Market Wrap

Morning Wrap: Wall St extends sharp declines, Bitcoin in free fall, ASX set to slide

Tue 10 May 22, 8:22am (AEST)

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ASX Futures (SPI 200) imply the ASX will open 99 points lower, down -1.4%.

Stock market carnage continues after another massive selloff on Wall St, worries about China's economy mount, cryptocurrencies are getting dumped, commodity prices join in on the selloff and Ford plans to sell 8m shares in EV start-up Rivian.

Let's dive in.

Overnight summary

Tue 10 May 22, 8:22am (AEST)

Name Value Chg %
Major Indices
S&P 500 3,991 -3.20%
Dow Jones 32,246 -1.99%
NASDAQ Comp 11,623 -4.29%
Russell 2000 1,762 -4.21%
Country Indices
Canada 20,000 -3.07%
China 3,004 +0.09%
Germany 13,381 -2.15%
Hong Kong 20,002 -3.81%
India 54,471 -0.67%
Japan 26,319 -2.53%
United Kingdom 7,217 -2.32%
Name Value Chg %
Commodities (USD)
Gold 1,852.90 -0.31%
Iron Ore 133.31 -
Copper 4.199 +0.12%
WTI Oil 102.98 -0.11%
Currency
AUD/USD 0.6950 +0.03%
Cryptocurrency
Bitcoin (AUD) 44,736 -9.76%
Ethereum (AUD) 3,301 -10.25%
Miscellaneous
US 10 Yr T-bond 3.079 -1.41%
VIX 35 +15.10%

Stocks

  • Major US indices are trading at their lowest point in more than a year

  • The S&P 500 is down -16% from its high in early January, the largest decline since the March 2020 selloff and longest correction since 2016

  • Cryptocurrency and Bitcoin prices are down at least -7.7% as investors flee from speculative assets

    • The 40-day correlation between Bitcoin and the Nasdaq is now at a record 84%. These two assets are now moving hand-in-hand

  • The VIX - Wall Street's fear gauge - spiked to a 2 month high

    • The previous high on 8 March was triggered by Russia's invasion of Ukraine

  • 10 out of 11 US sectors were red

  • Energy, real estate, discretionary and tech were the most hard hit

  • Consumer staples was the only green sector

  • 78% of US stocks declined

  • 75% of US stocks trade below their 200-day moving average (71% on Monday, 71% a week ago)

  • AMC Entertainment (-9%, after hours: +3.9%) posted a narrower-than-expected loss of -US$337.4m compared to -US$567m a year ago. Revenue was bolstered by movies like 'The Batman' and 'Spiderman: No Way Home'

  • Rivian (-20.9%) shares continue to deflate after Ford announced plans to sell 8m of its holdings. The EV start-up has shed -78% of its valuation in 2022

  • Upstart (-8%, after hours: -43%) is getting smashed after providing a disappointing full year guidance. The tech-lending firm beat Q1 forecasts, with revenue up 156% to US$310.4m  

Economy

  • Chinese exports rose 3.9% in April, the weakest growth in almost two years

    • The reading was slightly better than analyst expectations of 3.2%

    • March exports grew 14.7%

    • China’s trade sector, which accounts for around a third of GDP, stalled as lockdowns crippled supply chains in major hubs like Shanghai

Commodities

  • Iron ore futures -4.7% to US$131.99 a tonne, buying interest for cargoes in June waned in response to the loss in value of the Chinese yuan against the US dollar, sources told Fastmarkets 

  • Oil prices dipped in-line with broad-based selloff and fears of demand destruction given China’s covid situation

  • Gold struggled for upside as investors dumped stocks and favoured safe havens like the US dollar and bonds

 

US Sectors

Tuesday, 10 May 2022

Sector Chg %
Communication Services -2.44%
Consumer Discretionary -4.26%
Consumer Staples +0.05%
Energy -8.30%
Financials -2.46%
Health Care -2.57%
Sector Chg %
Industrials -2.41%
Information Technology -3.94%
Materials -3.24%
Real Estate -4.62%
Utilities -0.77%

Industry ETFs

Tuesday, 10 May 2022

Description Last Chg %
Commodities
Aluminum 59.3801 -1.77%
Copper Miners 37.98 -6.00%
Gold 175.42 -1.45%
Lithium & Battery Tech 66.94 -5.78%
Nickel 39.67 -6.35%
Strategic Metals 91.81 -5.60%
Steel 59.23 -4.15%
Silver 20.66 -3.05%
Uranium 21.97 -8.38%
Industrials
Aerospace & Defense 103.2 -4.44%
Global Jets 20.41 -6.37%
Healthcare
Biotechnology 113.17 -5.20%
Cannabis 3.86 -6.74%
Description Last Chg %
Cryptocurrency
Bitcoin 22.39 -14.11%
Renewables
CleanTech 13.8 -7.46%
Hydrogen 14.62 -9.37%
Solar 64.77 -7.50%
Technology
Cloud Computing 18.24 -4.88%
Cybersecurity 26.55 -6.06%
E-commerce 17.85 -5.66%
Electric Vehicles 24.01 -5.46%
FinTech 25.04 -6.15%
Robotics & AI 23.22 -5.38%
Semiconductor 409.1 -5.09%
Sports Betting/Gaming 16.93 -8.21%
Video Games/eSports 48.96 -5.90%

ASX Sectors to watch

There's no point in discussing 'Sectors to watch' as everything is likely to continue to sell off.

Earlier this month, I covered the Fed's plans to reign in its US$9tn balance sheet. A massive pullback in liquidity could be another compounding factor behind the market's ongoing correction.

This chart from US trader Mark Minervini - which has made a number of appearances in Morning Wraps - has really resonated with me

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Source: Mark Minervini

Minervini said current conditions suggest a "long term top and years of subsequent underperformance."

"At some point, you will get a powerful rally in the beaten down names. But subsequent to oversold bounces and counter trend rallies, the leaders of the past are going to underperform. It's time to look for new market leadership, perhaps it will emerge in the small & mid caps."

There's a lot of data out there that suggests we have yet to hit a bottom. We'll try to cover these views throughout the day.

It's absolute carnage out there. Stay safe.

Today's events

ASX corporate actions occurring today:

  • Ex-dividend: UOS

  • Dividends paid: DUR, NBI

  • Listing: None 

  • Issued shares: AQI, AQX, AVH, AZL, BNZ, BRK, COD, CXM, FAU, FGR, FLT, FXG, GLN, GOR, GRE, HXG, ICN, KIL, KNB, LKE, LRS, MCT, MFG, MOT, MQR, MXT, PFT, QXR, RSH, SPN, SZL, TGM, TPD, UBI, WIN, ZIP

Other things of interest (AEST):

  • RBA Meeting Minutes at 11:30 am 

  • US Retail Sales (Apr) at 10:30 pm

  • US Industrial Production (Apr) at 11:15 pm

Written By

Kerry Sun

Finance Writer & Social Media

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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