Market Wrap

Morning wrap: ASX set to fall as Wall Street extends losses, Biden taps into oil reserves to cool prices

Fri 01 Apr 22, 8:33am (AEST)

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ASX Futures (SPI 200) imply the ASX will open 42 points lower, down -0.56%.

Major US indices extended losses to close out a challenging quarter, President Putin vowed to halt gas supplies to Europe unless payments are made in rubles, OPEC+ stuck to its gradual output strategy and the US is set to release a record amount of strategic oil reserves. 

Let’s dive in.

Overnight summary

Thu 31 Mar 22, 9:33pm (AEST)

Name Value Chg %
US Indices
S&P 500 4530.41 -1.57%
Dow Jones 34,678 -1.56%
NASDAQ Comp 14,221 -1.54%
Russell 2000 2,070 -1.00%
Country Indices
Canada 21,890 -0.84%
China 3,252 -0.44%
Germany 14,415 -1.31%
Hong Kong 21,997 -1.06%
India 58,569 -0.20%
Japan 27,821 -0.73%
United Kingdom 7,516 -0.83%
Name Value Chg %
Commodities (USD)
Gold 1,942.20 +0.17%
Iron Ore 150.61 -
Copper 4.731 -0.41%
WTI Oil 101.20 -6.14%
Currency
AUD/USD 0.7480 -0.35%
Cryptocurrency
Bitcoin (AUD) 61,161 -3.63%
Ethereum (AUD) 4,410 -3.62%
Miscellaneous
U.S. 10 Year Treasury 2.327 -1.31%
VIX 21 +6.36%

Stocks

  • Major US indices finished the quarter on a downnote as the market pulls back from a massive win-streak. Also weighing on the markets

    • Russia threatening European gas supplies

    • Easing US personal spend data

    • Lack of progress between Russia and Ukraine

    • US 2-and-10 year Treasury yields remain on the edge of inversion

  • All 11 US sectors fell, led by financials, consumer discretionary and tech stocks

  • Defensive sectors including utilities, staples and real estate held up better-than-most

  • 62% of US stocks declined

  • 59% of US stocks trade below their 200-day moving average (58% yesterday, 60% a week ago)

  • Chipmaker AMD fell -8.3% after analysts at Barclays downgraded the stock to equal weight, flagging concerns over the PC market

  • GameStop shares are up more than 15% in after-hours trading after announcing plans for a stock split. The meme stock is seeking shareholder approval to increase the number of common stock from 300m to 1bn

Economy

  • US consumer spending rose 0.2% in February as high inflation weighed. Economists polled by The Wall Street Journal had forecast a 0.5% increase

  • US Personal Consumption Index - which includes gas and groceries - jumped 5.4% in February. This reading is the Fed’s preferred inflation measure

  • Chinese manufacturing and services PMIs simultaneously contracted in February for the first time since the initial covid outbreak in 2020

    • Manufacturing PMI fell to 49.5 from 50.2

    • Non-manufacturing PMI eased to 48.4 from 51.6

    • A reading below 50 points indicates contraction

Commodities

  • Iron ore unchanged around US$150 a tonne. Market participants remain conservative for physical demand as covid cases spike in China, sources told Fastmarkets

  • Oil prices fell below US$110 a barrel after President Joe Biden ordered the release of 1m barrels per day of oil to cool prices

  • Gold inched higher as a risk-off attitude returned

 

US Sectors

Thu 31 Mar 22, 9:33pm (AEST)

Sector Chg %
Communication Services -2.01%
Consumer Discretionary -1.95%
Consumer Staples -0.43%
Energy -1.39%
Financials -2.32%
Health Care -1.18%
Sector Chg %
Industrials -1.57%
Information Technology -1.59%
Materials -1.35%
Real Estate -1.18%
Utilities -0.17%

Industry ETFs

Thu 31 Mar 22, 9:33pm (AEST)

Description Last Chg %
Commodities
Aluminum 74.3356 -2.52%
Copper Miners 45.92 -0.89%
Gold 180.58 +0.06%
Lithium & Battery Tech 77.55 -0.74%
Nickel 43.2835 -0.96%
Strategic Metals 117.9 +0.32%
Steel 68.19 -0.51%
Silver 22.94 -0.26%
Uranium 25.69 +1.83%
Industrials
Aerospace & Defense 112.24 -1.29%
Global Jets 21.69 +0.32%
Healthcare
Biotechnology 130.97 -0.51%
Cannabis 5.63 -3.02%
Description Last Chg %
Cryptocurrency
Bitcoin 29.5 -3.19%
Renewables
CleanTech 16.72 -0.42%
Hydrogen 19.16 -0.52%
Solar 75.78 -0.42%
Technology
Cloud Computing 22.28 -1.30%
Cybersecurity 31.48 -0.19%
E-commerce 22.78 -2.72%
Electric Vehicles 28.12 -1.99%
FinTech 32.84 -2.50%
Robotics & AI 29.5 -1.66%
Semiconductor 484.3 -2.28%
Sports Betting/Gaming 20.38 -1.96%
Video Games/eSports 59.72 -2.73%

ASX Sectors to watch

Investors should expect the week to finish on a negative note as US indices kept on falling towards close, coupled with the decline in SPI futures.

There were a few major ETFs that managed to eke out some small gains overnight including US Jets, Rare Earths/Strategic Metals and Uranium.

It will be interesting to see if local names can withstand the weaker session.

#1 Tech

Tech continues to stand out given large declines in noteworthy stocks, including:

  • Etsy -7.6%

  • eBay -3.5%

  • Block -3.2%

  • PayPal -2.4%

The S&P/ASX 200 Info Tech Index fell -2.2% yesterday, in-line with how US tech stocks performed.

It wouldn't be surprising to see another weak session, headlined by names like Block (ASX: SQ2).

#2 Energy

Oil prices fell after OPEC+ decided to stick to its gradual output strategy.

Yesterday afternoon, the Biden administration announced plans to release a record 180m barrels from strategic petroleum reserves, showing the public he is trying to push gas prices down.

"This proposed record SPR release could have also been a chess move to try to pressure OPEC+ into delivering more output, but obviously had no impact," said Oanda senior market analyst, Ed Moya.

"This oil market will remain tight and any coordinated tapping of strategic reserves will only be effective if peace talks in the war in Ukraine are headed in the right direction.  If it becomes clear that a major de-escalation in the war is not going to happen, then oil could surge back to the recent highs."

Today's events

ASX corporate actions occurring today:

  • Ex-dividend: MVB, NBI, VAS

  • Dividends paid: CAJ, FWD, GEM, GNE, IFL, KSC, LSF, MCY, PFG, PPT, SLH, SUN, TLS, TWE

  • Listing: None today

  • Issued shares: AHF, ANL, AO1, ARG, ASN, AVR, BEN, BLG, BRK, CEL, CNU, ELT, EM2, ENT, EQT, FBU, GDI, GL1, IMA, JRL, LPD, MFF, MVL, NCM, NWE, PH2, PPH, PRM, RUL, SHH, SMR, STG, SZL, TGR 

Things of interest (AEDT): 

  • European Union Inflation Rate (March) at 8:00 pm

  • US Unemployment Rate (March) at 11:30 pm

  • US Non-farm payrolls (March) at 11:30 pm

 

Written By

Kerry Sun

Finance Writer & Social Media

Kerry holds a Bachelor of Commerce from Monash University. He is an avid swing trader, focused on technical set ups and breakouts. Outside of writing and trading, Kerry is a big UFC fan, loves poker and training Muay Thai. Connect via LinkedIn or email.

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