Morning Wrap: ASX 200 to rise, S&P 500 tries to bounce + Key takeaways from Powell's testimony

Major US benchmarks tried to recover from yesterday's selloff, Powell says interest rates have likely peaked but the Fed is in no rush to cut interest rates, gold extends gains to fresh all-time highs, cybersecurity firm Crowdstrike (US$80bn market cap) soars on strong earnings and a recap of sectors to watch out for on Thursday.

Let's dive in.

S&P 500 SESSION CHART

S&P 500 higher but finished below best levels (Source: TradingView)

ASX TODAY

• ASX 200 set to continue yesterday's momentum (+0.12% from session low of -0.38%)

• Watch out for a bounce in local tech names, potential strength across yield sensitive sectors like Real Estate, Utilities and Gold

• Cettire shares tumble after transactions reveal that duties owed to the Australian government were instead pocketed by the company (AFR)

• Inghams to acquire 100% of Bostock Brothers organic chicken business in New Zealand for NZ$35.3 million, acquisition to be immediately EPS accretive for FY25

• BCI Minerals holder Australian Super increases holding to 32.07% from 20.05%

• Eureka Group holder Filetron discloses 9.6% stake 

• Ventia Services CEO Dean Banks discloses sale of 1.5 million shares

• Accent Group upgraded to Neutral from Sell at UBS and target increased to $2.05 from $1.95 

• Zip upgraded to Buy from Neutral at UBS and target increased to $1.43 from $0.36

MARKETS

• S&P 500 higher but finished below session highs of 0.97%

• Markets are trying to bounce from yesterday’s selloff – A pullback that was driven more so by technical dynamics as opposed to a change in market narrative

• US dollar down, yields down and gold up following Powell’s appearance in House Financial Services Committee (more on this below)

• US 10-year yield down 5 bps overnight (and down 14 bps in March) to near one-month low, supporting yield-sensitive sectors like Utilities

• BofA says tech experienced its biggest weekly inflow last week since Aug-23 and inflows are annualising at a record US$98.8bn

• Citi notes Nasdaq positioning is near the highest levels seen in the past three years

• Traders remain bullish on Bitcoin following 'sell the news' retreat (Bloomberg)

• Crude oil stockpiles rise less than expected (Reuters)

INTERNATIONAL STOCKS

• CrowdStrike rallied on better-than-expected earnings, noting good deal flow, cross-selling momentum and strength in emerging products (Bloomberg)

• Tesla's Berlin factory yet to reopen after arson attack (Bloomberg)

• Zillow hit by short-seller report citing regulatory and competitive risks (Bloomberg)

• Banks with heavy CRE exposure seeing their bonds sell off (Bloomberg)

• New York Community Bank announces US$1bn capital raise (CNBC)

• Abercrombie & Fitch full-year revenue forecast implies slowdown (Bloomberg)

• Deutsche Bank cut bonuses for investment bankers by more than 10% amid deal slump (Bloomberg)

CENTRAL BANKS

• Bank of Canada holds rates steady for fifth straight meeting, policymakers acknowledge progress on inflation (Bloomberg)

• RBNZ chief economist Conway sees scope for earlier rate cuts if Fed eases first (Bloomberg)

GEOPOLITICS

• Ukraine military says it sunk a Russia patrol ship off the coast of Crimea (Reuters)

• Hamas responds to ceasefire proposal, says no prisoner exchange until Israel withdraws from Gaza (CNN)

ECONOMY

• South Korean inflation accelerates more than expected (Reuters)

• German exports up more than expected in January on stronger demand from EU and China (Reuters)

• Australian GDP growth in-line but household consumption very weak (Bloomberg)

• China policymakers pledge to meet 2024 growth targets and highlight flexibility to manoeuvre (Nikkei)

• PBoC governor highlights room to further cut banks' reserve requirements (CNBC)

Powell's Address To Congress

In prepared remarks published ahead of his appearance in front of the House Financials Services Committee, Fed Chair Powell reiterated that rates have likely peaked and the growing likelihood of rate cuts later this year. Here are some of the key takeaways and quotes:

• "Core PCE rose 2.8%, a notable slowing from 2022 that was widespread across both goods and services prices ... We believe that our policy rate is likely at its peak for this tightening cycle."

• "Long-term inflation expectations appear to have remained well anchored, as reflected by a broad range of survey of households, businesses and forecasters, as well as measures from financial markets."

• "If the economy evolves broadly as expected, it will likely be appropriate to begin dialing back policy restraint at some point this year. But the economic outlook is uncertain and ongoing progress towards our 2 percent inflation objective is not assured."

• "Reducing policy restraint too soon or too much could result in a reversal of progress we have seen in inflation and ultimately require even tighter policy to get inflation back to 2 percent."

The Bounce Attempt

Markets are trying to bounce after the tech-led pullback on Wednesday. Things are increasingly tricky and volatile as stretched technicals offset bright spots such as Powell's reserved remarks, bumper tech earnings, better US growth backdrop and AI proliferation. We'll cover some key overnight sectors below.

Bitcoin: The past three sessions has been absolutely wild (+8.3%, -6.7% and currently +4.5%). You'd generally expect more weakness after such a dramatic selloff from all-time highs on Wednesday. But it seems like crypto has more fuel in the tank. DigitalX (ASX: DCC) is probably one of the closest crypto-related exposures you can find on the ASX. The company is a digital asset fund manager and also holds around 114 Bitcoin.

Lithium: Pilbara Minerals (ASX: PLS) experienced a sizeable turnaround on Wednesday, down -0.2% from a session low of -4.4%. This move is in-line with Chinese lithium futures, which recovered from an almost -5.0% selloff to finish -1.1%. There was no major overnight catalyst for lithium stocks. We'll just have to see how Chinese lithium futures open at 12:00 pm AEDT.

Gold: Gold is all the rage right now. Prices for the commodity hit an all-time high of US$2,152 an ounce overnight and currently on a six-day win streak, up 5.7%. Local gold miner struggled for upside yesterday, with most large cap names finishing +/-1% amid overbought conditions. The VanEck Gold Miners ETF continued to trade in a choppy fashion overnight, up 1.7% from session highs of 3.07%.

ASX corporate actions occurring today:

• Trading ex-div: 47 companies and ETFs including BHP, South 32 and Woodside are trading ex-dividend today. See the full list here

• Dividends paid: Vicinity Centres (VCX) – $0.058

• Listing: None

Economic calendar (AEDT):

• 11:30 am: Australia Balance of Trade (Jan)

• 2:00 pm: China Balance of Trade (Jan-Feb)

• 12:15 am: ECB Interest Rate Decision

• 2:00 pm: Fed Chair Powell Testimony