Market Wrap

Morning wrap: US tech stocks rally, Elon takes a 9% stake in Twitter, ASX set to rise

Tue 05 Apr 22, 8:27am (AEST)

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ASX Futures (SPI 200) imply the ASX 200 will open 50 points higher, up 0.66%.

Major US indices extended gains, Elon Musk buys a 9% stake in Twitter, Europe warns of more sanctions against Russia for war crimes, China in a covid crisis as cases surge and green metal stocks are breaking out. 

Let’s dive in.

Overnight summary

Mon 04 Apr 22, 10:27pm (AEST)

Name Value Chg %
US Indices
S&P 500 4582.64 +0.81%
Dow Jones 34,922 +0.30%
NASDAQ Comp 14,533 +1.90%
Russell 2000 2,095 +0.21%
Country Indices
Canada 22,086 +0.60%
China 3,283 +0.94%
Germany 14,518 +0.50%
Hong Kong 22,502 +2.10%
India 60,612 +2.25%
Japan 27,736 +0.25%
United Kingdom 7,559 +0.28%
Name Value Chg %
Commodities (USD)
Gold 1,937.40 +0.18%
Iron Ore 161.84 -
Copper 4.783 +0.02%
WTI Oil 103.70 +0.41%
Currency
AUD/USD 0.7541 0.00%
Cryptocurrency
Bitcoin (AUD) 61,568 -1.46%
Ethereum (AUD) 4,649 -1.54%
Miscellaneous
U.S. 10 Year Treasury 2.412 +1.47%
VIX 19 -5.40%

Stocks

  • A tech-led rally drove all three major US indices higher

  • Only 4 out of 11 sectors were green, that being consumer discretionary, communication services, information technology and energy

    • Tesla is classified as a consumer discretionary stock

    • Alphabet is classified as a communication services stock

  • Europe is preparing more sanctions against Russia following the release of disturbing images over the weekend. There is increasing pressure for Germany to enforce a total ban on Russian energy imports

  • Elon bought a US$3bn stake in Twitter, which was viewed as the catalyst behind last night’s tech rally. Twitter shares finished the session 27% higher on almost 10 times its usual volume

  • 55% of US stocks advanced

  • 58% of US stocks trade below their 200-day moving average (58% on Monday, 59% a week ago)

  • Starbucks shares fell -3.7% after suspending its stock-repurchase program. Howard Schultz announced his return to the company as CEO

    • Schultz served as CEO between 1986 to 2000, and again from 2008 to 2017

  • Logitech shares rose 7.1% after being upgraded to a buy from neutral by Goldman Sachs. The company’s stock is down almost -50% from last June

  • US-listed China stocks continued to rally after China proposed revising confidentiality rules regarding audit oversight. JD.com rallied 7% and Alibaba rose 6.6%

Economy

  • The US 2-year Treasury yield continues to trade above the 10-year, making investors, economists and analysts question what's next for the economy

    • The median lag between an inverted yield curve and a recession is typically one-and-a-half years

Commodities

  • Iron ore was mostly unchanged as Chinese market participants were absent due to the Tomb Sweeping Festival holiday, according to Fastmarkets

  • Oil is stabilising around the US$100 mark. The International Energy Agency intends to release strategic petroleum reserves to ease the supply-tight market. The details of the release are still pending

  • Gold is holding around US$1,930 despite the increasingly risk-on attitude. The war in Ukraine, recession risks and inflation appears to be providing plenty of support for the yellow metal

 

US Sectors

Mon 04 Apr 22, 10:27pm (AEST)

Sector Chg %
Communication Services +2.28%
Consumer Discretionary +2.33%
Consumer Staples -0.32%
Energy +0.07%
Financials -0.47%
Health Care -0.75%
Sector Chg %
Industrials -0.17%
Information Technology +1.91%
Materials -0.04%
Real Estate -0.31%
Utilities -0.79%

Industry ETFs

Mon 04 Apr 22, 10:27pm (AEST)

Description Last Chg %
Commodities
Aluminum 72.3245 -1.43%
Copper Miners 46.7 +0.32%
Gold 179.5 +0.48%
Lithium & Battery Tech 78.22 +2.34%
Nickel 45.5 -3.52%
Strategic Metals 121.98 +4.45%
Steel 69.14 -0.01%
Silver 22.74 -0.48%
Uranium 26.07 -0.88%
Industrials
Aerospace & Defense 111.64 -0.28%
Global Jets 21.73 -0.05%
Healthcare
Biotechnology 133.06 +1.28%
Cannabis 5.42 +1.11%
Description Last Chg %
Cryptocurrency
Bitcoin 29.11 -1.13%
Renewables
CleanTech 16.75 +3.88%
Hydrogen 19.14 +5.22%
Solar 76.21 +4.20%
Technology
Cloud Computing 22.3 +2.11%
Cybersecurity 31.51 +1.84%
E-commerce 22.47 +3.87%
Electric Vehicles 27.56 +2.69%
FinTech 32.24 +2.92%
Robotics & AI 29.11 +0.89%
Semiconductor 464.11 +1.62%
Sports Betting/Gaming 20.06 +2.99%
Video Games/eSports 58.78 +3.54%

ASX Sectors to watch

#1 Tech

Elon you've done it again.

Twitter shares rallied 27% after Musk purchased a 9.2% 'passive stake' in the company. Investors viewed this move as a major endorsement and speculating whether the move could lead to a buyout or major changes to the social media platform.

"Technology is primarily up because of Musk buying shares of Twitter,” Kent Engelke, Chief Economic Strategist at Capital Securities, told MarketWatch.

The Global X Cloud, FinTech and eCommerce ETFs all rose at least 2%.

Local Block (ASX: SQ2) shares will be in for a strong open after its US-listed counterpart rallied 8.7%.

#2 Lithium

The VanEck Rare Earth/Strategic Metals ETF hit a fresh all-time high overnight, now up almost 35% since mid-March.

The ETF is mainly comprised of China and Australian-listed lithium and rare earth stocks.

Lynas Rare Earths (ASX: LYC), Pilbara Minerals (ASX: PLS), Allkem (ASX: AKE) and AVZ Minerals (ASX: AVZ) currently account for approximately 26% of the ETF's net assets.

REMX 2022-04-05 08-10-53.png ‎- Photos
Rare Earths ETF stages a V-shape bounce to all-time highs (Source: TradingView, Annotations by Market Index)

Recent developments for the green metals space include:

  • President Joe Biden authorising the use of the Defence Production Act to bolster financial support for domestic production

  • US and Australian ministers and executives meet to discuss a framework for investing in Aussie miners and projects

The ETF breaking out is another vote of confidence for the hot sector.

See a full list of ASX lithium stocks here.

#3 Hydrogen

We mentioned the Global X Hydrogen ETF two weeks ago, and how the ETF had started to bottom out and make higher highs.

After a few more sessions of sideways action, the ETF broke above its recent trading range to a 4-month high.

HYDR 2022-04-05 08-20-29
Hydrogen ETF breaks out of recent base (Source: TradingView, Annotations by Market Index)

A few ASX-listed hydrogen names rallied on Monday, including:

See a full list of ASX-listed hydrogen stocks here.

Today's events

ASX corporate actions occurring today:

  • Ex-dividend: CAM, PIC

  • Dividends paid: HLS, SSR

  • Listing: None today

  • Issued shares: ADX, AGE, AS2, BCN, BSX, CLZ

Things of interest (AEDT): 

  • RBA Interest Rate Decision at 3:30 pm

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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