Market Wrap

Morning wrap: US tech stocks plunge, ASX set to fall

Fri 14 Jan 22, 9:11 (AEDT) · 3 min

Stocks Mentioned

apt
MktCap:
-
pdn
MktCap:
-
qan
MktCap:
-
flt
MktCap:
-

Share article

ASX Futures (SPI 200) imply the ASX will open 38 points lower, down -0.5%.

US markets faded into the close, defensive sectors such as industrials and consumer staples held up better than most while technology stocks plummeted.

Overnight summary

Fri 14 Jan 22, 9:11 (AEDT)
Name Value Chg %
US Indices
S&P 500 4,659 -1.42%
Dow Jones 36,114 -0.49%
NASDAQ 100 14,807 -2.51%
Russell 2000 2,159 -0.76%
Country Indices
Canada 21,293 -0.48%
China 3,521 -0.96%
Germany 16,032 +0.13%
Hong Kong 24,383 -0.19%
India 61,223 -0.02%
Japan 28,124 -1.28%
United Kingdom 7,564 +0.16%
Name Value Chg %
Commodities (USD)
Gold 1,821.30 -0.01%
Iron Ore 126.24 -
Copper 4.508 -0.84%
WTI Oil 81.80 -0.39%
Currency
AUD/USD 0.7281 +0.02%
Cryptocurrency
Bitcoin 58,794 -2.99%
Ethereum 4,487 -3.86%
Miscellaneous
U.S. 10 Year Treasury 1.711 -0.81%
VIX 20 +15.27%

Overnight summary

The US market experienced a broad-based selloff after yesterday’s inflation report showed that the cost of living had accelerated to near 40-year highs. 

The December consumer price index in the US, a key inflation measure, rose 7% year-over-year.

To tackle stubbornly high inflation, the US Federal Reserve is widely expected to begin hiking interest rates as soon as March this year.

Investors fled fast growing, richly valued technology stocks, which can struggle amid a rising interest rate environment.

The Nasdaq Composite (tech) faced heavy selling pressure, flirting with its 200-day moving average.

The last time the index traded around the 200-day was in March 2020.

Could the trend be coming to an end?

IXIC 2022-01-14 08-37-39

Nasdaq Composite, Daily Chart, TradingView


 

US Sectors

Fri 14 Jan 22, 9:11 (AEDT)
Sector Chg %
Communication Services -1.40%
Consumer Discretionary -2.08%
Consumer Staples +0.22%
Energy -0.60%
Financials -0.41%
Health Care -1.63%
Sector Chg %
Industrials +0.18%
Information Technology -2.65%
Materials -0.81%
Real Estate -0.35%
Utilities +0.45%

The local technology, consumer discretionary and healthcare sectors are at risk following the weak US session.

Defensive sectors including utilities, consumer staples and industrials could hold up better than most.  

▲ Industrials 

US airlines rallied overnight amid a positive earnings update from Delta Airlines.

Delta said it expects to deliver a first quarter loss in 2022 because of the omicron variant, but still expects to turn a profit in the full year. The company's stock close 2.1% higher.

Elsewhere, Boeing rallied 3.1% after Bloomberg reported that the company’s 737 Max could resume service in China this month.

▼ Technology 

The tech sector is looking increasingly bearish with every rally met with an even greater selloff. 

Overnight, mega cap tech stocks including Tesla, Microsoft, Alphabet, Amazon and Meta Platforms all fell more than -2%.  

▼ Consumer discretionary 

The -6.5% decline from Tesla weighed the US consumer discretionary sector.

Sub sectors such as retailing fell -1.6%, while consumer services and consumer durables held up relatively well, down just -0.3% and -0.4% respectively.


Industry ETFs

Fri 14 Jan 22, 9:11 (AEDT)
Description Last Chg %
Commodities
Aluminum 64.89 -0.08%
Copper Miners 40.61 -1.18%
Gold 170.74 -0.34%
Lithium & Battery Tech 85.07 -2.56%
Nickel 29.0312 +0.53%
Strategic Metals 116.96 -2.51%
Steel 57.71 -1.04%
Silver 21.45 -0.56%
Uranium 24.18 -4.05%
Industrials
Aerospace & Defense 106.64 +0.48%
Global Jets 22.06 +2.22%
Healthcare
Biotechnology 141.93 -2.73%
Cannabis 5.85 -3.93%
Description Last Chg %
Cryptocurrency
Bitcoin 27.62 -2.39%
Renewables
CleanTech 16.59 -1.99%
Hydrogen 18.75 -1.92%
Solar 72.23 -2.22%
Technology
Cloud Computing 24.77 -4.00%
Cybersecurity 30.1 -3.65%
E-commerce 26.58 -2.75%
Electric Vehicles 31.2 -0.74%
FinTech 37.45 -4.33%
Robotics & AI 33.98 -3.65%
Semiconductor 535.14 -2.33%
Sports Betting/Gaming 23.87 -2.47%
Video Games/eSports 64.94 -4.22%

ASX Sectors to watch

#1 Uranium

The Uranium ETF fell heavily overnight but did not breach any major price levels or moving averages. The ETF closed just above its 200-day moving average.

URA 2022-01-14 08-54-44

Uranium ETF, Daily Chart, TradingView

Nevertheless, the sharp selloff could spark weakness across local names including:

#2 FinTech 

The FinTech ETF closed at fresh 15-month lows as investors flee from expensive technology shares. 

Local tech heavyweight Afterpay (ASX: APT) will tumble following a -5.9% decline from its soon-to-be parent company, Block. 

Other notable names at risk include: 

#3 Cloud 

The Cloud ETF was another tech-related industry subject to a harsh selloff, hitting a similar 14-month low. 

This could drive negative flow for local names including: 

#4 Airlines and travel 

US airlines rallied across the board in response to the better-than-expected earnings from Delta Airlines. 

Delta expects omicron to delay the rebound in travel over the next two months. The company expects to make losses in January and February, and a return to profitability in March.

American Airlines rallied 4.5% and United Airlines rose 3.5%. Cruise line operator Carnival Corporation closed 2.6% higher. Travel booking platform Expedia was up 2.1%. 

One of few major losers in this space was Airbnb, sliding -2.1%, unable to escape the broader tech-driven selloff. 

This could be good news for local airlines including: 

Travel management companies could also benefit, although the overnight weakness in growth stocks could dampen their performance. Names include: 


Today’s events 

ASX corporate actions occurring today:

  • Ex-dividend: None today 

  • Dividends paid: None today

  • IPOs: None today

  • Issued shares: BIS, CEL, EFE, EMT, EPM, GFN, HAV, HMI, MAT, MFF, NVU, PEB, RHY, UWL, WAM, WOR, XTC

Other things of interest

  • December Imports and Exports: China will release trade data at 2:00 pm AEDT

 

Written By

Kerry Sun

Content & Strategy

Kerry is an SAP analyst turned writer. He is an avid swing trader, drawn to breakouts and technical set ups. He covers markets from Melbourne, notably the Morning Wrap. Outside of writing and trading, Kerry is a huge UFC fan, loves poker and bouldering.

Get the latest news and media direct to your inbox

Sign up FREE