Morning wrap: S&P500 and Dow book another week of gains, ASX set to rise

ASX Futures (SPI 200) imply the ASX will open 33 points higher, up +0.44%.

Last Friday was a chopping session for major US indices, oil prices turned positive after a projectile hit a Saudi Armaco site, the Federal Reserve’s stance on monetary policy and the Russia-Ukraine war remained in focus for investors.

Let’s dive in.

Stocks

• The Dow Jones (blue chip) and S&P 500 (large cap) closed higher last Friday, up to a 1-month high. 

• The Nasdaq (tech) underperformed due to a mixed performance from mega cap names. Nevertheless, the index still closed well-above session lows of -1.3%

• Defensive and commodity-oriented sectors outperformed, including energy, utilities, financials, real estate and materials

• Consumer discretionary and tech sectors were the only two to close in negative territory

• 49% of US stocks advanced, indicating a mixed-session

• 58% of US stocks trade below their 200-day moving average (60% on Thursday, 60% a week ago)

• Apple (+0.4%) is working on a hardware subscription service for its iPhones, making phone ownership similar to subscribing to apps. The service could tie into AppleCare and digital service bundles, according to Bloomberg

• Toshiba (+0.6%) shareholders rejected plans to split the company into two parts - an electronic-device business and an energy/infrastructure business

Economy

This week is another stacked week for economic data and pivotal in showing investors that the economy remains intact despite inflationary pressures and geopolitical uncertainty. 

• US

  • Nonfarm payroll report and unemployment rate  

• EU

  • Unemployment rate and inflation rate

  • Further unexpected inflation spikes could pressure a more hawkish stance from the European Central Bank

• China

  • Manufacturing and services PMI

  • Evergrande is back in the headlines as bondholders run out of patience 

Commodities 

• Iron ore prices edged higher following a bullish run in futures markets and swap markets, sources told Fastmarkets

• Oil prices rose as disruption concerns continue to buoy upside risk

• Gold prices were unchanged as treasury yields maintained an upward trend. Higher bond yields make gold less attractive since the yellow metal does not bear any yield

#1 Tech

The mixed session for US tech stocks provides a difficult read for how local names will perform on Monday.

On one hand, the Nasdaq managed to close just -0.16% lower, well-above session lows of -1.28%. This indicates that buying returned to tech stocks towards close.

That said, the Global X Fintech and eCommerce ETFs both fell more than -2%. The Cloud ETF fell -1.4%.

Notable overnight losers include:

• Etsy -6.1%

• Affirm -5.9%

• Block -3.5%

• PayPal -2%

This means that local Block (ASX: SQ2) shares will decline at open but let's see where the day takes us.

#2 Cannabis

US cannabis stocks surged on Friday as the Congress will vote on a bill to decriminalise marijuana next week. This will be the second time that Congress will vote on legalisation.

A similar bill was passed by the House in 2020 but struggled to make it through the Senate. Forbes said that Wall Street analysts are not optimistic about the bill making it through Congress, though, the news lead to a short-term bounce for the sector.

Global X Cannabis ETF (Source: TradingView)

Several US cannabis stocks including Sundial, Tilray and Aurora rose more than 25% last week.

Notable ASX cannabis stocks include:

• Cann Group (ASX: CAN)

• Botanix Pharma (ASX: BOT)

• Althea Group (ASX: AGH)

• Auscann (ASX: AC8)

#3 Energy

A Saudi Aramco petroleum storage facility was attacked, with Yemen's Houthi's claiming responsibility.

"This is the second attack this week and raises concerns that the energy market could see a major attack like the one in 2019 that disrupted around half of Saudi Arabia’s production," said Oanda senior market analyst, Ed Moya.

"The oil market looks like it won’t be able to shake off disruption fears anytime soon and that should suggest prices could continue to rally strongly next week."

Energy was the best performing sector on Wall Street. Will the local energy sector continue its bullish run?

#4 Crypto

Bitcoin has been green for the past six sessions, back to a 3-month high around US$46,000.

“A less-discussed aspect of the war is its potential impact on accelerating digital currencies. The war will prompt countries to re-evaluate their currency dependencies," said BlackRock CEO, Larry Fink.

Local crypto-related stocks include Betashares Crypto Innovators ETF (ASX: CRYP) and DigitalX (ASX: DCC).

Its also interesting to observe the Bitcoin's price-action against the S&P 500. In short: Bitcoin green = S&P 500 green.

ASX corporate actions occurring today:

• Ex-dividend: COL, LYL, NCC, REH

• Dividends paid: ARA, BHP, DSK, EDV, IEL, NCK, UNI

• Listing: FEG

• Issued shares: A1M, AEV, ALI, APX, ARX, ATC, AVL, CF1, CHM, CNR, CNU, CPT, FBU, FEG, GMN, GMR, JIN, LOT, LRK, LRS, LYN, MOQ, MYG, NAB, PEK, PIC, PNM, RMC, RR1