Market Wraps

Morning wrap: US stocks extend tech led rally, ASX set to follow

Tue 01 Feb 22, 8:30am (AEDT)

ASX Futures (SPI 200) imply the ASX will open 42 points higher, up 0.6%.

US stocks bounced for a second consecutive session, once again led by recovering tech stocks.

Despite closing January on a more positive note, the S&P 500 (large cap) still logged its worst month since the March 2020 selloff.

Overnight Summary

Tue 01 Feb 22, 8:30am (AEDT)

Name Value Chg %
US Indices
S&P 500 4515.55 +1.89%
Dow Jones 35,132 +1.17%
NASDAQ 100 14,240 +3.41%
Russell 2000 2,028 +3.05%
Country Indices
Canada 21,098 +1.72%
China 0 0.00%
Germany 15,471 +0.99%
Hong Kong 23,802 +1.07%
India 58,863 +1.46%
Japan 27,078 +0.28%
United Kingdom 7,464 -0.02%
Name Value Chg %
Commodities (USD)
Gold 1,798.70 +0.13%
Iron Ore 138.79 -
Copper 4.336 +0.27%
WTI Oil 88.38 +0.26%
AUD/USD 0.7068 +0.04%
Bitcoin 54,516 +1.51%
Ethereum 3,807 +4.54%
U.S. 10 Year Treasury 1.782 0.00%
VIX 25 -10.23%

Key points

  • The S&P 500 and Dow Jones (blue chip) have both reclaimed their 200-day moving averages, keeping the long-term upward trend intact 

  • Despite the market rallying for a second straight session, investors should remain cautious. Sentiment remains bearish and there’s no shortage of stocks down 40-80% from last year’s highs

  • The markets are now pricing in at least five 25 basis point interest rate hikes by year-end 

  • Tech shares have been the most hard hit as higher rates expose lofty valuations and raises funding costs 

AAII Investor Sentiment Survey AAII

US AAII Investor Sentiment Survey

US Sectors

Tue 01 Feb 22, 8:30am (AEDT)

Sector Chg %
Consumer Discretionary +3.81%
Information Technology +2.68%
Communication Services +2.40%
Utilities +1.85%
Materials +1.44%
Real Estate +1.25%
Industrials +1.10%
Financials +0.89%
Health Care +0.67%
Consumer Staples +0.48%
Energy +0.44%

▲ Consumer discretionary

Amazon lifted the sector higher after rallying 3.9%.

Other notable winners include Etsy (7.7%), Expedia (5%), eBay (4.4%) and Royal Caribbean Cruises (4.4%).

▲ Tech

Netflix and Spotify both rallied more than 10% following an upgrade from Citi. The broker said that the recent selloff represents an attractive buying opportunity. Before today’s rebound, Netflix was down -36% in January while Spotify was down -26%.

Tesla was another recipient of a broker upgrade, up 10.7% by market close. Credit Suisse upgraded the stock to outperform, saying the broader market pullback had brought Tesla into oversold territory.

This week is another big week of tech-oriented earnings. What we’re watching this week: 

  • Tues: Alphabet, PayPal, Starbucks, ExxonMobil, AMD

  • Weds: Meta, Spotify

  • Thurs: Amazon, Ford

▲ Materials

The US-listed counterparts of BHP (ASX: BHP) and Rio Tinto (ASX: RIO) fell -0.9% and -2.4% respectively, going against the market's broad-based rally.

Iron ore prices fell rather substantially, down -4.25% to US$141.75 a tonne.

Most traders believe that iron ore prices should stay relatively stable until the end of China's Lunar New Year holiday on February 8, according to Fastmarkets. 

Iron ore sentiment might be weighed by an announcement from China’s National Development and Reform Commission (NDRC) last Friday, vowing to strengthen oversight of iron ore prices and crack down on speculation

Industry ETFs

Tue 01 Feb 22, 8:30am (AEDT)

Description Last Chg %
Lithium & Battery Tech 74.8 +4.64%
Strategic Metals 97.11 +4.61%
Uranium 19.97 +3.46%
Copper Miners 36.96 +1.22%
Gold 167.1 +0.59%
Silver 20.71 +0.43%
Steel 52.33 -0.04%
Nickel 29.3261 -0.05%
Aluminum 64.0829 -0.99%
Global Jets 20.42 +3.92%
Aerospace & Defense 99.69 +1.44%
Cannabis 4.68 +8.76%
Biotechnology 127.97 +3.04%
Description Last Chg %
Bitcoin 23.77 +1.64%
Hydrogen 14.49 +9.59%
Solar 60.51 +8.21%
CleanTech 13.75 +7.42%
E-commerce 23.77 +6.44%
Video Games/eSports 59.12 +5.70%
FinTech 32.14 +5.57%
Cloud Computing 22.14 +5.42%
Semiconductor 455.03 +5.37%
Robotics & AI 28.39 +4.61%
Cybersecurity 27.42 +4.38%
Sports Betting/Gaming 20.87 +4.26%
Electric Vehicles 27.1 +4.21%

ASX Morning Brief

#1 Tech

The FinTech, Cloud and eCommerce ETFs all closed at least 4.9% higher. Wall Street’s tech-led rally could see another positive session for local names.  

Notably, US-listed BNPL players like Block and Affirm continued to bounce, up 6.4% and 10.2% respectively. This could drive another positive session for local players including: 

#2 Travel 

The Global Jets ETF has hovered close to 14-month lows on three separate occasions in the past two months. 

Encouragingly, its managed to bounce off the low $19 mark each and every time.

JETS ETF 2022-02-01

US Global Jets ETF, TradingView

Most US airlines rallied between 3-5% overnight. While other travel names including cruise line operator Carnival Corp, Airbnb and Expedia closed the session 4.4%, 5.1% and 7.8% higher respectively.

#3 Hydrogen 

The Hydrogen ETF topped the leaderboards as investors returned to more speculative pockets of the market.

Before today’s bounce, the ETF had declined -50% from November 2021 highs. 

This could see some positive flow for local names, notably Hazer (ASX: HZR)

Key Events

ASX corporate actions occurring today:

  • Ex-dividend: AAA, NBI, 

  • Dividends paid: None today

  • IPOs: APS*


Other things of interest 

  • ABS lending indicators at 11:30 am AEDT

  • ABS retail trading at 11:30 am AEDT

  • RBA interest rate decision at 2:30 pm AEDT

The RBA is expected to keep rates on hold at 0.1%

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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