ASX pre-market wrap: Nasdaq slumps as US banks, energy and miners shine

The Australian sharemarket is poised for a small gain at open following a mixed session on Wall Street. The Nasdaq fell heavily as investors rotated out of tech stocks and back in cyclical sectors like financials and materials.

Before the bell

KEY POINTS

ASX SPI futures is currently pointing to an 11 point gain, up 0.2% to 7,207.

US stocks fell overnight with weakness among the tech sector weighing on major market averages. 

The Bank of England has joined the US Federal Reserve in its hawkish views about the economy, becoming the first major central bank to raise interest rates from 0.10% to 0.25%. 

“The labour market is tight and has continued to tighten, and there are some signs of greater persistence in domestic cost and price pressures. Although the Omicron variant is likely to weigh on near-term activity, its impact on medium-term inflationary pressures is unclear at this stage,” the central bank said, adding “the Committee judges that an increase in Bank Rate of 0.15 percentage points is warranted at this meeting.”

On the economic data front, US weekly jobless claims came in slightly higher than expected, but remained relatively low, after claims fell to their lowest level since 1969 last week. 

Housing starts for November rose strongly, marking its highest level since March, while industrial production continued to gather momentum. 

US Sector breakdown

KEY POINTS

Investors rotated out of richly-valued tech stocks and into cyclical and value pockets of the market such as financials and materials.

Technology stocks sold off heavily with Tesla falling -5.3%, Apple dropping -4.1%, Microsoft down -2.9% and Amazon closing -2.5% lower. Major semiconductor stocks like Nvidia and AMD tumbled -6.6% and -5.2% respectively. 

Bank stocks helped the blue-chip Dow Jones close at almost breakeven, with Wells Fargo rising 2.7%, Bank of America adding 2.4% and JPMorgan closing 1.6% higher. The banking sector likely welcomes the prospect of higher interest rates, as a potential tailwind to net interest margins. 

Material and energy stocks also posted gains following a broad uptick in commodity prices including iron ore, copper, gold and oil. The US-listed counterparts of BHP Group and Rio Tinto rose 0.3% and 2% respectively.

ASX Sectors in play

MAJOR ETFs

ETF GAINERS 

The Nickel ETF bounced strongly overnight but remains in a tight trading range.

• Nevertheless, this could spell good news for IGO (ASX: IGO) after acquiring rival nickel producer, Western Areas (ASX: WSA)

• Other potential winners include Panoramic (ASX: PAN) and Mincor (ASX: MCR) 

The Steel ETF moved higher on strong volumes of 129,000 compared to a 20-day average of just 53,300.

In a survey conducted by the US Chamber of Commerce, about 95% of contractors said they were experiencing at least one product shortage in the fourth quarter, with steel representing the most reported product shortage, according to S&P Global Platts. 

• This could point to positive flow for a big name like BlueScope Steel (ASX: BSL) 

ETF LOSERS 

The Semiconductor ETF fell sharply, amid heavy selling from leading chip makers AMD and Nvidia.

• ASX-listed semiconductor stocks are much more speculative in nature and developing new, cutting edge technologies 

• That said, the weakness across the broader technology sector and blue-chip semiconductor stocks could weigh on the performance of names like Weebit Nano (ASX: WBT), Brainchip (ASX: BRN) and 4DS Memory (ASX: 4DS)

The Fintech ETF closed at a fresh 7-month low. Major constituents like Square and Coinbase both fell around -4%. 

• The US Consumer Financial Protection Bureau's inquiry into the BNPL sector could weigh on ASX players from Afterpay (ASX: APT) all the way through to small caps like Openpay (ASX: OPY) 

The Betting & iGaming ETF gave back yesterday’s gains, closing at 13-month lows.

• This could flag more weakness for beaten ASX names like Pointsbet (ASX: PBH), BlueBet (ASX: BBT) and BetMakers Technology Group (ASX: BET) 

Similarly, the eCommerce ETF closed at fresh 15-month lows after a brief relief rally yesterday. The declines were led by names like Etsy (-4.7%), Williams-Sonoma (-3.9%) and eBay (-2.4%). 

• ASX players like Kogan.com (ASX: KGN), Redbubble (ASX: RBL) and MyDeal.com.au (ASX: MYD) could continue to struggle in today's session

The Jets ETF experienced broad based declines with United Airlines, American Airlines and Delta Airlines down between -2.2% and -3.5%. 

• The UK recorded its highest number of daily covid cases on Wednesday 

• A new wave of omicron cases is beginning to emerge in the US

• ASX travel names like Corporate Travel Group (ASX: CTD), Qantas Airways (ASX: QAN) and Flight Centre (ASX: FLT) could be at risk 

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