Market Wrap

Morning wrap: ASX to rise as US Santa rally loses momentum

Wed 29 Dec 21, 8:51am (AEST)

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ASX Futures (SPI 200) imply the ASX have a flat open. That said, the Dow Jones and S&P 500 have both rallied more than 1% since the ASX's last trading session on 24 December.

Major US indices were mixed overnight after a four-day Santa rally. The S&P 500 rose 1.38% the trading session after Christmas - the 5th best day after Christmas performance since at least 1945.

Overnight summary

Wed 29 Dec 21, 8:51am (AEST)

Name Value Chg %
US Indices
S&P 500
4793.0601 +0.14%
Dow Jones
36,489 +0.25%
NASDAQ 100
15,766 -0.10%
Russell 2000
2,249 +0.12%
Country Indices
Canada
0 0.00%
China
0 0.00%
Germany
15,852 -0.70%
Hong Kong
23,087 -0.83%
India
0 0.00%
Japan
28,907 -0.56%
United Kingdom
0 0.00%
Name Value Chg %
Commodities (USD)
Gold
1,805.40 -0.02%
Iron Ore
112.24 -
Copper
4.415 +0.03%
WTI Oil
76.57 +0.01%
Currency
AUD/USD
0.7258 +0.20%
Cryptocurrency
Bitcoin
0 0.00%
Ethereum
0 0.00%
Miscellaneous
U.S. 10 Year Treasury
1.543 +4.19%
VIX
17 -3.36%

Investors are betting that the rapid spread of omicron won’t compromise economic growth as the S&P 500 and Dow Jones rallied to fresh all-time highs.

A new study from South Africa’s National Institute of Communicable Diseases suggests that the omicron strain has a lower risk of hospitalisation compared to other covid variants. In the two months to November, the data showed that individuals with omicron were 70% less likely to experience more severe infections than delta. 

China’s heavily indebted real-estate developer Evergrande rallied 10% on Tuesday, with shares in its New Energy Vehicle subsidiary up 10% and Property Services up 5%. The company said it had made initial progress in resuming construction work. 

Oil prices have staged a strong rebound from its late November rout, with crude oil prices almost 10% in the last 5 sessions to US$76.12/bb. 

Bitcoin fell -5.3% to US$47,996, with crypto trading platform Coinglass flagging that more than 165,000 traders had their accounts liquidated in the last 24 hours, equal to US$524m of digital assets. 


US Sectors

Wednesday, 29 December 2021

Sector Chg %
Communication Services 0.00
Consumer Discretionary 0.00
Consumer Staples 0.00
Energy 0.00
Financials 0.00
Health Care 0.00
Sector Chg %
Industrials 0.00
Information Technology 0.00
Materials 0.00
Real Estate 0.00
Utilities 0.00

Cyclical and value pockets of the US markets rose, while richly valued technology and healthcare stocks fell. 

Material stocks rose despite slightly weaker commodity prices including gold, copper and iron ore. The US-listed counterparts of BHP Group (ASX: BHP) and Rio Tinto (ASX: RIO) both fell -0.9% and -0.5% respectively.

Real estate stocks amid economic data showing that housing prices have been accelerating at a slower pace. The S&P CoreLogic Case-Shiller 20-city price index revealed an 18.4% year-over-year increase in October, down from 19.1% in September. 

Technology stocks lagged as most mega cap names like Facebook, Tesla, Microsoft, Apple and Alphabet fell less than -1%. Fintech names like Affirm and Square fell sharply, down -3.8% and -2.6% respectively.  


Industry ETFs

Wednesday, 29 December 2021

Description Last Chg %
Commodities
Aluminum 59.61 -1.61%
Copper Miners 36.92 +0.43%
Gold 168.64 -0.03%
Lithium & Battery Tech 84.42 +0.05%
Nickel 26.37 +2.33%
Strategic Metals 108.46 +2.03%
Steel 52.74 -0.02%
Silver 21.27 -0.75%
Uranium 24.48 -1.39%
Industrials
Aerospace & Defense 103.26 -0.43%
Global Jets 21.46 -1.49%
Healthcare
Biotechnology 152.2 +0.41%
Cannabis 6.2 -3.39%
Description Last Chg %
Cryptocurrency
Bitcoin 30.24 -1.16%
Renewables
CleanTech 17.52 -0.34%
Hydrogen 20.77 -3.56%
Solar 76 -0.71%
Technology
Cloud Computing 27.13 -0.41%
Cybersecurity 32.22 +0.09%
E-commerce 27.27 -0.29%
Electric Vehicles 0 0.00%
FinTech 42.3 -0.71%
Robotics & AI 36.38 -1.07%
Semiconductor 549.5 +0.15%
Sports Betting/Gaming 24.63 -0.16%
Video Games/eSports 66.55 -1.28%

ASX Sectors in play

ETF GAINERS

The Lithium ETF eked out a small gain following its recent selloff. The ETF is down -12.8% since its 9 November all-time high. The positive close was supported by gains from Chinese names like Ganfeng and Yunnan Energy rose 5.5% and 3.3% respectively

  • Most ASX lithium stocks continue to consolidate after a powerful run-up this year. Names like Allkem (ASX: AKE), Lake Resources (ASX: LKE) and FireFinch (ASX: FFX) have mostly trade sideways since September 

  • Pilbara Minerals (ASX: PLS) is perhaps an outlier, having cracked a fresh all-time high on 24 December 

Airlines and travel stocks could be a point of interest given the news flow in the past few days. In the US, hundreds of flights have been cancelled over staff shortages as airline employees are forced to isolate due to covid infections. 

A similar narrative is taking place back at home. A Sydney Airport spokesperson told the Guardian Australia that 80 out of 500 domestic flights scheduled to arrive and depart last Friday had been cancelled. Some airlines cited staff shortages, while others flagged lower-than-expected demand during the Christmas period. 

The Jets ETF threatened 13-month lows on 20 December and has since bounced 10% off those levels. It appears that despite the staffing mayhem, investors doubt that it will have a lasting impact on overall demand. 

ETF LOSERS

The Bitcoin ETF plunged -6.9%, broadly in-line with the cryptocurrency selloff. Investors seem to have retreated from more risky assets as of late, triggered by the easing of central bank stimulus and prospect of rising interest rates. 

  • Betashares Crypto Innovators ETF (ASX: CRYP) could see some negative flow after a positive 6.7% session on 24 December 

  • DigitalX (ASX: DCC) could be another culprit from the crypto selloff 

The Uranium ETF sold off after a sharp 11% rally between 20 to 27 December. The ETF has traded mostly sideways in December. Uranium spot prices have remained relatively muted, sitting at US$42.25/lb according to fuel brokers EvoMarkets. 

  • ASX uranium stocks continue to consolidate around more long-term moving averages like the 100 or 200

The Hydrogen ETF retreated after a brief Christmas rally. The ETF is down -29.2% since its 9 November all-time high. Its major constituents Fuel Cell Energy tanked -6.8% to a 3 month low, Plug Power fell -4.2% and Bloom Energy closed -2.5% lower. 

  • This could take some heat out of rebounding ASX hydrogen stocks like Hazer Group (ASX: HZR) and Lion Energy (ASX: LIO

  • Hazer bounced off its 200-day moving average on 24 December, closing 6.8% higher 

  • Similarly, Lion Energy bounced off its 100-day moving average, closing 8.2% higher on the same day 

The FinTech ETF continues to set lower highs and lower lows as investors pivot away from richly valued technology stocks. 

  • Afterpay (ASX: APT) shares are poised to open lower after Block (formerly Square) shares declined -2.8%. Major US-listed BNPL rival Affirm also fell 3.8% 

  • The weakness across BNPL names could keep local names like Zip Co (ASX: Z1P) and Sezzle (ASX: SZL) at bay 


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Written By

Kerry Sun

Finance Writer & Social Media

Kerry holds a Bachelor of Commerce from Monash University and was Vice President of the University Network for Investing and Trading (UNIT). He is an avid swing trader, and drawn to breakouts and technical set ups. Outside of writing and trading, Kerry is a huge UFC fan, loves poker and bouldering.

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