Morning wrap: Dow Jones and S&P aim for record closes, ASX to open higher

ASX Futures (SPI 200) imply the ASX will open 12 points higher, up 0.2%.

US markets were mostly higher overnight with the Dow Jones rallying for a sixth straight session, closing at an all-time high and S&P 500 not far off yesterday's record open.

The tech-heavy Nasdaq closed in negative territory as technology stocks lagged.

The Dow Jones and S&P 500 continued to power ahead as investors rallied behind cyclical and more value oriented pockets of the market. 

Conversely, the interest-rate sensitive Nasdaq struggled to find headway as the yield for the US 10-year treasury climbed to a 1-month high of 1.54%. The tech-heavy Nasdaq is now on track to underperform the S&P 500 for the first time in five years.  

Omicron remains a focus for investors as cases continue to climb to all-time highs in countries including Australia, the US, France and Germany. That said, there is some encouraging news coming out of lawmakers and scientists.

Over in the US, the Centres for Disease Control and Prevention (CDC) cut its recommended isolation period for asymptomatic cases from 10 to 5 days. The changes would help asymptomatic people return to work or school, with proper precautions said White House medical advisor Dr Anthony Fauci.

In addition, the antibody response of people infected with omicron appears to increase protection against the delta variant according to a small study published by the Africa Health Research Institute. 

On the economic front, the US trade deficit in goods jumped by 17.5% in November to an all-time high. The US is on track to post its biggest international trade deficit in history. 

Real estate stocks climbed even after home buyer data showed a 2.2% month-on-month decline in November, as high housing prices took some heat out of buying activity. 

Material stocks closed higher despite copper and iron ore closing lower in overnight trade. The US-listed counterparts of BHP Group (ASX: BHP) and Rio Tinto (ASX: RIO) rose 1.1% and 0.4% respectively. 

Investors struggled to find incentives to push tech stocks higher amid rising bond yields. Mega caps including Microsoft, Alphabet, Apple and Tesla closed with gains of less than 1%. 

ASX Sectors in play

ETF GAINERS

The Rare Earth/Strategic Metal ETF topped the leaderboards thanks to strong gains from Pilbara Minerals (ASX: PLS) and Lynas Rare Earths (ASX: LYC), both stocks sit in the ETF's top four holdings.

• ASX-listed rare earths and lithium stocks rallied strongly on Wednesday with names like Pilbara Minerals and Lynas hitting fresh all-time highs 

• These gains were offset by the ETFs other holdings such as China Northern Rare Earth Group, Ganfeng and Zhejiang Huayou Cobalt, all of which closed in negative territory 

ETF LOSERS

The Cannabis ETF sold off on the most volume it's seen since March this year. The ETF is now down almost 40% year-to-date and down 80% from February highs.  

• The prospect of legislative catalysts to re-rate the sector has hung around for more than a year, but has struggled to materialise 

• The ETF’s performance isn’t providing much reassurance for ASX names like Cann Group (ASX: CAN), Althea Group (ASX: AGH) and Ecofibre (ASX: EOF), all of which are down more than 50% year-to-date

The Hydrogen ETF sold off following an earnings release from one of its major holdings, Fuel Cell Energy.

Fuel Cell Energy reported a net loss for the quarter to 31 October of US$24.98m or 7 cents a share versus forecasts for a loss of 4 cents a share, according to FactSet. Fuel Cell Energy shares plunged 12.9% to a 13-month low. 

• The largest ASX-listed hydrogen player, Hazer Group (ASX: HZR) closed -0.4% lower yesterday despite the ASX 200 lifting 1.2% 

• The weak overnight performance could put Hazer and other hydrogen names at risk 

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