ASX 200 to tumble, gold and copper prices slide + Russell 2000 turns negative

ASX 200 futures are trading 96 points lower, down -1.38% as of 8:20 am AEST.

S&P 500 SESSION CHART

MARKETS

• S&P 500 closed breakeven from session highs of 0.29% and lows of -0.65%
• Big tech pushed the benchmarks higher, S&P 500 equal-weight ETF down -1.1%
• Utilities sector marked its worst day since April 2020, the S&P 500 Utilities sector is down 13% in since mid-August
• Market breadth remains very poor, despite the breakeven close, only 26% or 130 stocks managed to close higher
• US 10-year yield up 10 bps, briefly touched 4.7% overnight after a ~50 bp rally last month
• Gold tumbles for a sixth consecutive session, down a little over 5.0%
• WTI crude settled 2.3% lower after an almost 9% rally last month
• Russell 2000 turns negative for the year, an indicator of broader weakness in the economy that's been masked by megacap tech stocks (CNBC)
• US averts shutdown until 17 November, markets breath sigh of relief (Bloomberg)
• Goldman Sachs sees earnings-led rally in big tech stocks (Bloomberg)
• Trade in 'fear gauge' at high as investors hedge amid fragile markets (FT)
• Wall Street bankers hope for dealmaking rebound after boom and bust (FT)

STOCKS

• Birkenstock targets US$10bn valuation (Reuters)
• Nvidia (+2.95%) after Goldman Sachs added the stock to its conviction list (CNBC)
• Instacart (-9.2%) after the Wall Street bank that underwrote its IPO forecasted a weak second-half outlook with slower revenue growth (CNBC)

CENTRAL BANKS

• Fed's Bowman urges multiple rate hikes to curb inflation (Bloomberg)
• Powell says economy still working through the impact of the pandemic (Reuters)
• BOJ to buy additional bonds to curb rise in sovereign yields (Bloomberg)
• BoE warns banks not to underestimate impact of higher rates (London Times)
• ECB deputy head warns the 'last mile' of disinflation the hardest (FT)

CHINA

• China stock investors say worst yet to come in property crisis (Bloomberg)
• China Caixin manufacturing PMI grows on stronger domestic demand (Bloomberg)
• China tourism revenue more than doubled over holiday weekend (Bloomberg)

ECONOMY

• Eurozone final September PMI stuck in steep downturn (Reuters)
• UK final manufacturing PMI slows sharply in September (Reuters)
• Australian home prices stay strong as RBA seen standing pat (Bloomberg)
• Japan factory activity falls at fastest pace in seven months in September (Reuters)
• South Korea exports drop in September, down for a 12th straight month (Yonhap)
• UAW strikes have costs the US economy nearly $4bn so far (Fox Business)
  
  

Insights from Goldman Sachs

A few interesting tidbits from the Goldman Sachs trading desks:

• Nasdaq's healthy pullback: The Nasdaq 100 is nearly ~10% off recent highs, which "Bulls an arguably make claim to a more supportive backdrop into earnings ... the opportunity for positive resolutions to key overhangs (strikes, China, debt ceiling), healing seasonality and A.I. ‘monetization’ signposts."
• Energy for tech: "Sell energy to buy tech ... Last week's notional long selling in US energy was the largest in more than 6 months and ranks in the 99th percentile vs. the past five years."
• A return to tech: "After 6 consecutive weeks of net selling, Info Tech was the most notionally net bought US sector on our Prime book last week ... the largest in two months."
• The market needs to bounce: "All eyes on S&P 500 200-day moving average of 4,195. If this level is tested and doesn't provide support, history suggests S&P 500 forward 1-month, 3-month, 6-month and 12-month returns are significantly below-average following a break in its 200 day."

Russell 2000 Turns Negative

The Russell 2000 ETF briefly returned to negative year-to-date territory overnight. From a technical perspective, its holding onto dear life. Is a break down a cause for concern?

Nevertheless, it's a warning sign for growth and riskier assets.

Surprisingly, approximately a third of Russell 2000 companies still aren't profitable, which is the highest level in data that dates back to 1985.

Sectors to Watch: Resource Pains

ASX 200 futures are pointing to a drop of almost 1.5%, with the Resource sector likely to lead the market lower.

• A few of our overnight ETFs fell more than 3%, notably Uranium, Copper, Gold and Rare Earths
• Energy was also the second worst performing S&P 500 sector, down almost 2%
• Copper prices fell a sharp 2.6% overnight to US$3.64 and now testing a 4-month low