Morning wrap: US stocks surge, oil prices retreat, ASX to open higher

ASX Futures (SPI 200) imply the ASX will open 27 points higher, up 0.38%.

Commodities experienced its first significant pullback since the Russian invasion of Ukraine.

Investors were slightly optimistic after Ukraine President Zelensky signalled he has ‘cooled down’ about the nation joining NATO. There are also hopes that Putin will avoid a long war as economic sanctions continue to mount against the Russian economy.

Stocks

• Risk appetite rose following a broad-based pullback across commodities, notably oil

• The Dow Jones (blue chip) and S&P 500 (large cap) was able to defend recent lows, buoyed by the view that the US Federal Reserve might be less aggressive with raising interest rates 

• The rally might be more of a technical bounce from oversold levels. A lot more is needed to pull the market out of deep correction territory

• Technology stocks outperformed the market as investors returned to beaten up growth names

• Industries concerned about higher energy prices such as retail, consumer staples and travel also rallied strongly

• 76% of US stocks advanced, indicating a broad-based rally

• 65% of US stocks trade below their 200-day moving average (66% yesterday, 62% a week ago)

Economy

• US job openings fell slightly to 11.3m in January after a record 11.5m in December

• The US is due to release Consumer Price Index data at 12:30 am on Friday

  • Consensus expects a 7.9% on-the-year reading

  • Hotter-than-expected inflation could force a more hawkish stance from the Fed, which could weigh on equity markets and economic growth 

Commodities 

• Iron ore prices continue to retreat, but still above US$150 a tonne

• Oil is now down almost -20% from its US$138 a barrel peak on Monday. The International Energy Agency chief said member countries are ready to release more emergency oil stocks to tackle surging prices

• Gold declined sharply as the risk-on attitude weighed on safe haven assets

#1 Tech

The Global X FinTech, Cloud and eCommerce ETFs rallied more than 4% overnight. Notable winners that might influence the local market include: 

• Block +11.2% 

• Affirm +7.4%

• PayPal +5.6%

This means that local Block (ASX: SQ2) shares will open sharply higher. Which could buoy the broader BNPL sector.

Wall Street's tech led rally could also see positive flow for local names like:

• Xero (ASX: XRO)

• WiseTech Global (ASX: WTC)

#2 Uranium

The Global X Uranium ETF continues to push near-term highs on massive volumes. The ETFs 20-day average volume sits around 3m, while volume on Tuesday and Wednesday was 5m and 8m respectively.

Global X Uranium ETF closes at a 3-month high (Source: TradingView)

Uranium prices have hit US$53.2/lb, its highest point since 2011. 

See a list of ASX uranium stocks here.

#3 Travel

The US Global Jets ETF has continued to bounce back from oversold levels, up 10.7% in the last two days.

The overnight rebound was fuelled by easing oil prices. Notable winners include: 

• United Airlines +8.3%

• Booking.com +7.2%

• American Airlines +5.9%

• Expedia +5.4%

This could see some positive flow for local airlines and travel stocks.

#4 Gold

Wall Street exhibited a classic risk-on attitude as safe haven assets like bonds and gold declined.

“Gold will remain a very volatile trade and will likely pivot around the US$2000 level. If US stocks continue to defend the lows made during the initial shock that happened at the beginning of the conflict, then gold can continue to edge lower," said Oanda senior market analyst, Ed Moya. 

The sharp pullback for gold could take some heat out of local gold miners, many of which have rallied more than 10% in the past week.

See a list of ASX gold stocks here.

#5 Energy

The US energy sector greatly underperformed the market, down -3.2% overnight.

“WTI crude is now 10% lower from the highs made at the start of the trading week, but pullback seems premature given the short-term supply disruption risk remains extremely elevated,” said Moya.

Local energy stocks could see some weakness in response to lower oil prices.

See a list of ASX energy stocks here.

ASX corporate actions occurring today:

• Ex-dividend: AGG, BFL, CEN, GEM, GLB, GMA, IFL, LBL, MHJ, MMS, NZM, PPT, REG, RIO, RWC, S32, SHJ, VSL, 

• Dividends paid: AVA, CDA, FSA, SGF, SXY

• Listing: none today

• Issued shares: 5EA, ACF, AII, AMH, BC8, BEN, BNZ, CAZ, CIW, CNU, ELO, FBU, FEX, FIJ, G79, LCL, LKE, LRS, MNS, MOT, MXT, MZZ, NBI, NCM, NVX, ORA, OZZ, QVE, RNU, SBW, SHL, SZL, TBA, TPD, TRN

Other things of interest: 

• US Consumer Price Index for February at 12:30 am Friday