S&P 500 and Nasdaq lower, Fed and megacap earnings jitters, ASX to fall

Get up to date on overnight market activity and the big events for the day.
The Morning Wrap

Livewire Markets

ASX 200 futures are trading 10 points lower, down -0.14% as of 8:20 am AEDT.

Major US benchmarks slumped ahead of a massive week for central banks and earnings, China's economy is showing signs of life as consumption revs up, Spanish inflation unexpectedly higher in January while Germany's GDP surprises to the downside, and chip inventories have tripled to record levels.

Let's dive in.

S&P 500 Session Chart

S&P 500 faded early gains of 0.25% to close at session lows (Source: TradingView)

Source: Market Index 


  • No one specific factor drove the overnight pullback, which follows an almost 2.5% rally last week that left the S&P 500 higher in three of the last four weeks
  • Potential catalysts for overnight weakness include: Hotter-than-expected Spanish inflation, profit-taking, and concerns about the Fed’s resolve around higher-for-longer messaging
  • Markets face a myriad of high-stakes macro and micro events over the next few days including Fed, ECB, and BoE interest rate decisions and mega-cap tech earnings
  • Central banks set to lift rates to 15-year highs (FT)
  • Hedge funds lift shorts on Treasury bonds amid doubts over rally (Bloomberg)
  • Bull market imminent for Chinese stocks as Lunar New Year consumption revival drives recovery (Bloomberg, FT)


The next three days will be huge for S&P 500 earnings.

Source: The Transcript


  • Spanish inflation unexpectedly higher in January (Bloomberg)
  • Holiday trips with China surge over Lunar New Year (Reuters, Bloomberg)
  • UK business optimism hits six-month high despite recession risk (Bloomberg)
  • UK wage inflation flags to another big BoE hike on Thursday (Bloomberg)
  • German GDP unexpectedly shrinks 0.2% in Q4, stokes recession woes (Bloomberg)
Last year, I wrote an explainer for our ETF table (includes tickers). You can check it out here. (Source: Market Index)

Deeper Dive

Talking Technicals

Nothing too interesting from a chart perspective. Just a few things to note:

  • ASX 200 is starting to stall after a massive run. Negative SPI futures suggests the market is beginning to turn – which gives us an opportunity to see what kind of pullback we get

    • Will it be a calm pullback that finds support quickly or the ones we experienced last year – volatile with heavy selling

  • ASX 200 has run quite far from its 20-day moving average – which is around -1.8% away

    • The 20-day is used to gauge the short-term trend. Strong upward-trending stocks typically find support around the 20-day  

Source: TradingView

Sectors to watch

It was a rather risk-off and/or profit-taking session whereby growth-y sectors led to the downside and defensive ones held up relatively well.

Since it wasn't an overly exciting session, we'll only be highlighting the overnight sector/ETF movers instead of more in-depth points:

  • Higher: Nickel (+2.9%), Uranium (+0.2%)

  • Lower: Cloud (-2.6%), Fintech (-2.2%), Lithium (-2.0%), Copper Miners (-1.9%), Biotech (-1.8%), Jets (-1.5%)

Quick bites

Too many chips: "Inventories — a critical indicator of demand for memory chips — have more than tripled to record levels, reaching three to four months’ worth of supply," according to Bloomberg.

Implications of a strong January: "... there have only been two other instances since WWII where the S&P 500 gained more than 5% in January after posting a double-digit percentage decline in the prior year." In 1967 and 1975, the S&P 500 finished the year up 11.4% and 17.2% respectively.

The 1946-49 cycle: "Is this a 1940s rerun? The 1946-49 cycle bottomed in 1947 when inflation peaked at 20%, much higher than last year. In the late 1940s, inflation proved to be sticky and kept the market in a range for several years. There's potential for a replay of that now." - Jurrien Timmer, Director of Global Macro at Fidelity.

Source: Fidelity 

Key Events

ASX corporate actions occurring today:

  • Trading ex-div: CVC (CVC) – $0.04

  • Dividends paid: Region Group (RGN) – $0.075, Centuria Industrial REIT (CIP) – $0.04, Rural Funds Group (RFF) – $0.029, Centuria Office REIT (COF) – $0.035, Kelly Partners Group (KPG) – $0.004

  • Listing: None

Economic calendar (AEDT):

  • 11:30 am: Australia Housing Credit

  • 11:30 am: Australian Retail Sales

  • 12:30 pm: China NBS Manufacturing and Services PMI

  • 9:00 pm: Eurozone GDP

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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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