Morning Wrap: ASX 200 to rise, S&P 500 closes at record high + Small cap Russell 2000 soars

The S&P 500 scored another record close overnight, gold prices finished at all-time highs after a volatile last couple of sessions, defensive sectors outperformed – signalling a broadening market rally, the Russell 2000 had its best day since mid-February and the ASX is closed on Friday and next Monday.

Let's dive in.

S&P 500 SESSION CHART

S&P 500 rallies in the last hour of trade to finished at best levels (Source: TradingView)

ASX TODAY

• ASX 200 to rally after a strong lead from Wall Street and falling bond yields

• ASX 200 set to test all-time highs ahead of the long weekend

• The market will be closed on Friday 29 March and Monday 1 April

• Fisher & Paykel initiatives voluntary recall of batches of Airvo 2 and myAirvo2 devices manufactured before 14 August 2017

• Spark New Zealand to undertake a further on-market share buyback of up to NZ$45m 

MARKETS

• S&P 500 rallies in the last hour of trade to finish at best levels

• Every S&P 500 sector finished higher, led by defensives

• Small cap Russell 2000 marks its best day since mid-February

• Bond yields fell, with the US 10-year now down 14 bps since 18 March

• VIX at its lowest level since 24 January

• Gold closes at record levels following string of volatile trading sessions

• Retail traders piling into market rally (Bloomberg)

• US small cap stocks on worst performance run vs. large cap peers in more than two decades (FT)

• Yen drops to 34-year low, inviting more intervention speculation (FT)

• Late-day equity market pullback on Wednesday chalked up to rebalancing (Bloomberg)

INTERNATIONAL STOCKS

• Apple to unveil AI strategy at 10-Jun developers conference (Bloomberg)

• Tesla's China pivot binds Musk to Beijing (NY Times)

• Boeing at risk of Moody's downgrade on safety and cash flow concerns (Bloomberg)

• S&P ratings downgrades five regional US lenders to negative on real estate exposure (Bloomberg)

• H&M rallies on big Q1 profit beat on (Reuters)

• GameStop shares tumble on fourth-quarter results (CNBC)

• Amazon invests $2.7B in AI startup Anthropic (Bloomberg)

• Reddit shares fall after Hedgeye names it a short idea with 50% downside (Bloomberg)

CENTRAL BANKS

• BOJ board member Tamura sees slow and steady normalisation of policy (Bloomberg)

• BoE policymaker Mann says market is pricing in too many cuts (Reuters)

• ECB's Kazaks signals June may be a good time for a rate cut (Bloomberg)

• South Africa holds rate at 15-year high on inflation worry (Bloomberg)

• Sweden's central bank stays pat on rates but flags incoming cut in May or June (Reuters)

GEOPOLITICS

• China files complaint to WTO over US EV subsidies, says Biden's IRA is discriminatory, distorts supply chains (Bloomberg)

• China's President Xi meets with US CEOs as American businesses look to repair ties with China (FT)

• US investigating TikTok over privacy and data practices, potentially paving way for lawsuit (Politico)

• Biden administration facing blow back from pro-Israel lawmakers in both parties for allowing the UN resolution pass (Axios)

ECONOMY

• China industrial profits rebound, adding to signs of stabilisation (Reuters)

• Australian monthly inflation unexpectedly unchanged at two-year low (Reuters)

• Spanish inflation accelerates in March as government continues to remove energy support (Bloomberg)

• South Korea April business sentiment falls as private spending slows (Yonhap)

Sectors to Watch: The Everything Rally

The US market has witnessed rather intriguing price action in the last hour of trade (aggressive selloff in the previous session and strong rally overnight). On Thursday, the ASX 200 rallied after the cooler-than-expected inflation data at 11:30 am and also rallied in the last hour of trade. Overnight market conditions were rather accommodative with a flat US dollar, lower yields and lower VIX.

Gold: Gold closed at an all-time high (+0.75%) of US$2,194 overnight after facing some volatile rallies, dips and fades in the past few weeks. The strong price action for gold resulted in the Gold Miners ETF rallying 3.7% overnight to the highest level since 2 January. This should draw a positive response for local names. A few names of interest include:

• Newmont (ASX: NEM): US-listed NEM rallied 3.7% overnight to a two-month high

• Ramelius Resources (ASX: RMS): One of the few gold names to break above recent highs. It's chart is a bit vertical but trading at levels not seen since late 2021

• Wet weather laggards: Several gold names including Regis Resources (ASX: RRL), Gold Road (ASX: GOR) and Westgold (ASX: WGX) have downgraded March quarter gold production forecasts due to a substantial rainfall event in WA

Defensives: Defensive and yield-sensitive sectors like Utilities, Real Estate and Industrials were the best performing sectors on Wall Street overnight. Let's see if the rally can kick on for local names.

Biotech: There's been a lot of life coming back to biotechs – A sector that's struggled for the past 2-3 years. The SPDR S&P Biotech ETF (+2.4%) is starting to settle after a pullback. As for the local scene, we've also seen some rather extraordinary pumps in recent days. Mesoblast (ASX: MSB) shares rallied 45% (session high of 57.6%) after the FDA said the company had sufficient clinical data from its Phase 3 Trial for remestemcel-L for treatment of pediatric patients. Osteopore (ASX: OSX) was a $1m market cap company seeking to commercial products that stimulate natural bone healing. The company received Singaporean and Vietnamese market approvals to supply its orthopedic products on Wednesday. The stock rallied as much as 1,043% on the news.

SPDR S&P Biotech ETF (Source: TradingView)

Companies trading ex-dividend: 

• Thursday, 28 March: Australian Clinical Labs (ACL) – $0.03, Sigma Healthcare (SIG) – $0.033

• Friday, 29 March: None

• Monday, 2 April: Regal Partners (RPL) – $0.05, Magontec (MGL) – $0.006, Harvey Norman (HVN) – $0.10 

• Tuesday, 3 April: Ridley Corp (RIC) – $0.044 

• Wednesday, 4 April: Lindsay Australia (LAU) – $0.021, Clime Capital (CAM) – $0.014, Eureka Group (EGH) – $0.007, ARB Corp (ARB) – $0.34

• Thursday, 5 April: None

Other ASX corporate actions today: 

• Dividends paid: Beach Energy (BPT) – $0.02, Bisalloy (BIS) – $0.08, Ariadne Australia (ARA) – $0.002, Grange Resources (GRR) – $0.02, Origin Energy (ORG) – $0.275, Monadelphous Group (MND) – $0.25, Commonwealth Bank (CBA) – $2.15, Data3 (DTL) – $0.126, Qualitas (QAL) – $0.02, The Lottery Corp (TLC) – $0.08, Newmont (NEM) – $0.264

• Listing: None

Economic calendar (AEDT):

• 11:30 am: Australia Housing Credit (Feb)

• 11:30 am: Australia Retail Sales (Feb)

• 11:30 pm: US GDP Final (Q4)