ASX Futures (SPI 200) imply the ASX 200 will open 20 points higher, up 0.30%.
The Nasdaq is on a five-day winning streak - its longest since last November, Wall Street was choppy on stronger-than-expected employment data, Elon Musk’s Twitter takeover is falling apart and Tesla sold a record number of China-made cars in June.
Let’s dive in.
Mon 11 Jul 22, 8:35am (AEST)
|US 10 Yr T-bond||3.101||+3.09%|
The US posted better-than-expected employment data, signalling that the economy remains intact. A 75 bps rate hike seems to be set in stone as the Fed seeks to move ‘expeditiously’ to fight inflation. The market is in an awkward place where good news (strong labour market) is also bad news (encouraging Fed to hike more aggressively).
It’s a massive week for economic data and events, including US inflation, Chinese economic data, a couple of key interest rate decisions and Biden’s trip to the Middle East. Buckle up.
Healthcare and Tech were the only green sectors
Energy and Discretionary closed just shy of breakeven
Defensives including Real Estate, Industrials and Utilities underperformed
Materials led to downside
49% of US stocks declined
73% of US stocks trade below their 200-day moving average (73% last Friday, 76% a week ago)
Tesla (+2.5%) shares gained after selling a record number of China-made vehicles. The China Passenger Car Association reported 78,906 Tesla vehicle sales in June, compared to 32,165 in May
PayPal (-2.2%) shares were downgraded from Buy to Neutral by equity research firm Redburn. The analysts raised the prospect that sluggish eCommerce trends could impact the company’s ability to meet growth expectations
Twitter (-5.1%) shares slumped after a Elon Musk’s deal to buy the social media company is reportedly in jeopardy
WD-40 (-14.9%) shares dipped on weaker-than-expected earnings. The lubricant maker flagged a ‘challenging macroeconomic environment’ and rising inflation as factors pressuring margins
Upstart (-19.7%) shares tumbled after the consumer lending company issued a profit warning, flagging it will not meet already-downgraded earnings in the second-quarter amid a constrained lending marketplace
US added 372,000 jobs in June, topping estimates of 250,000
By sector, education and health services headlined job creation, followed by professional and business services, leisure and hospitality, and healthcare
Signals that the employment pillar remains strong but may embolden the Fed for more aggressive interest rate hikes
US unemployment rate was unchanged at 3.6%
US average hourly earnings rose 5.1% year-on-year in June
Beat expectations of a 5.0% gain
Slight decline from a 5.3% increase in May
Atlanta Fed’s ‘GDPNow’ model estimates real GDP growth to be -1.2% for the second quarter of 2022 (up from -1.9%)
Highlights from Fed policymakers comments last Friday:
President of Fed Atlanta Raphael Bostic: Jobs report shows economy is strong, starting to see first signs of economic slowdown. Need to see more sustained, more significant slowing. Fully supportive of 75 bps in July
President of Fed New York John Williams: Debate of 50 or 75 bps is right positioning for July meeting, with more data to come. The Fed still needs to move ‘expeditiously’ to more normal rate levels. Expects rates at 3% to 3.5% by year end, but ‘a lot of uncertainty’ after that
Iron ore futures failed to rally even after China raised the idea of US$220bn in infrastructure stimulus. Weak demand continues to weigh on sentiment, with Chinese steel mills halting unprofitable operations due to weak margins, high inventories and surging energy costs
Oil prices edged higher after US unemployment data showed that the economy remains strong
Gold is trying to stabilise around US$1,740 as the market appears to be close to pricing in what near-term Fed tightening might look like
Monday, 11 July 2022
Monday, 11 July 2022
|Lithium & Battery Tech||75.12||-0.41%|
|Aerospace & Defense||99.24||+0.08%|
|Robotics & AI||21.32||-0.33%|
It was a rather uneventful overnight sessions as US stocks remain in a tug of war between solid economic data and aggressive interest rate hikes.
Several renewable-related ETFs performed well, including:
Rare Earth/Strategic Metals +0.8%
The three tech-related ETFs we track fell, even though the Nasdaq managed to extend its winning streak to 5.
The oil price pendulum is swinging back towards supply concerns after the US June labour market report showed that the economy remains strong.
"Economic growth fears may have been overdone as the oil market looks poised to remain tight for the foreseeable future. After testing the mid-$90s, the selling pressure for WTI crude has been completely exhausted," said Oanda senior market analyst, Ed Moya.
"Oil prices will likely comfortably trade above the $100 a barrel level as the risk of interruptions to supplies remains elevated. Kazakh and Russian oil shortages could keep oil prices heading higher into next week."
It's not a good look when a commodity plummets -25% in a few weeks, stages a small bounce and then continues selling off.
Copper is down -1.85% to US$3.46/lb in early trade on Monday.
ASX corporate actions occurring today:
Dividends paid: None
Issued shares: BNZ, BOT, BRK, CHN, CXL, D2O, DBF, DDD, DEG, EAI, EGG, EUR, JAN, MAU, MFG, MNY, MOT, MXT, NAB, NIM, NVX, NWL, NWS, ORI, PRL, SI6, SVM, TSO, VUL, WHC, WSP, XTC
Other things of interest (AEST):
NAB Business Confidence (June) at 11:30 am
Finance Writer & Social Media
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