Market Wrap

Morning wrap: US inflation jumps to 40-year high, ASX set to open flat

Thu 13 Jan 22, 8:45 (AEDT) · 4 min

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ASX Futures (SPI 200) imply the ASX will open 3 points lower, down -0.05%.

Major US indices started out on a stronger note but retreated after inflation data came in at a four-decade high.

Overnight summary

Thu 13 Jan 22, 8:45 (AEDT)
Name Value Chg %
US Indices
S&P 500 4,726 +0.28%
Dow Jones 36,290 +0.11%
NASDAQ 100 15,188 +0.23%
Russell 2000 2,176 -0.82%
Country Indices
Canada 21,395 +0.56%
China 3,555 -1.17%
Germany 16,010 +0.43%
Hong Kong 24,430 +0.11%
India 61,235 +0.14%
Japan 28,489 -0.96%
United Kingdom 7,552 +0.81%
Name Value Chg %
Commodities (USD)
Gold 1,825.40 -0.10%
Iron Ore 127.84 -
Copper 4.554 -0.49%
WTI Oil 82.77 +0.16%
Currency
AUD/USD 0.7282 -0.02%
Cryptocurrency
Bitcoin 60,225 +2.10%
Ethereum 4,637 +3.85%
Miscellaneous
U.S. 10 Year Treasury 1.725 -1.20%
VIX 18 -4.29%

The US reported a 0.5% month-on-month increase in December consumer price index (CPI). The figure came in just above the 0.4% forecast from economists polled by The Wall Street Journal. 

When compared to December 2020, the cost of living has accelerated 7% to a near 40-year high. The elevated costs were largely driven by segments including food, shelter, used cars and energy prices. 

Stubbornly high inflation adds more conviction that the US Federal Reserve will raise interest rates this year. It looks like four interest rate hikes in 2022 is becoming an increasingly likely reality.

US Sectors

Thu 13 Jan 22, 8:45 (AEDT)
Sector Chg %
Communication Services +0.36%
Consumer Discretionary +0.63%
Consumer Staples +0.05%
Energy +0.19%
Financials +0.04%
Health Care -0.26%
Sector Chg %
Industrials +0.30%
Information Technology +0.44%
Materials +0.95%
Real Estate +0.29%
Utilities +0.35%

More broadly speaking, it might be difficult to gauge how ASX sectors will perform on Thursday after the US market struggled to close at session highs.

▲ Materials

Copper prices are breaking out, jumping 3% overnight to a 3-month high of US$4.56/lb.

Iron ore is another point of interest given recent supply concerns coming out of Brazil

According to FastMarkets, heavy rains in Brazil's major mining areas are causing prices of Brazilian iron ore prices to increase quickly. 

The US-listed counterparts of BHP Group (ASX: BHP) and Rio Tinto (ASX: RIO) continue to push near term highs, up a respective 4.1% and 2.2% in overnight trade. 

▲ Technology 

Large cap tech stocks including Microsoft (1%), Google (1.2%) and Tesla (3.9%) helped pull the technology sector into positive territory.

The ASX tech sector could cop some heat, given a -2% decline in Square shares. 

▼ Healthcare 

A notable healthcare headline came out of the European market, with Dutch health tech giant Philips plunging -14.8%, its biggest fall since the 2008 Global Financial Crisis. 

Philips flagged a profit warning, with “intensified global supply chain shortages” to blame. 


Industry ETFs

Thu 13 Jan 22, 8:45 (AEDT)
Description Last Chg %
Commodities
Aluminum 62.29 -0.79%
Copper Miners 38.53 +5.40%
Gold 170.29 +0.26%
Lithium & Battery Tech 81.78 +4.02%
Nickel 28.8101 +0.83%
Strategic Metals 112.86 +3.63%
Steel 56.03 +3.00%
Silver 21.05 +1.90%
Uranium 24.08 +0.42%
Industrials
Aerospace & Defense 106.64 +0.06%
Global Jets 22.26 -0.90%
Healthcare
Biotechnology 143.52 -1.11%
Cannabis 5.91 -1.02%
Description Last Chg %
Cryptocurrency
Bitcoin 27.01 +2.30%
Renewables
CleanTech 16.44 +0.91%
Hydrogen 18.87 -0.64%
Solar 71.91 +0.45%
Technology
Cloud Computing 24.96 -0.76%
Cybersecurity 30.24 -0.46%
E-commerce 26.64 -0.23%
Electric Vehicles 30.9 +0.97%
FinTech 37.71 -0.69%
Robotics & AI 33.63 +1.04%
Semiconductor 531.24 +0.73%
Sports Betting/Gaming 23.99 -0.50%
Video Games/eSports 64.2 +1.15%

ASX Sectors to watch

#1 Copper

Yesterday, we flagged copper as an ASX sector to watch as the ETF began poking its head near 3-month highs.

Overnight, copper prices broke out of its recent trading range, rallying 3% to 3-month highs of US$4.56/lb.

HG1! 2022-01-13 08-42-04

Copper futures, TradingView

The Copper ETF delivered outsized gains (relative to spot prices), rallying to a 7-month high. 

Investors should keep an eye out for local copper names, both producers and explorers including:

#2 Lithium

The Lithium & Battery ETF is showing signs of strength after the recent interest rate driven selloff. 

Two sessions ago, the ETF was looking slightly bearish after touching its 200-day moving average for the first time since March 2020. The ETF has since rallied 6.6%. 

LIT 2022-01-13 08-43-12

Lithium & Battery ETF, TradingView

The solid overnight gains could provide positive tailwinds for local names like:

Towards the more speculative end of town:

#3 Nickel 

Yesterday, nickel was flagged as a sector to watch as spot prices were breaking out to multi-year highs.

2022-01-12 16 08 05-Window

Nickel prices, Trading Economics

It proved to be an immensely bullish day for ASX nickel stocks.

Other notable names include 

Nickel could continue to be a point of interest given the recent concerns around supply. Earlier this week, Reuters reported that nickel stockpiles in LME warehouses were down around 62% since April 2021. 

#4 FinTech 

There wasn’t too much action towards the losing end of town. The FinTech ETF could be a point of interest, down 0.7% despite the Nasdaq index (tech) closing slightly higher.

Notable US fintech names like Block and Coinbase fell -2% and -1.2% respectively. 

Block’s -2% fall will weigh on the local tech sector, driving losses for its soon-to-be subsidiary, Afterpay. 


Today’s events 

ASX corporate actions occurring today:

  • Ex-dividend: None today 

  • Dividends paid: OZF, OZR, SDG, SFY, SSO, STW, SYI

  • IPOs: None today

  • Issued shares: 360, 92E, AM7, BIO, BXB, CBO, CM8, DGO, DTZ, ICN, JYC, KMT, LCL, LOT, M7T, NAC, NBI, NTD, NWE, RDT, RFX, SNG, ST1, SZL, TRY, WAM

 

Written By

Kerry Sun

Content & Strategy

Kerry is an SAP analyst turned writer. He is an avid swing trader, drawn to breakouts and technical set ups. He covers markets from Melbourne, notably the Morning Wrap. Outside of writing and trading, Kerry is a huge UFC fan, loves poker and bouldering.

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