ASX Pre-market wrap: Overnight markets bounce as full blown lockdowns unlikely

ASX Futures (SPI 200) imply the ASX will open 4 points higher or up 0.05%.

Wall Street bounced back from a three-day rout on omicron concerns. Could a Santa Claus rally take us into the year end?

All three major US averages rebounded overnight as the Biden administration promised that they will avoid March 2020-like lockdowns and outlined a roadmap to fight against rapidly surging covid cases. 

President Joe Biden’s US$2 trillion “Build Back Better” plan was rejected by Democratic West Virginia Senator Joe Manchin on Monday, saying he wouldn’t vote in favour in the 50-50 senate.

Manchin previously said that inflation was a bigger concern than the need for the package. 

Encouragingly, the Senate will vote on the economic plan in January, suggesting further negotiations are likely. 

It's worth noting that the ASX rallied 0.9% yesterday, ahead of the overnight rebound in the US market.

Energy stocks bounced on optimism that holiday travel will not be disrupted for the vaccinated population. Crude oil prices reclaimed the US$70/b mark after sliding to lows of US$66/b on Tuesday. 

“Both the US and UK are not headed to lockdowns and that suggests the short-term outlook might not get completely derailed by the omicron variant,” said OANDA senior market analyst Ed Moya. 

With the market opening up its appetite for risk assets, struggling technology stocks were ripe for a rebound. Mega cap tech stocks including Apple, Amazon, Microsoft, Meta (Facebook) and Tesla all rallied more than 2%. 

Consumer discretionary, notably reopening plays like airlines and entertainment stocks experienced some relief buying in overnight trade. Names like Delta Air Lines, United Airlines, Boeing and Booking Holdings all bounced more than 5%. 

ASX Sectors in play

ETF GAINERS 

The Uranium ETF has started to consolidate around its 200-day moving average after a harsh 30% correction from November all-time highs. Uranium spot prices have remained stable at US$42.88/lb according to fuel brokers Numerco. 

• ASX uranium stocks rebounded strongly on Tuesday, with the largest player Paladin Energy (ASX: PDN) up 4.4% 

The Jets ETF fell close to 13-month lows on Tuesday. The ETF bounced on positive news from the Biden administration, saying that they will avoid full blown lockdowns. That said, daily covid infections in the US have surged to levels not seen since September.

Restrictions have continued to mount for European countries, with Portugal and Spain being the latest nations to impose curfews, social gathering limits and closure of nightclubs. 

• Nevertheless, the overnight rebound could see some relief buying for ASX players like Qantas Airways (ASX: QAN), Flight Centre Travel Group (ASX: FLT) and Webjet (ASX: WEB), most of which have tumbled to near-term lows 

The beaten up Sports Betting & iGaming ETF is showing an encouraging bottom after a strong bounce off 12-month lows on two occasions in the past few weeks. Major US sports betting names like DraftKings and Penn National Gaming surged 7.9% and 8.6% respectively overnight. 

• This could drive some positive flow for struggling ASX players like PointsBet (ASX: PBH), BetMakers Technology Group (ASX: BET) and BlueBet (ASX: BBT) 

• Large cap gambling machine manufacturer Aristocrat Leisure (ASX: ALL) could also benefit

The FinTech ETF hit fresh 13-month lows yesterday. Far more work is needed to show investors that the overnight gains are more than just a short-lived bounce. Notable names like Block (formerly Square) rallied 7.7%, Fiserv bounced 4.7% and Coinbase closed 4.1% higher. 

• Afterpay (ASX: APT) shares are expected to bounce following the overnight move from Block 

• ASX tech stocks like WiseTech Global (ASX: WTC), Altium (ASX: ALU) and Xero (ASX: XRO) all closed in positive territory on Tuesday 

Similarly, the eCommerce ETF bounced off 15-month lows, driven by gains from China’s JD.com (+7.6%), Williams-Sonoma (+3.3%) and Etsy (+2.9%). Shares in eBay slightly lower, down -0.1%. 

• ASX eCommerce names like Redbubble (ASX: RBL) and Kogan.com (ASX: KGN) are sitting in no mans land, trading at 16-month lows after plunging more than 30% in the last 2-months

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