ASX Futures (SPI 200) imply the ASX 200 will open 23 points higher, up 0.36%.
Wall Street whipsawed back and forth after comments from Fed Chair Jerome Powell, inflation in the UK and Canada hit 40-year highs, Chinese stimulus fails to inspire iron ore prices and Leo Lithium will make its ASX debut at 11:00 am AEST.
Let’s dive in.
Thu 23 Jun 22, 8:32am (AEST)
|US 10 Yr T-bond||3.156||-4.57%|
US stocks initially rallied after Powell said the Fed will be nimble in responding to incoming data and the evolving economic landscape. Wall Street eventually faded as Powell acknowledged the need for more aggressive interest rate hikes, which could tip the economy into a recession.
“Fading stock market bounces will still remain the go-to trade on Wall Street until the economic data dramatically weakens and the Fed pivots so that they may ease up their tightening of policy strategy,” said Oanda senior market analyst, Ed Moya.
4 out of 11 US sectors were green
Real Estate, Health Care, Utilities and Communication Services outperformed
Energy fell an outsized -4.2%
Materials, Industrials and Tech also underperformed
49% of US stocks declined
78% of US stocks trade below their 200-day moving average (77% on Wednesday, 76% a week ago)
Revlon (+34%) shares surged after filing for Chapter 11 bankruptcy protection last week. The stock is up almost 320% in the last 3 sessions
Airbnb (-2.7%) after JMP Securities downgraded the stock to neutral, saying that the post-pandemic jump in travel demand is already priced into its valuation
Coinbase (-9.7%) after rival crypto exchange Binance said it’s dropping bitcoin trading fees for customers. Coinbase relies heavily on trading volumes for revenue
Altria Pharma (-66.3%) after its exploratory Phase 2 study assessing experimental treatment for Alzheimer’s did not meet its primary endpoint
UK inflation rose 9.1% in May, the highest rate in 40 years
In-line with economist forecasts and slightly ahead of the 9.0% reading in April
Energy, food and non-alcoholic drinks were the main contributors to rising consumer prices
Canada’s inflation rate accelerated to 7.7% in May, close to a 40-year high
Exceeded economist expectations of 7.4% and well above the 6.8% reading in April
Fed Chair Jerome Powell gave his testimony to the Senate banking committee. Some interesting comments include:
Fed hikes won’t bring down gas or food prices
Market pricing for additional hikes is appropriate. The Fed is using its tools ‘pretty vigorously now’. We must restore price stability, and we will
We don’t think we’ve seen the full effect of lockdowns in China yet
Rate rises should impact housing prices fairly quickly, we are seeing a slowing in housing
Will be ‘very challenging’ to achieve a soft landing
It is a possibility our rate rises could cause a recession
100 bps is not off the table, but didn’t give much reason to consider it
Iron ore extended losses in response to continued weakness in downstream demand despite Chinese policymakers announcing accelerated fiscal expenditure and the sale of infrastructure-related government bonds, sources told Fastmarkets
Oil was crushed on recession fears, falling to a 6-week low of US$104
Gold crept higher as the doom and gloom is driving demand for safe havens
Thursday, 23 June 2022
Thursday, 23 June 2022
|Lithium & Battery Tech||73.87||-1.58%|
|Aerospace & Defense||96.56||-0.42%|
|Robotics & AI||20.96||-0.24%|
SPI futures currently point to a 0.36% open, but that's hardly reassuring given the ASX's fade on Wednesday and Wall Street giving back gains overnight.
There was a lot of weakness in commodity-related ETFs, including:
Rare earth/strategic metals -4.2%
Lithium (rare earth/strategic metals) and uranium ETFs bounced earlier this week, only to give back gains and threaten fresh year-to-date lows. It's not a good look.
It was overall a pretty boring overnight session. It's worth noting that the ASX is somewhat acting on its own accord this week instead of reacting to US market performance, as the US market was closed on Monday in observe of the Juneteenth Independence day holiday.
Things are looking pretty ugly for copper, with futures falling -2.4% to a 15-month low of US$3.9/lb.
Copper has an acute sensitivity to global industrial activity and a longstanding leading indicator of the economic cycle. It's not a good look when prices are rolling over and breaking towards the downside.
This weakness was reflected in the Global X Copper Mines ETF, which fell -5.4% overnight.
ASX corporate actions occurring today:
Dividends paid: None
Issued shares: AGY, AIM, AS1, BIO, BPM, DTZ, FRS, ID8, IMB, JHX, LKE, LLL, LRD, MCP, MFG, NAB, NTU, ONE, PSC, QHL, T3D, TRJ, UUV, VAL, WC1, ZNC
Other things of interest (AEST):
Australia Manufacturing and Services PMI (June) at 9:00 am
US Initial Jobless Claims (week ending 18 June) at 10:30 pm
Finance Writer & Social Media
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