Market Wrap

Morning wrap: US stocks finish positive after wild session, ASX to fall

Tue 25 Jan 22, 8:46am (AEST)

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ASX Futures (SPI 200) imply the ASX will open 92 points lower, down -1.3%. 

Major US indices staged an incredible turnaround, closing in positive territory after sliding more than -3% at open.

Will we also see some strength come back into the local sharemarket?

Overnight summary

Tue 25 Jan 22, 8:46am (AEST)

Name Value Chg %
US Indices
S&P 500 4410.1299 +0.28%
Dow Jones 34,365 +0.29%
NASDAQ 100 13,855 +0.63%
Russell 2000 2,034 +2.29%
Country Indices
Canada 20,571 -0.24%
China 3,433 -2.58%
Germany 15,011 -3.80%
Hong Kong 24,244 -1.67%
India 57,858 +0.64%
Japan 27,131 -1.66%
United Kingdom 7,297 -2.63%
Name Value Chg %
Commodities (USD)
Gold 1,843.90 +0.12%
Iron Ore 129.94 -
Copper 4.462 +1.11%
WTI Oil 84.11 +0.96%
Currency
AUD/USD 0.7154 +0.18%
Cryptocurrency
Bitcoin 51,432 +3.06%
Ethereum 3,429 +0.09%
Miscellaneous
U.S. 10 Year Treasury 1.735 -0.69%
VIX 30 +3.64%

Key points

  • The Nasdaq (tech) was a major standout, bouncing from intraday lows of -4.9% to close 0.6% higher

  • Likewise, the S&P 500 (large caps) and Dow Jones (blue-chips) rallied off intraday lows of more than -3% to finish up around 0.3%

  • The encouraging relief buying does not mean the market is out of trouble just yet. The Nasdaq and Dow Jones are still trading below their 200-day moving averages, suggestive of a weakening trend

  • However, credit is given where credit is due, it is not often the market stages a turnaround of such magnitude. It needs to continue to push higher to show that last night was more than just a one-off bounce

  • The US Federal Reserve kicked off its closely watched two-day interest rate meeting. This could set the tone for the rest of the year. Investors are concerned that the Fed’s stance might be less accommodative for the stock market 

  • Russia has mobilised around 100,000 troops on Ukraine’s border, leading to fears of a Russian invasion. NATO (Europe and North America) allies have been sending additional troops to beef up borders


US Sectors

Tuesday, 25 January 2022

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

The sharp reversal from the US market could potentially see a positive session for local sectors.

▲ Consumer discretionary

Familiar names like Bath & Body Works (+5.9%), Domino's Pizza (+4.9%) and Etsy (+3.5%) all rallied into close.

This could point to some positive flow for local retailers, eCommerce and leisure stocks.

▲ Technology

Relief buying helped mega cap names including Microsoft, Alphabet, Amazon and Meta Platforms pull the tech heavy Nasdaq higher.

Quarterly earnings will dominate headlines and sentiment for the sector. Highlights for this week include: 

Tue: Microsoft 

Wed: Tesla, Intel 

Thurs: Mastercard, Apple, Visa, Robinhood

▼ Healthcare 

Healthcare stocks bounced the least, headlined by losses from Johnson & Johnson (-1.2%) and Pfizer (-2.4%)

Johnson & Johnson is expected to release its December quarter earnings tomorrow.


Industry ETFs

Tuesday, 25 January 2022

Description Last Chg %
Commodities
Aluminum 63.3835 +1.16%
Copper Miners 39.17 -2.40%
Gold 171.09 +0.53%
Lithium & Battery Tech 78.82 -0.01%
Nickel 31.95 -6.42%
Strategic Metals 104.7 -1.01%
Steel 52.45 -0.21%
Silver 22.38 -1.21%
Uranium 20.75 +0.10%
Industrials
Aerospace & Defense 102.22 +0.68%
Global Jets 20.86 -0.58%
Healthcare
Biotechnology 128.68 +0.92%
Cannabis 4.9 -1.63%
Description Last Chg %
Cryptocurrency
Bitcoin 24.1 -2.57%
Renewables
CleanTech 14.7 -1.84%
Hydrogen 16.2 -3.70%
Solar 63.74 +1.07%
Technology
Cloud Computing 22.36 +1.92%
Cybersecurity 27.93 +0.64%
E-commerce 24.22 +0.62%
Electric Vehicles 28.33 -0.46%
FinTech 33.06 -0.79%
Robotics & AI 29.49 -0.64%
Semiconductor 472.64 +1.14%
Sports Betting/Gaming 21.27 -0.75%
Video Games/eSports 61.99 -1.40%

ASX Sectors to watch

What started out as panic selling turned into relief buying by close. Many ETFs staged encouraging reversals which could see some positive flow come through to beaten up sectors.

Some impressive ETF turnarounds include (from intraday low to close):

  • Uranium 11%

  • Cloud 7.4%

  • FinTech 6.9%

  • Betting & iGaming 6.5%

  • eCommerce 6.4%

  • Jets 5.5%

Other sectors to watch include:

#1 Gold 

It is no surprise that gold is performing strongly amid elevated geopolitical risks.

“Gold got good news on Friday after the largest bullion-backed exchange-traded fund, SPDR Gold shares posted its biggest net inflow in dollar terms since listing in 2004,” said OANDA senior market analyst, Ed Moya. 

“A laundry list of geopolitical risks will likely lead to safe-haven flows for gold that should help it soon break above the $1850 level.”

This could see positive flow for local gold miners including: 

#2 Nickel 

Nickel prices plunged more than -7.3% overnight, its largest decline since March

The selloff was driven by profit taking, as the metal is up almost 20% year-to-date. In addition, physical market activities are expected to slow in the next month amid Chinese New Year and the Beijing Winter Olympics, this could drive a much needed build up in stock. 

The sharp price reversal could trigger some weakness across local names, that have also had a very strong year-to-date run.


Today's events

ASX corporate actions occurring today:

  • Ex-dividend: None today

  • Dividends paid: None today

  • IPOs: None today

  • Issued shares: AGE, AGY, ATV, BCA, BDG, BEE, CY5, EBO, ECT, FPH, FTZ, GLA, HVM, IMU, KNM, LKE, LME, LPD, LRS, MGF, MRD, NAB, PEK, PNV, POL, RUL, SGC

Other things of interest:

  • Australia Inflation Rate: Inflation figures for the December quarter will be released at 11:30 am AEDT

  • Australia Business Confidence: NAB will release its monthly business survey results for December 2021 at 11:30 am AEDT

 

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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