Morning wrap: US sell-off deepens, ASX set for another tumble
ASX Futures (SPI 200) imply the ASX will open 49 points lower, down -0.7%.
Mentioned
ASX Futures (SPI 200) imply the ASX will open 49 points lower, down -0.7%.
Major US indices continued to crater, with the S&P 500 (large-cap) and Nasdaq (tech) posting their biggest weekly decline since March 2020.
A bearish mood has been cast over global equity markets. There’s lots of carnage out there as markets attempt to price in looming interest rate hikes and less stimulus.
Key points
In the past week, the US market has consistently faded into close. A snippet from last Friday's morning wrap, the “bearish price action suggests investors are selling into strength instead of relief buying or buying the dip”
The Nasdaq correction continues to deepen, down -5.1% since its close below the 200-day moving average last Tuesday
Netflix shares added further insult to injury for the struggling tech sector after sliding -21.8% on slowing subscriber growth. From a revenue perspective, the streaming service posted its slowest year-on-year revenue since 2012
The S&P 500 closed right on its 200-day moving average. The index needs to bounce in the next few sessions to stay out of trouble
Bitcoin also faltered amid the flight to safety, down -13.5% since last Friday to a 7-month low
Nasdaq and S&P 500, daily chart, TradingView
Negative ASX SPI futures and the sea of red for US markets suggests another difficult session for local sectors.
▲ Consumer staples
Defensive pockets of the market including real estate and utilities have managed to hold up better than most.
US retail names like Walmart, Home Depot and Costco all fell less than -1%.
▼ Consumer discretionary
In stark contrast to necessities, large cap discretionary names headlined the losses including Amazon (-5.9%), Netflix (-21.8%) and Tesla (-5.3%).
▼ Materials
Mining stocks tumbled despite commodity prices like iron ore and copper holding up relatively well. This goes to show just how bearish the markets have become.
Iron ore prices continued to march north, up another 2.8% to US$137.4/t. Prices have rallied 8.4% in the past week.
The US-listed counterparts of BHP (ASX: BHP) and Rio Tinto (ASX: RIO) fell -4.5% and -2.4% respectively.
ASX Morning Brief
It was absolute carnage across specialty ETFs, notably the ones that had a strong run up in 2021.
#1 Uranium
Last Friday, we flagged that the Uranium ETF “needed to bounce off the 200-day to stay out of trouble”.
Unfortunately, the ETF did not hold up, sliding to a 5-month low on heavy volume.
5.6m shares were traded compared to a 20-day average of just 2.2m.
Global X Uranium ETF, daily chart, TradingView
Most local names posted heavy losses on Friday, with Paladin Energy (ASX: PDN) down -10.9%.
With the ETF rolling over, this could flag more negative flow for ASX-listed uranium stocks.
#2 Lithium and rare earths
The Lithium ETF closed just below its 200-day moving average. From a technical perspective, if it struggles to bounce in the next few sessions, it could begin to roll over.
Global X Lithium ETF, daily chart, TradingView
That said, lithium prices continued to go from strength-to-strength. According to Fastmarkets, lithium prices rose last week amid "firm demand, tight supply and strength from China's lithium carbonate market".
Let's see if underlying fundamentals can prevail against a bearish market.
#3 Fintech and cloud
The Fintech and Cloud ETFs both fell around -4% to at least 16-month lows.
Investors are fleeing from fast growing technology stocks ahead of the four interest rate hikes expected from the US Federal Reserve.
This could flag another challenging session for local tech names including:
#4 Nickel
Nickel prices hit 12-year highs last week as the supply-tight narrative continues to take shape.
Nickel prices, TradingEconomics
It will be difficult to gauge whether or not bullish nickel prices can outweigh the broader market's weakness.
Notable ASX nickel names include:
Key Events
ASX corporate actions occurring today:
Ex-dividend: TGA, MIR
Dividends paid: EDC
IPOs: VMM
Issued shares: AZL, BCT, BEM, BIO, CHN, COB, CY5, FCT, FDV, GSS, HGO, IMA, JAT, MCE, MEL, MGF, MNS, MXI, NAB, PGY, RNU, SBW, SCL, SGH, VEN, VMM, WAM, WHK
Other things of interest:
Australia manufacturing PMI: local manufacturing purchasing managers index (PMI) figures will be released at 9:00 AM AEDT
US manufacturing PMI: likewise, US PMI figures will be released on Tuesday, 1:45 AM AEDT
