ASX Futures (SPI 200) imply the ASX will open 32 points lower, down -0.44%.
Wall Street sold off sharply last Friday, solid jobs data reaffirmed the Fed's hawkish stance on interest rates, Elon Musk said he has a “super bad feeling” about the economy and OPEC+ agrees on larger oil output hikes.
Let’s dive in.
Mon 06 Jun 22, 8:23am (AEST)
|US 10 Yr T-bond||2.957||+1.51%|
Major US indices posted heavy losses after better-than-expected jobs data reinforced expectations of a series of half-point interest rate hikes from the Federal Reserve over the next few months.
10 out of 11 US sectors declined
Energy was the only green sector
Discretionary and tech stocks underperformed
64% of US stocks fell
68% of US stocks trade below their 200-day moving average (67% last Friday, 67% a week ago)
American Airlines (-7.1%) provided a guidance update, raising both its revenue and cost outlook. The company said capacity would fall to the low end of its prior guidance due to staffing shortages
Tesla (-9.2%) CEO Elon Musk said he plans to freeze hiring and cut 10% of the company’s workforce. Musk sent an email out to Tesla executives saying he had a “super bad feeling” about the economy
Earlier this week, Musk sent an email to his executive staff saying "everyone at Tesla is required to spend a minimum 40 hours in the office per week"
Coinbase (-9.7%) said it plans to extend a hiring pause and pull some accepted job offers. Management said the pause will last “for as long as this macro environment requires"
US added 390,000 jobs in May
Economists polled by the Wall Street Journal had forecast a gain of 328,000 new jobs
This was the smallest increase in the last 13 months
US unemployment rose to 3.6% in May compared to 3.5% in April
US wage growth slowed to 5.2% in May from 5.5% in April
US Non-manufacturing PMI fell to 55.9 in May
Economists polled by the Wall Street Journal had forecast 56.7%
Iron ore futures inched higher to US$144.4 a tonne
Last week, iron ore prices rose 8.2%
Oil rallied through US$120 after solid US nonfarm payroll figures and, the anticipation of a strong summer travel season and China’s reopening
Gold fell back to US$1,850 after the robust nonfarm payroll report
Traders were hoping a weaker-than-expected job report could pivot the Fed away from half-point rate hikes, which is now unlikely
Monday, 06 June 2022
Monday, 06 June 2022
|Lithium & Battery Tech||75.08||-0.99%|
|Aerospace & Defense||104.08||-0.06%|
|Robotics & AI||24.41||-2.74%|
US tech stocks didn't stand a chance against Musk's dire views about the economy and a stronger-than-expected jobs report.
Solid jobs data will point to higher interest rates, which takes a toll on richly valued tech companies. Notable overnight losers include:
Mega caps including Meta, Apple, Alphabet and Amazon fell between -2.5% to -4%.
Local travel stocks could cop some heat after a broad-based selloff for US airlines.
American Airlines earnings might come under pressure after raising both its revenue and cost forecast. Management said that the carrier has grounded roughly 100 regional jets due to a pilot shortage.
"There is a supply and demand imbalance right now, and it really is within the regional carrier ranks," American Airlines CEO Robert Isom told The Dallas Morning News.
Pilot shortages and surging oil prices will stress test the otherwise bullish travel sector.
OPEC+ agreed on Thursday that the Group will add 648,000 barrels a day (bpd) of oil to the market in July and August, up from 432,000 bpd in previous months.
The output hike represents a sharp turnaround from the Petroleum Organisation's previous view of sticking to a gradual increase in output.
Even in the face of rising supply, demand side factors including summer driving season, China's reopening and a strong US jobs report pushed oil prices over US$120 a barrel.
"Oil will be a very choppy trade given bullish exhaustion could be settling in," said Oanda senior market analyst, Ed Moya.
"This oil market will remain tight throughout this summer, so there should be further upside for oil prices. Unless, Biden’s trip leads to a breakthrough of more output by the Saudis, oil will head higher as we don’t see any significant signs of crude demand destruction."
ASX corporate actions occurring today:
Ex-dividend: ALQ, ATM, CIA, IPL, MEC, OCA, WAM
Dividends paid: NAC, NSC
Issued shares: ADT, AGE, ANX, AUB, AVL, AVR, BRK, CAI, CNR, COD, CZL, EAI, FLT, FRX, GUL, IPT, KCC, KZA, LCT, MGF, NBI, ORA, PPC, PPE, PXX, RLC
Other things of interest (AEST):
China Services PMI (May) at 11:45 am
Finance Writer & Social Media
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