Market Wraps

Morning wrap: US selloff continues, Nasdaq in correction territory, ASX to open flat

Thu 20 Jan 22, 8:56am (AEDT)

ASX Futures (SPI 200) imply the ASX will open 10 points higher,  up 0.14%.

The ASX could be in for a challenging session after US stocks struggled to hold onto gains.

Overnight Summary

Thu 20 Jan 22, 8:56am (AEDT)

Name Value Chg %
US Indices
S&P 500 4482.73 -1.10%
Dow Jones 34,715 -0.89%
NASDAQ 100 14,154 -1.30%
Russell 2000 2,024 -1.88%
Country Indices
Canada 21,058 -0.69%
China 3,523 -0.91%
Germany 15,912 +0.65%
Hong Kong 24,966 +0.05%
India 59,037 -0.72%
Japan 27,522 -0.90%
United Kingdom 7,585 -0.06%
Name Value Chg %
Commodities (USD)
Gold 1,839.20 -0.18%
Iron Ore 129.49 -
Copper 4.523 -1.31%
WTI Oil 86.90 0.00%
Currency
AUD/USD 0.7216 -0.12%
Cryptocurrency
Bitcoin 57,187 -1.86%
Ethereum 4,262 -1.98%
Miscellaneous
U.S. 10 Year Treasury 1.833 +0.33%
VIX 26 +7.30%

The S&P 500 (blue-chip), Dow Jones (large cap) and Nasdaq (tech) all opened in positive territory, posting intraday gains between 0.5% and 1%. 

These gains faded towards close, with all three major indices closing around -1% lower. 

The Nasdaq has breached its 200-day moving average for the first time since March 2020, officially entering correction territory.

US stocks continue to whipsaw in wake of tightening economic conditions and elevated inflation. The US Federal Reserve will hold its interest rate decision meeting next Wednesday and Thursday

The general consensus is that the Fed won’t raise interest rates until March.

On the economic front, the US International Energy Agency predicts global oil demand to exceed pre-covid levels, expecting the impact of omicron to be ‘mild’.

Crude oil prices broke above 7-year highs on Wednesday, currently trading at US$86.7 a barrel.  


US Sectors

Thu 20 Jan 22, 8:56am (AEDT)

Sector Chg %
Communication Services 0.00
Consumer Discretionary 0.00
Consumer Staples 0.00
Energy 0.00
Financials 0.00
Health Care 0.00
Industrials 0.00
Information Technology 0.00
Materials 0.00
Real Estate 0.00
Utilities 0.00

With all three major US indices staging a sharp U-turn before close, this could flag a weak session for local sectors.

▼ Materials  

The US materials sector was weighed by the performance of construction companies.

Whereas commodity prices posted broad-based gains overnight including iron ore, gold, nickel and silver. 

The US-listed counterparts of BHP (ASX: BHP) and Rio Tinto (ASX: RIO) rose 3.1% and 2.9% respectively.

▼Financials

US banks faltered despite Morgan Stanley posting a better-than-expected fourth-quarter profit

Other major banks including Goldman Sachs, JPMorgan and Citi all fell more than -1%. 

Yesterday, Goldman Sachs’ fourth quarter results flagged a 23% jump in operating expenses.

While the general view is that higher interest rates will help expand bank margins, it looks like expenses are also on the rise


Industry ETFs

Thu 20 Jan 22, 8:56am (AEDT)

Description Last Chg %
Commodities
Aluminum 64.0055 +2.44%
Nickel 30.59 +2.32%
Silver 22.37 +1.12%
Gold 172.08 -0.23%
Lithium & Battery Tech 80.41 -0.31%
Strategic Metals 110.59 -0.58%
Copper Miners 40.79 -0.83%
Uranium 22.56 -1.91%
Steel 56.47 -2.59%
Industrials
Global Jets 21.49 -0.51%
Aerospace & Defense 105.3 -1.04%
Healthcare
Biotechnology 131.83 -0.90%
Cannabis 5.26 -2.09%
Description Last Chg %
Cryptocurrency
Bitcoin 26.2 +2.67%
Renewables
Hydrogen 16.73 +0.72%
CleanTech 15.35 +0.29%
Solar 66.94 +0.07%
Technology
E-commerce 25.11 +0.64%
Video Games/eSports 63.01 +0.63%
FinTech 34.39 +0.20%
Cybersecurity 28.64 +0.03%
Sports Betting/Gaming 22.14 -0.18%
Cloud Computing 23.37 -0.39%
Robotics & AI 30.8 -0.81%
Electric Vehicles 29.61 -1.79%
Semiconductor 496.2 -3.14%

ASX Morning Brief

#1 Nickel 

Last week, we flagged Nickel’s initial breakout into all-time highs. 

The Nickel Index hit another all-time high overnight as spot prices rallied to 11-year highs. 

jjn

Nickel Index, TradingView

According to Reuters, stockpiles in LME-registered warehouses have fallen more than -60% since April 2021. Inventories in Shanghai Futures Exchanges warehouse are at “near record lows”. 

Massive premiums are being paid to secure the limited supply.

This could see another bullish day for local nickel names including: 

#2 Silver

Silver made an appearance as an ASX sector to watch yesterday, given a meaningful 2.2% rally. 

Silver prices posted another overnight gain, up 3.1% to a 2-month high, closing above its 200-day moving average and testing the downward trend line.

silver

Silver spot prices, TradingView

Silver is a relatively niche sector, especially on the ASX. Notable names include:

#3 Copper 

Copper has made a regular appearance as a sector to watch, with major breakouts taking place on 12 and 13 January

After a brief pullback, the Copper Mines ETF hit a fresh 7-month high overnight. This is despite no major breakout in copper spot prices.

Earlier today, Reuters reported expectations of further policy easing for the metals sector in China. Policymakers said that they will roll out more policy measures to stabilise the economy.

Although a higher Copper Mines ETF with no movement in spot prices could send mixed signals for local copper stocks. 

#4 Lithium and Rare Earths 

The Rare Earth/Strategic Metals ETF staged a slight pullback yesterday, where we flagged that: 

“Many ASX lithium stocks have greatly outperformed the ETF and set new all-time highs almost on a daily basis. This could put them at risk if the ETF experiences a sharp correction.” 

Overnight, the Lithium & Battery Tech ETF slumped -2.8%, close to a 3-month low. The Rare Earths ETF also fell -1.5%.  

Large cap ASX lithium stocks faltered on Wednesday, including: 

Whereas a number of explorers continued to run.

#5 Hydrogen

Investors continue to pull out of risky sectors, including hydrogen. 

The ETF hit its fourth consecutive all-time low overnight. 

This could drive negative flow for local names, notably Hazer (ASX: HZR).


Key Events

ASX corporate actions occurring today:

  • Ex-dividend: None today

  • Dividends paid: None today

  • IPOs: SQ2

  • Issued shares: AD1, ADR, AEE, AND, BID, CRR, DOU, DRX, E25, EMT, ICI, IVT, KWR, LIO, MSB, NAB, PX1, QML, SEQ, SQ2, TYR, WAM, ZLD

Other things of interest 

Unemployment rate: Australia’s unemployment data for December will be released at  11:30 AM AEDT

Written By

Kerry Sun

Content Strategist

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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