Morning Wrap: ASX 200 futures flat, S&P 500 gives back gains + Gold soars past US$2,100

The S&P 500 and Nasdaq both sold off in the last hour of trade to close at worst levels, Bitcoin prices surged overnight and now within 3% of all-time highs, investment banks continue to pile into upgrading their year-end S&P targets, gold is also within an arms reach of record highs and sets the scene for another bumper session for local gold equities.

Let's dive in.

S&P 500 SESSION CHART

S&P 500 sold off in the last hour of trade to finish lower (Source: TradingView)

ASX TODAY

• ASX 200 set for a soft open after a relatively weak lead from Wall Street

• Gold stocks set to continue rallying after prices for the commodity surged for a second consecutive session

• DigitalX could be a beneficiary of higher Bitcoin prices, the company operates a few crypto-related funds and held 114.9 Bitcoin as at 31 December 2023

• Lithium and Uranium stocks could be in for a weak one as overnight peers sold off

• Fletcher Building faces growing pressure from investors after suspending its interim dividend (The Australian)

• BHP sets tentative sales deals for Canadian potash (Reuters)

• PWR Holdings Managing Director Kees Weel discloses sale of 2.0 million shares, says he remains fully committed to the business and delivering on growth objectives

• Nanosonics Chairman Steven Sargent purchases 36,500 shares 

• Fletcher Building upgraded to Buy from Neutral at BofA but target decreased to $4.35 from $4.45

MARKETS

• S&P 500 sold off in the last hour of trade to close near worst levels

• S&P 500 was trading around 0.24% higher and gave back all its gains

• Fading price action was evidenced across most mega cap tech stocks including Nvidia (+3.6% from +6.6% high), Alphabet (-2.8% from -1.1% open) and Tesla (-7.2% from -1.9% open)

• Bitcoin soared 6.4% to a near record US$67,150, prices are now up almost 60% year-to-date

• Bank of America raises S&P end-of-year target to 5,400 form 5,000 (Bloomberg)

• Goldman Sachs says big tech driven rally not like past bubbles and backed by fundamentals (Bloomberg)

• Super Micro Computer set to join S&P 500 (Reuters)

INTERNATIONAL STOCKS

• Apple fined more than €1.8bn by EU over dominant position in music streaming (FT)

• Apple announces new MacBook laptop with latest M3 chip starting at US$1,099 (CNBC)

• Macy's share soar after Brigade Capital Management ups offer for the department store, valuating the company at US$6.6 billion (CNBC)

• Nippon Steel will meet with USW union chief to gain support for US Steel acquisition (Reuters)

• Ford sales increased 10.5% last month driven by hybrids and EVs (CNBC)

CENTRAL BANKS

• Powell to appear before Congress this week and expected to reiterate the need for more evidence that inflation is returning to target  (Bloomberg)

• Atlanta Fed President Bostic sees just two cuts this year, warns of “pent-up exuberance” that could unleash a burst of demand (Atlanta Fed)

• Bumpy disinflation path keeps focus on June for ECB policy easing (Bloomberg)

• BOJ March vs April rate hike debate revived by latest rhetoric (Nikkei)

ECONOMY

• US Atlanta Fed GDPNow estimate for Q1 currently sits at 2.1%, down from early-February peak reading of 4.2% (Atlanta Fed)

• China parliament set to unveil more moderate stimulus this week but aggressive reforms seen unlikely (Reuters)

• China's Premier Li Qiang will not host press conference after the close of this year's annual parliamentary meeting (Reuters)

Gold Breakout Continues

Gold just topped US$2,100 an ounce for the first time since 4 December 2023. It's up 3.55% in the past two sessions, marking one of the largest two-day streaks since March 2023.

Prices are now less than 2% away from all-time highs (the brief US$2,146 an ounce on 4 December). This is despite the recent pushback against Fed rate cuts and overnight bounce in bond yields.

These were the best performing gold stocks on All Ords on Monday, as per the Evening Wrap:

Here are a few factors to consider if you're interested in the gold trade:

• Reporting season: How did these companies performing during February reporting season? Did they miss, meet or exceed expectations? Were there any positive or negative surprises? As I noted in the Evening Wrap, Westgold reported a half-year net profit figure that was 13% ahead of Macquarie expectations and surprised the market with a 1 cps dividend (vs expectations of none).

• Cash flow: Large cap gold miners like Newmont and Evolution have struggled to deliver meaningful cash flows due to ongoing capex commitments, rising costs and costs related to recent acquisitions.

• Leverage: Which companies have the most leverage to a rising gold environment? I threw a few small cap names out there yesterday including Auric Mining (a profitable microcap) and Spartan Resources (a gold exploration success story).

• Cash: Something to watch out for when a commodity starts coming back to life, especially for explorers and small caps. The last thing you want is to be locked into a trading halt (and capital raise)

ASX corporate actions occurring today:

• Trading ex-div: 29 stocks and ETFs are trading ex-dividend today. See the full list here 

• Dividends paid: GWA Group (GWA) – $0.07, Korvest (KOV) – $0.25

• Listing: None

Economic calendar (AEDT):

• 12:45 pm: China Services PMI (Feb)

• 2:00 am: US ISM Services PMI (Feb)