ASX Futures (SPI 200) imply the ASX will open 70 points higher, up 0.98%.
Wall St rebounded as investors digest a stream of positive news across the world. China is taking its first steps to bring Shanghai out of lockdown, US retail sales data was solid, the Chinese government is showing support for its tech sector and Warren Buffet bought the dip.
Let’s dive in.
Wed 18 May 22, 8:38am (AEST)
|US 10 Yr T-bond||2.968||+3.16%|
Major US indices are trying to bottom after an abysmal start to the year. In the last three days:
Dow Jones +2.9%
S&P 500 +4.1%
Chinese Vice-Premier Liu He said the government supports the development of digital platform companies and their public listings
Large cap tech names like Alibaba and Tencent rallied more than 5% on Tuesday
JP Morgan raised ratings for 7 Chinese tech stocks, after calling the region “uninvestable” a few months ago
Bank of America’s monthly fund manager survey reported that investors have increased their cash holdings to the highest level in two decades
Hawkish central banks (31%) and global recession (27%) are considered to be the “two biggest tail risks among investors”
Commodities, healthcare and consumer staples were the top picks
Technology, Europe and emerging markets were shunned
10 out of 11 US sectors were green
Tech, materials, financials and discretionary outperformed
Consumer staples was the only red sector
79% of US stocks advanced
70% of US stocks trade below their 200-day moving average (73% on Tuesday, 75% a week ago)
Home Depot (+1.7%) beat first quarter earnings expectations, with surprise growth in same-store sales, up 2.2%
Warren Buffett is buying the dip as Berkshire Hathaway added:
US$2.9bn in Citigroup (+7.5%)
US$2.6bn in Paramount (+15.4%)
US retail sales rose 0.9% in April
Economists surveyed by The Wall Street Journal expected a 1.0% gain
Most major retail categories posted gains
US industrial production rose 1.1% in April
Beat expectations of a 0.5% gain
Capacity utilisation rose to 79% in April from 78.2% in March
India wholesale inflation rose to 15.08% in April
Led by higher energy, oil and food prices
Headline CPI hit 7.8%, the highest level since May 2014
Iron ore prices eased slightly, holding above US$130 a tonne
Seaborne cargo demand has been steadily improving in the last two weeks, with more inquiries from Chinese steelmakers, industry sources told Fastmarkets
Oil initially rallied as China’s fight against covid appears to be taking a step in the right directions and US officials signalled a potential switch from a Russian oil embargo to tariffs
Gold remains muted, hovering US$1,800
Wednesday, 18 May 2022
Wednesday, 18 May 2022
|Lithium & Battery Tech||66.65||+5.54%|
|Aerospace & Defense||98.56||+2.36%|
|Robotics & AI||22.29||+3.19%|
It feels odd to see such strength come back into the market after a prolonged period of underperformance and pessimism.
It's encouraging to see broad-based buying across US sectors as well as slightly better market breadth (70% of stocks below 200-day vs. >70% in the past week).
Its important that indices and individual stocks hold their gains over the next few days - otherwise things might look a little more like a suckers rally.
Most ETFs were up 2-5%, but the gains are rather inconsequential relative to the recent selloff - more is needed and the gains need to hold up. Some notable movers include:
Jets (Airlines) +5.7%
Copper Miners +4.7%
The past three trading sessions has been an absolute rollercoaster for tech. We're finally seeing some strength came through for mega cap names including:
The Global X FinTech and Cloud ETFs rallied 3.7% and 3.5% respectively. The Cloud ETF lagged, up just 1.1%.
On the BNPL front, Affirm rallied 10% and Block closed 6.4% higher.
The Rare Earth/Strategic Metals ETF topped the leaderboards overnight, up 5.9%.
Several lithium-related companies in China rallied strongly on Tuesday, with Ganfeng Lithium up 9% and Zhejiang Huayou Cobalt up 4.8%.
Tesla's Shanghai factory is back up producing EVs. Though, the factory is only running at approximately 45% capacity, according to the South China Morning Post.
ASX corporate actions occurring today:
Dividends paid: None
Issued shares: 1AE, AUB, AUK, BCN, CXO, EBO, FBU, GL1, GMR, HCD, LCL, LRS, MCM, MGF, NAB, PGO, PHO, QRI, SLS, TMZ, TPD, UWL, VRC, WAA
Other things of interest (AEST):
Japan GDP Growth Rate (Q1) at 9:50 am
UK Inflation Rate (April) at 10:30 pm
Canada Inflation Rate (April) at 10:30 pm
US Housing Starts (April) at 10:30 pm
Finance Writer & Social Media
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