ASX Futures (SPI 200) imply the ASX will open 77 points higher, up 1.07%.
Wall Street continues to dip one day and rally then next, Microsoft downgraded its earnings, iron ore rallies past US$140 and oil surges after a modest OPEC+ boost.
Let’s dive in.
Fri 03 Jun 22, 8:32am (AEST)
|US 10 Yr T-bond||2.913||-0.61%|
It was a broad-based rally for Wall Street as investors remain divided between recession calls and aggressive interest rate hikes, and hopes that inflation has peaked and a possible soft landing for the economy
10 out of 11 US sectors advanced
Discretionary, materials and tech outperformed
Energy and utilities were the worst performing sectors
They also happen to be the only two sectors that are up year-to-date
76% of US stocks advanced
67% of US stocks trade below their 200-day moving average (69% on Thursday, 70% a week ago)
97% of S&P 500 companies have reported first quarter earnings
Earnings per share growth is down -14% compared to the fourth quarter of 2021 and down -0.4% year-on-year
GameStop (+10.4%) delivered its March quarter earnings, with revenue slightly up compared to a year ago. The meme stock posted a quarterly loss of -US$158m, up from -US$66 a year ago
Microsoft (+0.8%) shares bounced off session lows of -4% after downgrading its earnings guidance, blaming unfavourable foreign exchange rates (surging US dollar is bad for earnings)
Hewlett Packard (-5.2%) after missing analyst earnings expectations
Margins have been under pressure due to higher freight costs and component pricing
A strong US dollar is also taking a toll on profits
Australian retail sales rose 0.9% on-the-month in April
In-line with expectations
Cafes, restaurants and takeaway segment rose the most, up 3.3%
Department stores and household goods retailing segments dipped around -2.6%
US private-sector payrolls rose by 128,000 in May
Economists polled by The Wall Street Journal had forecast a gain of 299,00
US first-time jobless claims fell 11,000 to 200,000
Applications for unemployment benefits are falling again after reaching a 4-month high in early May
Iron ore rallied past US$140/t on hopes of a recovery in demand after Shanghai reopened from covid lockdowns and the government rolled out a series of measures to drive economic growth
Oil rallied, trying to reclaim US$120 after a larger-than-expected draw from the US Energy Information Draw
OPEC+ plans to increase production from 430,000 bpd to 648,000 bpd to meet demand
Gold is pushing a 1-month high as investors begin to shift towards safe-havens amid ongoing inflation fears and economic growth concerns
Friday, 03 June 2022
Friday, 03 June 2022
|Lithium & Battery Tech||71.92||+4.39%|
|Aerospace & Defense||102.06||+1.98%|
|Robotics & AI||23.44||+4.14%|
US-listed BHP and Rio Tinto rallied 5.6% and 3.5% respectively amid higher iron ore prices and optimism surrounding Chinese stimulus.
Uranium spot prices have reclaimed US$50/lb, compared to:
April 14: US$64/lb
May 23: US$47/lb
The Global X Uranium ETF rallied 5.3% thanks to firmer spot prices and the broader risk-on attitude for equities. The overnight moves could send some positive flows for local uranium names, especially after a rather challenging past two days.
The VanEck Rare Earth/Strategic Metals ETF rallied 5.1%, but still down -2% since the string of bad news on Wednesday.
The chart looks rather intact compared to most ASX lithium companies, many of which experienced a demoralising 10-20% selloff on Wednesday and failed to bounce on Thursday.
The magnitude of the selloff (in terms of % decline and relative volume) for a name like Pilbara Minerals (ASX: PLS) is quite damaging for the stock. To remain bullish, the stock needs to, at the very least, stabilise around Wednesday (close) levels.
Copper prices rallied 5.2% overnight to US$4.55.
Copper prices have been trading sideways for more than a year. The overnight rally brings copper back to the mid-point of its longstanding trading range.
The price surge was again bolstered by China's reopening and stimulus optimism, and shortage concerns.
The usual US tech suspects topped the leaderboards, including:
The S&P/ASX 200 Info Tech is on a 3-day losing streak, down -5.8%. The rebound for US tech names and positive SPI futures will look to turn things around for local tech names.
ASX corporate actions occurring today:
Dividends paid: QVE, UOS
Issued shares: AHX, AKO, ASP, BIO, BTH, DAF, GRL, GSM, IR1, JHG, KNI, LAM, LIT, LPD, MQG, MTB, NBI, NXS, OEX, OIL, OPY, PNT, PPC, PXX
Other things of interest:
Aus Home Loans (April) at 11:30 am
EU Retail Sales (April) at 7:00 pm
US Unemployment Rate (May) at 10:30 pm
Finance Writer & Social Media
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