Market Wrap

Morning wrap: US market extends gains as investors refocus on war, ASX set to rise

Fri 18 Mar 22, 8:34am (AEST)

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ASX Futures (SPI 200) imply the ASX will open 37 points higher, up 0.51%.

US stocks climb for a third day as investors eye developments from Russia-Ukraine negotiations, Russia processed at US$117m bond payment - avoiding default, US economic data remains buoyant and oil prices bounce.

Let’s dive in.

Overnight summary

Thu 17 Mar 22, 9:34pm (AEST)

Name Value Chg %
US Indices
S&P 500 4411.67 +1.23%
Dow Jones 34,481 +1.23%
NASDAQ Comp 13,615 +1.33%
Russell 2000 2,065 +1.69%
Country Indices
Canada 21,771 +1.41%
China 3,215 +1.40%
Germany 14,388 -0.36%
Hong Kong 21,501 +7.04%
India 57,864 +1.84%
Japan 26,653 +3.46%
United Kingdom 7,385 +1.28%
Name Value Chg %
Commodities (USD)
Gold 1,943.00 +1.77%
Iron Ore 148.85 -
Copper 4.697 +2.10%
WTI Oil 103.62 +9.03%
Currency
AUD/USD 0.7374 -0.03%
Cryptocurrency
Bitcoin (AUD) 55,238 -1.96%
Ethereum (AUD) 3,805 +0.37%
Miscellaneous
U.S. 10 Year Treasury 2.192 +0.18%
VIX 26 -3.75%

Stocks

  • A risk-on attitude is making a return as investors have a clear view of what to expect from the US Federal Reserve and economic data remains intact despite inflationary concerns

  • In the past three days:

    • S&P 500 (large cap) +5.7%

    • Dow Jones (blue chip) +4.7%

    • Nasdaq (tech) +7.9%

  • All 11 US sectors finished in positive territory, led by energy and material stocks

  • 73% of US stocks advanced

  • 61% of US stocks trade below their 200-day moving average (63% yesterday, 65% a week ago)

  • Kitchenware and home furnishings company Williams-Sonoma rallied 5.4% after beating analyst earnings expectations for the December quarter

  • Berkshire Hathaway crossed US$500,000 a share for the first time this week. Warren Buffett owns 151.6m shares

Economy

  • Russia has managed to avoid default after creditors received a $117m payment (in US dollars) for bond coupons due this week, according to Reuters

  • US jobless claims totaled 214,000 for the week ended 12 March, ahead of the Dow Jones estimate of 220,000

    • This signals that the labour market remains very strong and the impact of omicron has largely disappeared

  • US housing starts for February came in better-than-expected, 1.77m versus 1.70m forecasts

    • Suggests continued high demand for new housing

  • US building permits were in-line with estimates but down month-on-month to 1.86m

  • US Philly Fed manufacturing for March was much stronger than anticipated, 27.4 versus 15.0 forecasts

    • Industrial production rose 0.5% from a month ago

    • Auto production decline -3.5%

Commodities 

  • Iron ore gains have slowed as Chinese buyers weigh the government’s stimulus plans against the uncertain outlook over surging covid cases and new lockdowns

  • Oil prices bounced back above US$100 a barrel as geopolitical tensions remain high

  • Gold rose as flattening yield curve flags growth concerns, helping drive some positive flow towards safe-haven assets

US Sectors

Thu 17 Mar 22, 9:34pm (AEST)

Sector Chg %
Communication Services +0.93%
Consumer Discretionary +1.86%
Consumer Staples +0.60%
Energy +3.48%
Financials +1.23%
Health Care +1.61%
Sector Chg %
Industrials +1.34%
Information Technology +0.69%
Materials +1.95%
Real Estate +1.36%
Utilities +0.46%

Industry ETFs

Thu 17 Mar 22, 9:34pm (AEST)

Description Last Chg %
Commodities
Aluminum 68.7 +4.21%
Copper Miners 42.34 +2.31%
Gold 180.01 +0.45%
Lithium & Battery Tech 72.31 +1.05%
Nickel 37.19 +4.89%
Strategic Metals 103.51 +1.29%
Steel 62.29 +3.11%
Silver 23.11 +0.95%
Uranium 23.95 +6.93%
Industrials
Aerospace & Defense 106.895 +1.56%
Global Jets 20.35 -0.20%
Healthcare
Biotechnology 125.97 +2.10%
Cannabis 4.62 +3.90%
Description Last Chg %
Cryptocurrency
Bitcoin 25.66 -0.04%
Renewables
CleanTech 16.295 +0.15%
Hydrogen 18.41 +2.66%
Solar 75.61 -0.57%
Technology
Cloud Computing 19.94 +2.91%
Cybersecurity 29.055 +1.91%
E-commerce 21.88 -0.09%
Electric Vehicles 26.06 +0.73%
FinTech 30.36 +2.93%
Robotics & AI 27.86 +3.19%
Semiconductor 462.3 +0.62%
Sports Betting/Gaming 20.12 +1.14%
Video Games/eSports 58.1 -1.39%

ASX Sectors to watch

Investors are likely forgetting how bearish they were feeling just a week ago now that equity markets are bouncing back.

"There is too much short-term geopolitical and economic growth risk that the rally in stocks appears like it will be capped soon," warned Oanda senior market analyst, Ed Moya.

US stock trader Mark Minervini said this morning that "yesterday's rally had a feel of an oversold bounce, fueled in part by short covering as many of the beaten down names were the strongest."

"We saw a follow through day yesterday and that's a step in the right direction... but our risk model has not yet improved enough to signal the all clear buy signal."

#1 Tech

Beaten up tech stocks extend gains as investors cautiously return to more risky pockets of the market.

Notable overnight winners include: 

  • Block +10.3%

  • Affirm +10.2%

  • Etsy +5.9%

  • PayPal +3.9%

  • Tesla +3.7%

The S&P/ASX 200 Info Tech Index is up 7.2% in the last two sessions.

The positive overnight session will set up local Block (ASX: SQ2) shares for another positive open, which could also drive positive flows for the broader tech and BNPL sector.

#2 Uranium

Overnight uranium stocks surged after the US Energy Department pledged to accelerate aid for current and future US nuclear reactors, according to Bloomberg.

Top Energy Department nuclear officials said that “we need to build out capacity for a Western alternative for the Russian component of the uranium market, including conversion and enrichment capacity.” 

“There is no question in my mind that we will continue to focus on uranium as an incredibly important fuel."

The Global X Uranium ETF rallied 6.9% overnight, still recovering from this week's selloff.

Global X Uranium ETF
Global X Uranium ETF (Source: TradingView)

See a full list of ASX uranium stocks here.

#3 Energy

Oil stocks bounced back after a sharp -30% correction from last week's highs.

“Not enough crude demand destruction has happened to warrant prices falling below the US$90 level and with inventories continuing to decline, this oil market will likely remain tight for quite some time,” said Moya.  

“Oil prices edged higher after Secretary of State Blinken said he doesn’t see signs that Putin is prepared to stop and that the US is concerned China is considering helping Russia.  This war seems like it won’t be ending anytime soon and that likely means oil prices could have another strong rally here.”

Today's events

ASX corporate actions occurring today:

  • Ex-dividend: CAR, HUB, SPY, VLS

  • Dividends paid: ABA, APX, AUI, CAF, DUI, EBO, EGN, EHE, FRI, HIT, IGO, IPH, IRE, JIN, MCP, PAI, PBP, PMC, PNI, PTM, SHA

  • Listing: SLB

  • Issued shares: ALA, BKT, CRR, D2O, DBF, FBU, FZO, GLN, IPT, IS3, LKE, LLC, LPD, LRV, MLS, MTM, MYS, NCM, PSI, SLB, VMY, WQG

 

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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