Market Wrap

Morning wrap: ASX set to rise as Wall Street claws back early losses

Fri 08 Apr 22, 8:25am (AEST)

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ASX Futures (SPI 200) imply the ASX will open 36 points higher, up 0.5%.

US stocks clawed back earlier losses to snap a two-day losing streak, the Russian ruble has recovered to pre-war levels, Shanghai’s lockdown is causing residents to run out of food, uncertainty continues to linger from Russia-Ukraine developments and from the Fed's hawkish stance on monetary policy.

Let’s dive in.

Overnight summary

Thu 07 Apr 22, 10:25pm (AEST)

Name Value Chg %
US Indices
S&P 500 4500.21 +0.43%
Dow Jones 34,584 +0.25%
NASDAQ Comp 13,897 +0.06%
Russell 2000 2,010 -0.35%
Country Indices
Canada 21,835 +0.21%
China 3,237 -1.42%
Germany 14,078 -0.52%
Hong Kong 21,809 -1.23%
India 59,035 -0.97%
Japan 26,889 -1.69%
United Kingdom 7,552 -0.47%
Name Value Chg %
Commodities (USD)
Gold 1,934.80 -0.15%
Iron Ore 157.29 -
Copper 4.718 +0.39%
WTI Oil 97.10 +1.11%
Currency
AUD/USD 0.7480 +0.01%
Cryptocurrency
Bitcoin (AUD) 58,194 -1.35%
Ethereum (AUD) 4,304 -0.87%
Miscellaneous
U.S. 10 Year Treasury 2.652 +1.65%
VIX 22 -2.49%

Stocks

  • Major US indices clawed back earlier losses to close slightly higher. Intraday lows include:

    • Dow Jones (blue chip) -0.9%

    • S&P 500 (large cap) -0.7%

    • Nasdaq (tech) -1.44%

  • The market needs to follow through on today’s strength to show that the reversal wasn’t a one-off bounce from oversold levels

  • China’s biggest city and financial hub, Shanghai, reported almost 20,000 cases on Thursday, another near all-time high. Residents are not allowed to leave their homes, even for essential reasons

    • Supply chain issues could worsen as goods and containers face further delays from China’s lockdowns

  • 7 out of 11 US sectors advanced as healthcare, energy, consumer staples and material stocks outperformed

  • Defensive sectors including real estate, utilities and financials underperformed

  • 42% of US stocks rose, indicated a mixed rebound

  • 63% of US stocks trade below their 200-day moving average, (62% yesterday, 59% a week ago)

    • Even though major indices rose, market breadth got slightly worse

  • HP shares rose 14.8% after Warren Buffett’s Berkshire Hathaway disclosed an 11% stake in the legacy technology giant

  • Food producer Conagra was flat after reporting a mixed third-quarter result. Margin guidance was trimmed as pricing pressures intensified. Inflation has taken a toll on frozen, refrigerated and snack segments. Though the business said consumer demand remains strong despite recent price hikes

Economy

  • US first-time jobless claims fell by 5,000 to 166,000 for the week ended 12 April - the lowest reading since 1968

  • St Louis Fed President James Bullard downplayed recession warnings, saying that the US expansion can “continue for a long time”

  • There is a 79.4% likelihood that the Fed will raise interest rates by 50 bps in the May meeting, according to CME's FedWatch tool

Commodities

  • Iron ore prices fell below US$160 a tonne following pessimistic sentiment in China, sources told Fastmarkets

    • The Chinese government introduced several policies to support its infrastructure and construction sectors on Thursday

  • Oil prices edged lower as the massive International Energy Agency crude reserve release is providing short-term relief for prices

  • Gold continues to stabilise around the US$1,900 level. Prices edged slightly higher overnight as an aggressive Fed and geopolitical risks as driving positive flows for the yellow metal 

 

US Sectors

Thu 07 Apr 22, 10:25pm (AEST)

Sector Chg %
Communication Services -0.73%
Consumer Discretionary +0.39%
Consumer Staples +1.18%
Energy +1.36%
Financials -0.10%
Health Care +1.85%
Sector Chg %
Industrials +0.31%
Information Technology +0.23%
Materials +0.63%
Real Estate -0.86%
Utilities -0.25%

Industry ETFs

Thu 07 Apr 22, 10:25pm (AEST)

Description Last Chg %
Commodities
Aluminum 71.7815 -0.98%
Copper Miners 44.62 +0.99%
Gold 179.66 +0.38%
Lithium & Battery Tech 75.75 -0.62%
Nickel 44.6509 +0.15%
Strategic Metals 116.73 -0.63%
Steel 67 +0.81%
Silver 22.57 +0.58%
Uranium 25.75 +5.86%
Industrials
Aerospace & Defense 109.585 +1.45%
Global Jets 20.76 -1.40%
Healthcare
Biotechnology 132.48 +1.08%
Cannabis 5.14 -4.09%
Description Last Chg %
Cryptocurrency
Bitcoin 27.34 -0.99%
Renewables
CleanTech 16.5 -1.39%
Hydrogen 19.22 -1.46%
Solar 75.34 -1.05%
Technology
Cloud Computing 21.56 -0.23%
Cybersecurity 30.69 +1.17%
E-commerce 21.85 -1.24%
Electric Vehicles 26.31 -0.49%
FinTech 31.15 -0.96%
Robotics & AI 27.66 -0.14%
Semiconductor 438.75 +0.22%
Sports Betting/Gaming 19.41 -1.24%
Video Games/eSports 57.57 -0.75%

ASX Sectors to watch

#1 Uranium 

Uranium spot prices added another 2.5% overnight to a fresh 11-year high of US$63.5.

The Global X Uranium ETF rallied 5.9% to a 5-month high, now 15% away from all-time highs.

Uranium ETF
Global X Uranium ETF (Source: TradingView)

Thursday was a relatively strong session for local uranium names. Notable players like Paladin Energy (ASX: PDN), Boss Energy (ASX: BOE) and Bannerman Energy (ASX: BMN) all rose more than 3%.

Eyes on another encouraging session for the sector, buoyed by higher spot prices, Russia supply concerns and government support for nuclear power adoption.

See a full list of ASX listed uranium stocks here.

#2 Tech

Mega cap tech stocks like Tesla, Microsoft and Apple helped pulled the Nasdaq higher overnight.

Whereas the Global X FinTech, Cloud and eCommerce ETFs all closed the session slighty lower.

Even though headlines are saying 'US stocks bounced', it could still be a very mixed and challenging session for the local tech sector.

Notable overnight losers include:

  • Affirm -5.3%

  • Block -2.2%

  • Zoom -1.5%

#3 Hydrogen 

A quick one on the state of hydrogen stocks.

The Global X Hydrogen ETF briefly broke out on Monday before a broad-based selloff pulled it back into its previous trading range.

If the broader market can stabilise in the next few sessions, then the ETF could be poised to have another crack at moving higher.

Hydrogen ETF
Global X Hydrogen ETF (Source: TradingView, Annotations by Market Index)

#4 Lithium 

The Thursday wrap talked about how investors should watch how the Rare Earths/Strategic Metals ETF behaves around the 20-day moving average (red).

The ETF was down -0.63% overnight but well above session lows of -2.8%. The intraday reversal helped the ETF closed above the 20-day.

The ETF is showing early signs of stabilising. The encouraging reversal and positive SPI futures could see some positive flow for local lithium and green metal stocks.

REMX 115.99 ▼ −0.63- Market Index 2
VanEck Rare Earths/Strategic Metals ETF (Source: TradingView)

#5 Gold

Gold continues to consolidate around the US$1,900 level. The longer it consolidates - the more meaningful the next up/down move will be.

"Given the Treasury yields have basically doubled in the last several months, gold staying above the US$1900 level is rather impressive," said Oanda senior market analyst, Ed Moya.

"As recession concerns brew and the debate of which Fed mistake will be made, gold should start to see steady inflows in the coming months."

Longer term, the Australian Government's commodity forecaster expects prices to fall an average -4.9% year-on-year over its outlook period to 2027 as monetary policy begins to tighten as economies recover from the impacts of covid.

Today's events

ASX corporate actions occurring today:

  • Ex-dividend: None today

  • Dividends paid: CLX, CRN, CVL, DDH, EMB, GCI, GDG, IVC, KSL, LAU, LBL, LNK, MEZ, MOT, MXT, NTD, QUB, REG, RWC, SPK, VSL, WOT, WTC

  • Listing: NHE

  • Issued shares: AEE, AGY, AII, ANG, ARG, ARN, ASO, BNR, BRI, BRK, CCG, CG1, CNR, COB, DOW, EM2, EOL, EPY, FAU, FZO, GMA, IFL, IPD, IPX, KFE, KGN, KP2

 

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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