than 2% oil capacity and Tabcorp's Keno and Lotteries demerger is set to list at 11:00 am. 

Let’s dive in.

Overnight summary

Mon 23 May 22, 10:34pm (AEST)

Name Value Chg %
Major Indices
S&P 500 3,974 +1.86%
Dow Jones 31,880 +1.98%
NASDAQ Comp 11,535 +1.59%
Russell 2000 1,793 +1.10%
Country Indices
Canada 20,198 +0.08%
China 3,147 +0.01%
Germany 14,175 +1.38%
Hong Kong 20,470 -1.19%
India 54,289 -0.07%
Japan 27,002 +0.98%
United Kingdom 7,513 +1.67%
Name Value Chg %
Commodities (USD)
Gold 1,852.30 +0.24%
Iron Ore 133.99 -
Copper 4.33 -0.37%
WTI Oil 110.01 -0.25%
AUD/USD 0.7101 -0.04%
Bitcoin (AUD) 41,226 -3.50%
Ethereum (AUD) 2,799 -2.53%
US 10 Yr T-bond 2.859 +2.58%
VIX 28 -3.23%


  • All three major US indices rallied over optimism that Biden could restore US-China trade relations

    • “I am considering it. We did not impose any of those tariffs. They were imposed by the last administration and they're under consideration," Biden said on reducing tariffs on China

  • “Conviction remains low and headlines are being more impactful than fundamentals should suggest. E.g. Biden’s tariff comments aren’t new but grab attention,” said Bank of America 

  • Today was the first time in 20 weeks that the week kicked off with a gap up higher of more than 0.3% for the S&P 500, according to Bespoke

  • JP Morgan says that “...our recession probability model based solely on financial indicators … now exceeds 41% … the market is discounting a much higher probability than that implied from economic data, and using financial indicators alone has produced false positives

  • All 11 US sectors were green

  • Financials, energy, tech and consumer staples outperformed

  • Discretionary, healthcare, utilities and real estate underperformed

  • 64% of US stocks advanced

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

  • Apple (+4%) seeks to boost production outside of China, with eyes on regions such a India and Vietnam, according to the Wall St Journal

    • More than 90% of Apple products including iPhones and MacBook laptops are manufactured in China

  • Amazon (-0.1%) is looking to sublet at least 10 million square feet of space and vacate even more by ending leases with landlords as eCommerce spending normalises 

  • Zoom (-0.5%, after hours: +6.2%) reported better-expected-earnings and issued an upbeat outlook for the June quarter. Revenue growth came in at 12% compared to almost 200% a year ago

  • Snapchat (-3.3%, after hours: -29%) said it will likely miss quarterly earnings estimates as the economy as “deteriorated further and faster than anticipated” 


  • There was no high-profile economic data on Monday

    • The World Economic Forum is commencing in Davos, Switzerland after a two-year absence 


  • Iron ore prices were unchanged, most market participants were cautious about closing deals amid market uncertainty created by the rise in India’s tariff on iron ore exports, according to Fastmarkets

    • India had increased export taxes on iron ore, raising tariffs from 30% to 50% and duties on pellets from zero to 45%

    • The export tax will help boost government income at the expense of domestic producers and disrupting global iron ore trade

  • Oil remains unchanged at US$110 as economic fears offset the reopening of Shanghai and supply side constraints

  • Gold is on a 4-day win streak as the US dollar continues to weaken


US Sectors

Mon 23 May 22, 10:34pm (AEST)

Sector Chg %
Communication Services +1.81%
Consumer Discretionary +0.64%
Consumer Staples +2.10%
Energy +2.68%
Financials +3.23%
Health Care +0.80%
Sector Chg %
Industrials +1.63%
Information Technology +2.37%
Materials +1.85%
Real Estate +1.22%
Utilities +1.21%

Industry ETFs

Mon 23 May 22, 10:34pm (AEST)

Description Last Chg %
Aluminum 61.195 +2.12%
Copper Miners 38.18 +2.59%
Gold 172.03 +0.47%
Lithium & Battery Tech 71.4 +1.40%
Nickel 37.88 -2.85%
Strategic Metals 97.41 +3.04%
Steel 58.39 +3.58%
Silver 20.07 +0.15%
Uranium 20.87 +2.87%
Aerospace & Defense 96.27 +1.91%
Global Jets 19.25 +1.56%
Biotechnology 115.61 +0.72%
Cannabis 3.67 -1.36%
Description Last Chg %
Bitcoin 18.19 -0.82%
CleanTech 13.93 +1.29%
Hydrogen 13.55 +2.07%
Solar 67.19 +0.86%
Cloud Computing 17.17 +0.23%
Cybersecurity 25.57 +1.56%
E-commerce 17.06 -0.59%
Electric Vehicles 23.2 +1.72%
FinTech 24.13 +0.87%
Robotics & AI 22.58 +1.20%
Semiconductor 396.95 +0.43%
Sports Betting/Gaming 16.42 +0.49%
Video Games/eSports 50.37 +0.60%

ASX Sectors to watch

#1 Tech

Tech is in an awkward spot after Snapchat shares declined almost -30% in after hours.

We're seeing a bit of contagion with Snapchat's warning that the economy has "deteriorated further and faster than anticipated". Nasdaq futures are currently down -1.7% and Facebook has dipped -8.3% in after hours.

This could spell a rather choppy session for local tech shares as we digest both a positive overnight session and what's likely going to be a weak upcoming session for US tech.

#2 Banks

US banks including JP Morgan, Citi, Bank of America and Wells Fargo rallied more than 5% after the possibility of lifting US tariffs on China boosted sentiment on Wall St.

This might not necessarily put local banks in the spotlight, but still something to consider. Especially since its uncommon for slow moving banks to rally more than 5%.

#3 Lithium

The Rare Earth/Strategic Metals ETF closed 3% higher, buoyed by optimism about the reopening of Shanghai and Biden's comments.

Tesla said it expects to return to pre-lockdown production in Shanghai. The EV maker hopes to double its daily output from 1,000 on Monday to 2,600 by Tuesday.

The decline in lithium carbonate prices appears to be stabilising around 457,500 yuan a tonne, from an early April all-time high of 500,000 yuan a tonne.

2022-05-24 08 18 29-Window
Source: TradingEconomics

#4 Uranium

The Global X Uranium ETF was another substantial mover overnight, up 2.9%.

2022-05-24 08 21 27-Window
Global X Uranium ETF (Source: TradingView, Annotations by Market Index)

The weakness across uranium stocks has been in-line with the decline in spot prices, now trading around US$48/lb, down from April highs of almost US$65/lb.

Spot prices have retreated back to September 2021 levels, a likewise scenario for most uranium stocks.

It appears that the pullback in spot prices has been driven by broader pressures such as recession fears, lower energy demand and Chinese lockdowns.

#5 Gold

Gold is in a pretty interesting spot, coming off a massive selloff as a result of surging Treasury yields and the US dollar.

Gold has performed well in the past week as investors pivot their worries from interest rates to recession fears, lowering yields and pushing the dollar lower.

GOLD 2022-05-24 08-29-28
(Source: TradingView)

"Gold needs to see the dollar weaken for it to attract further investment and that could happen if Europe becomes even more aggressive with their rate hikes," said Oanda senior market analyst, Ed Moya.

"Gold should start to see inflows over constant COVID fears for China and if investors become more optimistic that the US won’t see a recession in 2023."

Today's events

ASX corporate actions occurring today:

  • Ex-dividend: AMC, GQG

  • Dividends paid: ACQ

  • Listing: TLC


Other things of interest: 

  • Australia Manufacturing PMI (May) at 9:00 am

  • Australia Services PMI (May) at 9:00 am

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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