ASX SPI futures are currently pointing to a 25 point fall, down -0.3% to 7,355.
A risk off attitude reverberated throughout overnight markets ahead of a US Federal Reserve meeting on Wednesday. The US market pulled back Monday as safe-haven assets like bonds and gold inched higher.
The Fed is widely seen backing a faster taper next week, doubling the pace of its monthly asset purchases from US$15bn to US$30bn. However, a more pronounced concern over inflation or hawkish stance on interest rates could roil markets.
Monday’s retreat followed a jump in headline inflation data last week, which came in at 6.8% year-over-year in November, the biggest surge since 1982. The result was just a fraction higher than the 6.7% Dow Jones estimate.
Defensive sectors including real estate, consumer staples and health care jumped, reiterating the market’s cautious tone ahead of the Fed meeting.
Health care finished higher after Israeli researchers said that a three-shot course of the Pfizer-BioNTech vaccine provided significant protection against omicron. Pfizer shares closed 3.9% higher while Moderna jumped 6.3%.
The market shifted away from cyclical and growth-related names, with technology, consumer discretionary and energy pulling sharply lower by market close.
Mega caps including Amazon, Apple and Alphabet closed the session around 1% lower. Tesla and Nvidia weighed after both tech giants tumbled -4.7% and -5.5% respectively.
Reopening plays like airlines and travel stocks were the most hard hit. Names like American Airlines fell -4.7%, Airbnb dropped -5.4% and Carnival Corp slumped -5.1%.
Energy stocks retreated as crude oil continued to test the US$70/b zone. On Monday, OPEC raised its forecast for global oil demand in the first quarter, projecting a slight oversupply with the view that omicron will have a transitory impact on the global economy.
"Improved COVID-19 management and rising vaccination rates [will enable] economic activity and mobility to return to pre-pandemic levels, supporting transportation fuels in particular," OPEC said in its closely watched monthly oil market report, according to S&P Global Platts. "Meanwhile, as vaccination rates increase, the impact of the omicron variant is projected to be mild and short-lived."
Aluminium topped the leaderboards amid a comeback after sliding -20% between mid-October and early-November.
China’s demand for imported bauxite, the main ingredient used to make aluminium, is set to rise about 20% in 2022, according to S&P Global Platts.
Aluminium prices are sitting around US$2,650/t, not far from a 2-month low
Prices have fell sharply from record highs of almost US$3,200/t amid a sluggish real estate market in China
The Biotechnology ETF topped the leaderboard thanks to gains from vaccine makers Moderna and Pfizer. The ETF is down almost 15% since late September.
The Bitcoin ETF hit another all-time low on Monday ahead of the Fed meeting. An accelerated taper could dry up liquidity and anticipated interest rate hikes could pivot investors back into yield bearing assets.
Bitcoin plunged 7% overnight to a 2-month low of US$46,580. While the entire crypto market capitalisation is down about 8% in the last 24-hours.
DigitalX (ASX: DCC) is the main ASX-listed crypto candidate
Betashares Crypto Innovators (ASX: CRYP) is another name that’s potentially at risk
The Global Jets and Airlines ETF tumbled overnight as investors turned away from reopening stocks. Most US airlines tumbled between 3% to 5%. Travel-related stocks seem to be struggling despite researchers finding that booster shots are effective against the new omicron variant.
The Rare Earth/Strategic Metals ETF is approaching a 1-month low after last night's pullback
Similarly, the Lithium & Battery Tech ETF is near a 2-month low.
ASX lithium stocks rallied strong on Monday with names like Pilbara Minerals (ASX: PLS) cracking a fresh all-time high
The bearish overnight performance of the ETF could take some heat out of ASX players on Tuesday
Finance Writer & Social Media
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