Market Wrap

Morning Wrap: European stocks bounce, ASX set to snap 7-day losing streak

Tue 21 Jun 22, 8:22am (AEST)

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ASX Futures (SPI 200) imply the ASX 200 will open 47 points higher, up 0.74%.

US markets were closed on Monday, major European indices bounced overnight, wholesale prices in Germany are surging and China kept its interest rates unchanged.

Let’s dive in.

Overnight summary

Tue 21 Jun 22, 8:22am (AEST)

Name Value Chg %
Major Indices
S&P 500 3,675 +0.22%
Dow Jones 29,889 -0.13%
NASDAQ Comp 10,798 +1.43%
Russell 2000 1,666 +0.96%
Country Indices
Canada 19,184 +1.34%
China 3,315 -0.04%
Germany 13,266 +1.06%
Hong Kong 21,164 +0.42%
India 51,598 +0.46%
Japan 25,771 -0.74%
United Kingdom 7,122 +1.50%
Name Value Chg %
Commodities (USD)
Gold 1,840.20 -0.02%
Iron Ore 135.69 -
Copper 4.005 -0.21%
WTI Oil 110.27 +0.65%
Currency
AUD/USD 0.6954 +0.03%
Cryptocurrency
Bitcoin (AUD) 29,241 -0.63%
Ethereum (AUD) 1,581 -3.15%
Miscellaneous
US 10 Yr T-bond 3.239 -2.06%
VIX 31 -5.83%

Markets

US markets were closed in observance of the Juneteenth National Independence Day holiday. We now turn to the next best alternative: European markets.

  • European benchmarks including the pan-European STOXX 600, FTSE 100 and German DAX all rose at least 0.97% after a brutal selloff last week on recession worries

  • Looking at UK markets:

    • Energy, discretionary and bank sectors outperformed

    • Industrials, materials and utilities underperformed

Stocks

  • Renault (+9.7%) after Jefferies upgraded the French carmaker to a “Buy”

  • International Consolidated Airlines Group (+7.3%) saw the largest increase among FTSE 100 constituents. This is in-line with the bounce for local travel stocks on Monday

  • HSBC (+5.7%) amid a broad-based rebound in battered bank stocks 

  • Kingspan (-11.4%) shares plunged after the building insulation specialist said that market sentiment was deteriorating and order intake volumes were down significantly in May and June

Economy

  • Chinese banks kept lending rates unchanged, in-line with forecasts

    • The 1-year loan prime rate was left at 3.7%

    • The 5-year loan prime rate was maintained at 4.45%

    • China is in wait-and-see mode as it gauges the economic rebound from covid lockdowns

    • Bloomberg economists said that China is still in an easing cycle and expect it to lower rates by another 20 bps by year-end

  • Germany’s producer price index surged 33.6% year-on-year in May

    • This is the 6th consecutive month of record highs and slightly ahead of the 33.5% reading in April

    • Energy was the biggest contributor, notably prices for the distribution of natural gas, electricity and mineral oil products

    • Excluding energy, producer prices rose 16.5% compared to last year 

Commodities

  • Iron ore prices plunged on Monday amid concerns about weak Chinese demand and its troubling property market

  • Oil prices are steady around US$110 as investors weigh recession fears against extremely tight supply

  • Gold is still trying to price-in more hawkish-than-expected central banks

 

ASX Sectors to watch

The S&P/ASX 200 is hoping to snap a 7-day losing streak on Tuesday. SPI futures are currently pointing towards a 0.74% rise at open and overnight markets were also positive.

Sectors to look for signs of strength:

  • Energy: Can oil stocks rebound from the sharp selloff on Monday?

  • Uranium: Several Toronto-listed uranium miners bounced overnight, including Cameco (+2.6%)

  • Coal: Another sector that was sold off heavily on Monday. Worth noting that Newcastle coal futures rose 6.6% overnight

  • Travel: Can local travel names extend gains to a 2-day winning streak?

  • Tech: ASX 200 tech index rose 1.2% on Monday, another sector looking to extend gains from no-man's land

 

Today's events

ASX corporate actions occurring today:

  • Ex-dividend: KPG, PMV

  • Dividends paid:  CRN, FPC, OCA, VUK

  • Listing: None

  • Issued shares: 1ST, AFP, AKN, AM7, AVR, BSA, CLG, CXM, DTR, DVP, EEG, FHE, GCX, IHL, KAU, KKO, KMT, KZA, LRS, MFG, MGU, MRI, NAB, NBI, OAU, PCK, PDI, PPC, RHY

Other things of interest (AEST): 

  • RBA Gov Low Speech at 10:00 am

  • RBA Meeting Minutes at 11:30 am 

 

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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