Market Wraps

Morning Wrap: Wall St bounce lacks conviction, all eyes on US inflation, ASX set to edge lower

Wed 11 May 22, 8:21am (AEDT)

ASX Futures (SPI 200) imply the ASX will open 9 points lower, down -0.1%. 

Wall Street tried to bounce but closed well-below session highs, investors are jittery ahead of tomorrow’s US inflation data - which is expected to show that consumer prices peaked in March and Morgan Stanley says retail investors have given back all their pandemic gains.

Let’s dive in.

Overnight Summary

Wed 11 May 22, 8:21am (AEDT)

Name Value Chg %
Major Indices
S&P 500 4,001 +0.25%
Dow Jones 32,161 -0.26%
NASDAQ Comp 11,738 +0.98%
Russell 2000 1,762 -0.02%
Country Indices
Canada 19,890 -0.55%
China 3,036 +1.06%
Germany 13,535 +1.15%
Hong Kong 19,634 -1.84%
India 54,365 -0.19%
Japan 26,167 -0.58%
United Kingdom 7,243 +0.37%
Name Value Chg %
Commodities (USD)
Gold 1,838.00 -0.16%
Iron Ore 131.90 -
Copper 4.162 +0.18%
WTI Oil 99.28 -0.48%
Currency
AUD/USD 0.6938 +0.02%
Cryptocurrency
Bitcoin (AUD) 44,190 -2.01%
Ethereum (AUD) 3,322 -0.16%
Miscellaneous
US 10 Yr T-bond 2.993 -2.79%
VIX 33 -5.06%

Stocks

  • The overnight bounce was far from convincing as major US indices faded from session highs

    • Dow Jones -0.26% vs. session high of 1.57%

    • S&P 500 0.25% vs. session high of 1.94%

    • Nasdaq 0.98% vs. session high of 2.77%

  • Cleveland Fed President Loretta Mester spooked markets after saying "we don't rule out 75 [bp rate hikes] forever"

    • Mester said she wasn't ruling out more aggressive hikes in the second half of the year, if inflation remains elevated

  • Investors are nervous leading into US inflation data on Thursday

    • Consensus expects consumer prices to ease to 8.1% in April from 8.5% a month earlier

    • A soft inflation reading could give investors hope that price are beginning to stabilise and smooth out interest rate expectations 

  • Morgan Stanley estimates that retail traders who jumped into stocks at the beginning of the pandemic have given back all their gains 

  • 4 out of 11 US sectors were green

  • Tech, energy and healthcare outperformed

  • Real estate, utilities, financials and staples fell the most

  • 45% of US stocks advanced, indicating that most names continued to struggle and the market was only held up large caps

  • 75% of US stocks trade below their 200-day moving average (75% on Tuesday, 69% a week ago)

  • Roblox (-5.7%, after hours: -3.4%) revenue declined by -3% in the first quarter as kids are no longer stuck at home and spending more time on screens. The video game company reported a wider-than-expected loss and missed daily active user expectations

  • Coinbase (-12.6% after hours: -10%) first quarter revenue fell -27% amid a major selloff across the crypto market. Retail monthly transaction users fell to 9.2m, down from 11.4m in the fourth quarter

  • US earnings to watch this week:

    • Wed: Disney, Rivian, Beyond Meat, Bumble

    • Thurs: Affirm 

Economy

  • Australian retail sales volumes rose 1.2% in the March quarter

    • “Most discretionary spending industries experienced rises in volumes, despite price increases. However, food retailing fell 1.5 per cent with strong price increases for fresh food and grocery items combining with more consumers choosing to dine at hospitality venues,” said Director of Quarterly Economy Wide Statistics Ben James

  • NAB business confidence index fell 6 pts to +10 index points

    • Still above its long-run average after several months of steady increases

    • “Capacity utilisation continues to rise and forward orders are still well above their long-run average, supporting the positive outlook,” said NAB Chief Economist Alan Oster

Commodities

  • Iron ore futures extended losses, down -1.3% to US$130.3 a tonne. Prices fell in response to the continued decline in markets and pessimistic outlook for iron ore in China, according to Fastmarkets 

  • Oil is down -10% in the last two sessions amid worries about worsening economic growth

  • Gold prices edged lower as the US dollar continues to rally

 

US Sectors

Wed 11 May 22, 8:21am (AEDT)

Sector Chg %
Information Technology +1.58%
Energy +0.93%
Communication Services +0.84%
Health Care +0.33%
Consumer Discretionary -0.30%
Materials -0.59%
Industrials -0.65%
Consumer Staples -0.76%
Financials -0.80%
Utilities -1.24%
Real Estate -2.28%

Industry ETFs

Wed 11 May 22, 8:21am (AEDT)

Description Last Chg %
Commodities
Lithium & Battery Tech 63.07 +1.92%
Strategic Metals 86.67 +1.29%
Nickel 37.15 +0.39%
Aluminum 58.3319 +0.34%
Uranium 20.13 -0.10%
Gold 172.88 -0.84%
Steel 56.77 -0.93%
Copper Miners 35.7 -1.40%
Silver 20.03 -2.40%
Industrials
Global Jets 19.11 +0.89%
Aerospace & Defense 98.62 +0.18%
Healthcare
Biotechnology 107.28 +2.67%
Cannabis 3.6 -1.11%
Description Last Chg %
Cryptocurrency
Bitcoin 19.23 +1.09%
Renewables
Solar 59.91 +0.68%
CleanTech 12.77 +0.08%
Hydrogen 13.25 -2.64%
Technology
Semiconductor 388.27 +2.27%
Cybersecurity 24.94 +1.32%
E-commerce 16.84 +0.83%
Video Games/eSports 46.07 +0.59%
Electric Vehicles 22.7 +0.26%
Cloud Computing 17.35 -0.46%
Sports Betting/Gaming 15.54 -0.64%
Robotics & AI 21.97 -1.27%
FinTech 23.5 -2.26%

ASX Morning Brief

Turnaround Tuesday fizzled as investors turned their attention to upcoming US inflation data.

March headline/core was 8.5%/6.5% and consensus expects a lower rate in April of 8.1%/6%.

Investors shouldn't rule out inflation acceleration, as segments like shelter and services could surprise. A higher-than-expected inflation reading would likely trigger a more hawkish view from the Fed, which would then come back to bite markets.

ETFs were rather uneventful overnight as early gains faded.

  • Lithium, Rare Earth/Strategic Metals and Jets (Airlines) were notable gainers, up between 0.8% and 1.9%

  • Hydrogen, FinTech and Copper were notable losers, down between -1.4% and -2.6%

 

Key Events

ASX corporate actions occurring today:

  • Ex-dividend: NAB, RMD

  • Dividends paid: None 

  • Listing: None 

  • Issued shares: ADO, ADS, AS2, CNU, DVP, EMR, EPX, FBU, FSA, FZO, JGH, LEL, LGP, LNU, M2R, MCT, MDR, MFG, MGF, MKL, MNS, MTM, NBI, NZM, OSL, PNN, QEM, RMC, RPM, SRZ, T3D, TEG, THR, TMX, WR1

Other things of interest (AEST):

  • Australia Westpac Consumer Confidence Index (May) at 10:30 am

  • China Inflation Rate (April) at 11:30 am

  • US Inflation Rate (April) at 10:30 pm

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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