Market Wrap

Morning wrap: Goldman Sachs cuts US growth outlook, flags potential recession, ASX set to rise

Mon 14 Mar 22, 8:24am (AEST)

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ASX Futures (SPI 200) imply the ASX will open 20 points higher, up 0.28%.

US stocks quickly gave up earlier gains as investors remain cautious about the Russia-Ukraine war. 

The US market is on its longest stretch of weekly losses since late 2018, Russian President Putin said there were “certain positive shifts” in talks with Ukraine before resuming military assault and President Joe Biden has called for a suspension of normal trade relations.

Let's dive in.

Overnight summary

Sun 13 Mar 22, 9:24pm (AEST)

Name Value Chg %
US Indices
S&P 500 4204.31 -1.30%
Dow Jones 32,944 -0.69%
NASDAQ Comp 12,844 -2.18%
Russell 2000 1,980 -1.59%
Country Indices
Canada 21,462 -0.56%
China 3,310 +0.41%
Germany 13,628 +1.38%
Hong Kong 20,554 -1.61%
India 55,550 +0.15%
Japan 25,163 -2.05%
United Kingdom 7,156 +0.80%
Name Value Chg %
Commodities (USD)
Gold 1,992.30 -0.40%
Iron Ore 155.36 -
Copper 4.61 -0.91%
WTI Oil 109.09 +2.90%
Currency
AUD/USD 0.7288 +0.32%
Cryptocurrency
Bitcoin (AUD) 53,138 -1.66%
Ethereum (AUD) 3,499 -2.14%
Miscellaneous
U.S. 10 Year Treasury 2.004 -0.35%
VIX 31 +1.72%

Stocks

  • Wall Street tentatively rallied after Russia signalled an openness for talks, which was followed by a continued assault on Western Ukraine

  • Stocks sold off towards close as investors position for more economic sanctions against Russia. President Biden aims to up the ante with trade restrictions, calling for an end of normal trade relations with Russia

  • All 11 US sectors closed in negative territory, led by technology, consumer staples and consumer discretionary sectors 

  • 69% of US stocks fell, indicating a broad-based selloff

  • 66% of US stocks trade below their 200-day moving average (65% on Monday, 64% a week ago)

  • Shares in online-signature company DocuSign plunged -20% after an earnings report that included a weaker-than-expected outlook for 2022

  • Rivian Automotive fell -7.6% after losing more than US$2bn in the fourth quarter. The electric vehicle hopeful only sold 908 vehicles in the quarter

Economy

  • The Michigan consumer sentiment fell from 62.8 to 59.7. Widespread price increases and economic growth concerns has pulled sentiment sharply lower, and likely to get worse

  • Goldman Sachs has cut its economic growth outlook for the US in 2022 from 2% to 1.75%

    • Rising gas and good prices is expected to weigh on disposable income

  • Last Thursday, the US Consumer Price Index rose 7.9% on-the-year in February. The largest on-the-month increases were 

    • Fuel oil +7.7%

    • Gasoline +6.7%

    • Transportation services +1.4%

    • Food at home +1.3%

Commodities 

  • Iron ore eased slightly, but remain above the symbolic US$150 a tonne level

  • Oil remains volatile as headlines regarding the Russia-Ukraine war and US-Iran nuclear talks kept the market on edge

  • Gold has struggled to hold above US$2,000 following the short-lived Russian ceasefire talks. Gold’s bull-case remains intact given inflationary pressures, economic growth concerns and the continued Russian assault on Ukraine

 

US Sectors

Sun 13 Mar 22, 9:24pm (AEST)

Sector Chg %
Communication Services -1.88%
Consumer Discretionary -1.79%
Consumer Staples -1.15%
Energy -0.85%
Financials -0.72%
Health Care -0.79%
Sector Chg %
Industrials -0.80%
Information Technology -1.80%
Materials -0.74%
Real Estate -0.93%
Utilities -0.37%

Industry ETFs

Sun 13 Mar 22, 9:24pm (AEST)

Description Last Chg %
Commodities
Aluminum 71.455 +2.20%
Copper Miners 43.81 -2.03%
Gold 186.4 -0.70%
Lithium & Battery Tech 70.5 -2.28%
Nickel 46.7 -2.78%
Strategic Metals 104.74 -1.87%
Steel 63.88 -1.36%
Silver 24.01 -0.67%
Uranium 26.39 -2.84%
Industrials
Aerospace & Defense 107.42 -1.47%
Global Jets 18.53 -1.78%
Healthcare
Biotechnology 123 -1.91%
Cannabis 4.74 -4.43%
Description Last Chg %
Cryptocurrency
Bitcoin 24.86 -3.38%
Renewables
CleanTech 16.36 -2.14%
Hydrogen 18.74 +0.21%
Solar 75 -1.83%
Technology
Cloud Computing 19.8 -3.03%
Cybersecurity 29.68 -2.26%
E-commerce 20.45 -3.52%
Electric Vehicles 25.43 -2.44%
FinTech 29.38 -4.42%
Robotics & AI 27.33 -2.93%
Semiconductor 443.93 -2.15%
Sports Betting/Gaming 19.13 -1.93%
Video Games/eSports 55.28 -1.99%

ASX Sectors to watch

#1 Tech

Tech valuations continue to slide as investors exit out of richly-valued and loss-making companies. The Global X FinTech, eCommerce and Cloud ETFs declined at least -3% on Friday.

Noteworthy US losers include: 

  • Affirm -15.6% 

  • Etsy -11.5% 

  • Block -6.4% 

  • Tesla -5.1% 

  • eBay -4.4%

The local technology sector will likely follow in the footsteps of the US market, most notably BNPL stocks. 

Online signature company Nitro Software (ASX: NTO) could struggle following a sharp decline and weak outlook from US-rival DocuSign.

#2 Uranium

Last week was a massive week for uranium stocks after spot prices rose above US$60/lb for the first time since 2011.

The sector has been buoyed by positive news including:

  • Finland commissioning first new reactor in 4 decades

  • Japanese lawmakers demand to speed up of nuclear reactors

  • South Korea's pro-nuclear candidate, Yoon Suk-Yeol, wins the presidential election

  • Russian uranium exports at risk

  • 2022 uranium demand is forecast to be circa 200m lbs while supply sits at just 135m lbs, according to fuel consultants UxC

That said, the Global X Uranium ETF fell -2.8% on Friday, in-line with the broader market selloff.

This could take some heat out of local uranium names after a strong rally last week.

See a list of ASX uranium stocks here.

#3 Energy

The Russia-Ukraine war was initially a one-way ticket to send oil prices to the moon.

Now, investors are worried that higher oil prices will eventually lead to "demand destruction", possibly dragging the economy into recession.

"Oil prices are still looking heavy as crude demand destruction appears like it could get much worse as inflationary pressures intensify the longer the war in Ukraine lasts," said Oanda senior market analyst, Ed Moya.

"The supply side for oil will keep this market tight for a while and WTI crude should see massive support at the $100 level."

All eyes should be on the developments of the US-Iran nuclear talks and OPEC's meeting on output on 31 March.

Today's events

ASX corporate actions occurring today:

  • Ex-dividend: ANG, ARA, BST, CNU, FFI, LSF, PPM, SND, TGR,

  • Dividends paid: BAP, EBG, FID

  • Listing: None today

  • Issued shares: AGS, ALV, ARG, CNU, CXM, EBR, EML, FBU, FEX, GLH, HCH, LCK, MEB, MFF, MGF, NAB, OAR, PLT, PYG, QXR, SUV, SZL, WPR

 

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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