Market Wrap

Morning wrap: Google-parent pushes Wall Street higher, ASX to open flat

Thu 03 Feb 22, 8:23am (AEST)

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ASX Futures (SPI 200) imply the ASX will open flat. 

Wall Street logged its fourth straight session of gains, buoyed by quarterly results from tech giants.

Overnight summary

Wed 02 Feb 22, 9:23pm (AEST)

Name Value Chg %
US Indices
S&P 500 4,589.4 +0.94%
Dow Jones 35,629 +0.63%
NASDAQ 100 14,417.5 +0.50%
Russell 2000 2,029.5 -1.03%
Country Indices
Canada 21,362 +0.20%
China 3,361 -0.97%
Germany 15,614 -0.04%
Hong Kong 23,802 +1.07%
India 59,558 +1.18%
Japan 27,227 -1.11%
United Kingdom 7,252 +1.51%
Name Value Chg %
Commodities (USD)
Gold 1,806.40 +0.27%
Iron Ore 138.79 -
Copper 4.488 +1.21%
WTI Oil 88.35 +0.17%
Currency
AUD/USD 0.7134 +0.14%
Cryptocurrency
Bitcoin (AUD) 52,504 -3.75%
Ethereum (AUD) 3,788 -3.33%
Miscellaneous
U.S. 10 Year Treasury 1.766 -1.89%
VIX 22.09 +0.59%

Key points

  • Google-parent company Alphabet rallied 7.5% after beating quarterly earnings expectations. The internet giant’s advertising and cloud computing businesses benefited from continuing trends in online shopping and working from home

  • Facebook released its quarterly earnings after market close, the stock fell -22% in after hours. The company's earnings missed expectations, blaming inflation and supply chain issues impacting advertising spend

  • A small handful of heavyweight stocks managed mask the weakness on Wall Street

  • 56% of US stocks declined overnight, according to wallmine

  • The US market is also lacking breadth, with 63% of stocks trading below their 200-day moving average

  • The Organisation of the Petroleum Exporting Countries and its allies (OPEC+) stuck to its plan to modestly increase production by 400,0000 barrels per day each month, sending oil prices higher

  • On the economic front, private US payrolls fell by -301,000 in January, while economists polled by Dow Jones expected 200,000 additions. This flags the first decline in more than 12-months as omicron concerns delay hiring plans 


US Sectors

Wed 02 Feb 22, 9:23pm (AEST)

Sector Chg %
Communication Services +3.09%
Consumer Discretionary -0.53%
Consumer Staples +1.18%
Energy +0.38%
Financials +0.66%
Health Care +1.25%
Sector Chg %
Industrials +0.67%
Information Technology +0.81%
Materials +0.23%
Real Estate +1.66%
Utilities +1.46%

▲ Communications 

Alphabet is surprisingly labeled under communication services. Its 7.5% rally drove an outsized gain for the sector.

From a weighting perspective, the company accounts for 2% of the S&P 500 and 4% of the Nasdaq. 

▲ Real estate, utilities and consumer staples

Cyclical and defensive US sectors have weathered the recent broad-based selloff relatively well.

The US Consumer Staples Index is 1% away from all-time highs.

▲ Tech

Gains from Alphabet, Facebook-parent Meta and Microsoft managed to pull the Nasdaq higher.

However, there's a long list of tech stocks giving back recent gains.

This includes Tesla (-2.7%), Coinbase (-5.2%), Netflix (-6.1%), Affirm (-9.8%) and Block (-10%).


Industry ETFs

Wed 02 Feb 22, 9:23pm (AEST)

Description Last Chg %
Commodities
Aluminum 63.5701 -1.67%
Copper Miners 38.13 +0.83%
Gold 168.23 +0.22%
Lithium & Battery Tech 79.49 -0.73%
Nickel 30.1561 +0.96%
Strategic Metals 103.77 +0.22%
Steel 54.82 +1.31%
Silver 20.94 0.00%
Uranium 21.23 -1.91%
Industrials
Aerospace & Defense 102.335 +0.62%
Global Jets 21.65 -0.44%
Healthcare
Biotechnology 134.25 -0.90%
Cannabis 5.34 -3.75%
Description Last Chg %
Cryptocurrency
Bitcoin 24.2 -2.48%
Renewables
CleanTech 14.85 -1.08%
Hydrogen 16.11 -1.43%
Solar 65.21 -1.90%
Technology
Cloud Computing 23.55 -2.51%
Cybersecurity 28.88 -1.23%
E-commerce 25.38 -2.40%
Electric Vehicles 28.65 -0.06%
FinTech 34.75 -4.17%
Robotics & AI 30.15 +0.65%
Semiconductor 483.46 +2.55%
Sports Betting/Gaming 22.34 -2.01%
Video Games/eSports 62.67 +0.34%

ASX Sectors to watch

Major ETFs continued to chop around after last month's selloff. Most ETFs staged a slight pullback overnight after a strong rebound earlier this week.

As mentioned in Wednesday's wrap, the bounce off oversold levels is neither bullish or bearish. We have to wait and see if the bounce can continue, or if the ETFs will go on to make lower lows.

#1 FinTech & BNPL

PayPal shares dove -25% overnight after the company provided a weak guidance and missed user growth targets. 

US-listed BNPL rivals Block and Affirm also fell sharply, down -10% and -9.2% respectively. 

The tide could begin to turn for local BNPL stocks that enjoyed a relief rally earlier this week.

#2 Tech 

The broader tech sector could also come under pressure following declines from the FinTech (-4.2%), Cloud (-2.5%) and eCommerce (-2.3%) ETF.

This goes to show how Alphabet is doing most of the heavy lifting, while other tech stocks struggle.

#3 Lithium 

The Lithium/Battery Tech and Rare Earths/Strategic Metals ETFs were mixed overnight, down -0.6% and up 0.2% respectively.

On the news front, Ford said it plans to invest an additional US$10-20bn to accelerate its deployment of electric vehicles.

The automaker has already pledged to spend over US$30bn on electric vehicles and battery development by 2030. 

To add some perspective, Ford's market cap is around US$80bn.


Today's events

ASX corporate actions occurring today:

  • Ex-dividend: ASW, KKC

  • Dividends paid: ARF

  • Issued shares: AEE, AIM, ALB, BID, BMN, BRV, COH, CTM, EMN, EPM, GCY, GSS, HOR, HXL, ICL, IRI, JHG, LNY, NAB, NXS, OCL, PH2, PNN, POL, RFF, RHY, RMC, RRR, SHL, SPL, SYA, TNT, TNY, TON, VUK, WAM, WBT, WOA

Other things of interest 

  • ABS Building approvals (Dec) due at 11:30 am AEDT 

  • ABS Balance of trade (Dec) due at 11:30 am AEDT 

  • UK Interest rate decision due at 11:00 pm AEDT 

    • The Bank of England is expected to hike rates from 0.25% to 0.5% 

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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