ASX 200 to fall as US banking crisis reignites, S&P 500 tumbles, oil slumps 5%

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The Morning Wrap

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ASX 200 futures are trading 41 points lower, down -0.58% as of 8:30 am AEDT.

Major US benchmarks fell but off worst levels, several US regional bank shares drop between 10-30% as JPMorgan seeks to close a deal with First Republic, oil tumbles 5% to a five-week low, Uber shares rally on a shallower loss and a positive outlook on cash flows, and the Fed is widely expected to hike rates by another 25 bps on Thursday.

Let's dive in.

Source: Market Index


S&P 500 tumbles but closes off session lows (Source: TradingView)


  • Heavy session with the US equities lower but off worst levels
  • S&P 500 down -1.16% but off intraday lows of -1.88%
  • Regional banking weakness was the major drag – Multiple names posted steep losses incl PacWest (-27.8%), Metropolitan Bank (-20.5%) Western Alliance (-15.1%)
  • Discretionary stocks outperformed thanks to gains from Marriott (+5.0%), Etsy (+3.0%) and Amazon (+1.6%)
  • WTI crude down 5.6% to US$71.50 a barrel, the lowest close since March 24
  • Russian oil exports >4m bpd for second time since Ukraine invasion (Bloomberg)
  • Recession fears accelerate Treasury purchases, selling of high yield debt (Reuters)
  • Stock-pickers go all in on recession bets and favouring defensives (Bloomberg)
  • Yellen says Treasury could run out of cash as early as June 1 (NY Times)


  • Morgan Stanley plans to cut 3,000 more jobs (Bloomberg)
  • IBM to suspend hiring for jobs it believes could be replaced with AI (Bloomberg)


Another high-volume earnings day. A few high profile names including AMD, Ford and Starbucks reported after hours. We'll go through those results tomorrow.

Over 60% of the S&P 500 have now reported. Results remain better-than-expected, with 80% of results beating consensus estimates and earnings pulling ahead by nearly 7.5%.

Uber (+11.6%): Shallower loss and revenue beat, revenue grew 29% year-on-year to US$8.8bn, headcount seen to flat to down in the upcoming quarters.

  • "We significantly accelerated Q1 trip growth to 24% from 19% last quarter, with Mobility trip growth of 32%, as a result of improved earner & consumer engagement … We delivered record profitability & FCF in Q1 and we are poised to expand profitability again in Q2.” – CEO Dara Khosrowshahi
  • “Over the next few quarters, we will evaluate returning excess capital to shareholders as our cash flows ramp, and with any potential further monetization of our equity stakes over the long term."

Marriott (+5.0%): Double beat, net sales rose 34% year-on-year, full-year guidance upgraded and ahead of analyst expectations.

  • "While global economic picture is uncertain, demand remains strong, and we are not seeing signs of a slowdown. With the faster-than-expected recovery in international markets and continued solid booking trends globally."

Chegg (-48.4%): The education company warned ChatGPT is threatening growth of homework-help services and provided a light view on the next quarter.

  • "... since March, we saw a significant spike in student interest in ChatGPT. We now believe it's having an impact on our new customer growth rate. Fortunately, we continue to see very strong retention rates..." – CEO Dan Rosensweig
  • "Yes, you can use ChatGPT to get some answers, which is what the customer that didn't come to us are doing, but to actually learn it, you need to use Chegg.” 


  • FDIC recommends raising deposit insurance coverage (FT)
  • Bank failures put pressure on Fed's inflation battle (FT)
  • Banks still tapping Fed's FHLB and emergency lending facilities as scramble for liquidity is not over (Bloomberg)


  • US labor market softens, job openings drop, layoffs accelerate to two year high (Reuters)
  • RBA surprises with a 25 bp rate hike, flags 'some' further tightening (Bloomberg)
  • Eurozone CPI slows but headline higher (Bloomberg)
  • Eurozone factory downturn worsens in April, falling for first time since Jan (Reuters)
  • South Korean inflation slows as expected, backs case for rate cuts (Bloomberg)

US sector ETFs (Source: Market Index)

Deeper Dive

Morgan Stanley's Mike Wilson

A few highlights from Wilson's US equity strategy note:

  • On earnings: Q1 earnings season is playing out 'stronger than we expected'
  • On macro: "While earnings revisions breadth has improved, the recent leading macro data have slowed. The rate of change on the Duncan Leading Indicator (a gauge of the more cyclical components of GDP) fell further ... April surveys indicated a more recent slowdown in demand."
  • On Fed and markets: "We believe that equities are priced for an optimistic policy outcome (rate cuts in '23 without the growth downside). If the message delivered at this meeting is more hawkish, it could provide a near-term negative surprise for equities."
  • On market breadth: "The S&P 500 Equal Weighted vs. Cap Weighted Index ratio has yet to rebound, and the cumulative advance/decline line for the Nasdaq has fallen further."

On the last point: Meta, Amazon, Apple, Microsoft and Alphabet have returned approximately 31% year-to-date. While the remaining 495 S&P 500 companies have returned just ~3%.

Sectors to Watch

That was a rather heavy session with sentiment turning a lot more bearish on the regional bank crisis, FOMC jitters and economic growth concerns.

Most of the sector ETFs in the above watchlist were down around 1-3%. With FOMC taking place tomorrow morning and more US earnings, buckle up.

Energy: Worst performing S&P 500 sector, down 4.3%. Oil prices are down around 11% since the gap up on April 3 (due to surprise OPEC cut). Does this point to more pain for names like Woodside and Beach Energy?

Financials: KBW Regional Banking Index fell 4.3% overnight, down to its lowest since November 2020. It's not exactly our problem but it does continue to weigh on sentiment. Will we see these negative flows follow through for local regionals and majors?

Gold: Spot prices rallied 1.7% overnight and reclaimed the US$2,000 level. The VanEck Gold Miners ETF rallied 4.0% overnight to a two week high. A lot of local gold miners have experienced a rather steep pullback in recent weeks. But the macro worries is setting gold up for another comeback.

Key Events

ASX corporate actions occurring today:

  • Trading ex-div: Acorn Capital Investment Fund (ACQ) – $0.043, Qualitas Real Estate Income Fund (QRI) – $0.011
  • Dividends paid: New Hope Corp (NHC) – $0.30
  • Listing: None

Economic calendar (AEST):

  • 9:00 am: Australia Industrial Index
  • 11:30 am: Australia Retail Sales
  • 7:00 pm: Eurozone Unemployment
  • 12:00 am: US ISM Services PMI
  • 4:00 am: Fed Interest Rate Decision
  • 4:30 am: Fed Press Conference

This Morning Wrap was first published for Market Index by Kerry Sun. 

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The Morning Wrap
Markets Wrap
Livewire Markets

Livewire and Market Index's pre-opening bell news and analysis wrap. Available weekday mornings and written by Chris Conway, Kerry Sun, and Hans Lee.

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