ASX Futures (SPI 200) imply the ASX will open 9 points lower, down -0.1%.
Major US indices gave up earlier gains, the S&P 500 Consumer Staples Index hit its lowest level since December as retail firms struggle to deal with inflation, Goldman Sachs predicts a 35% chance of a US recession in the next two years and gold finally finds its groove.
Let’s dive in.
Fri 20 May 22, 8:41am (AEST)
|US 10 Yr T-bond||2.855||-1.07%|
Major US indices were all red after hitting session highs of:
Dow Jones +0.25%
S&P 500 +0.57%
Retailers like Target, Ralph Lauren and Nike continue to bleed as margins come under pressure from rising prices and also hurting consumer purchasing power
3 out of 11 US sectors were green
Materials, healthcare and consumer discretionary sectors were higher
Consumer staples, tech, industrials and financial sectors underperformed
50% of US stocks advanced
Interesting to see 50% of stocks green even though all three major US indices were red
Apple dragged the Nasdaq lower, but there were more green tech stocks than red
74% of US stocks trade below their 200-day moving average (74% on Thursday, 76% a week ago)
Target (-5.1%) continued to sell off after a shocking -25% plunge on Wednesday
Quarterly earnings came in well-below expectations as higher freight costs and supply chain disruptions ate away at margins
Bath & Body Works (-6.8%) reported better-than-expected earnings but cut its full-year guidance due to inflation and increased investments
Higher costs of raw materials, transportation and wages is expected to take a US$225-250m hit to earnings, US$75m more than expected
Cisco Systems (-13.7%) led Dow declines after missing quarterly earnings expectations and guided to a much weaker-than-expected fourth quarter
Revenue is forecast to decline -1% to -5.5% compared to analyst estimates of a 5.7% gain
Its Russia exit and component shortages related to China’s covid lockdowns has taken a toll on growth
Australia’s unemployment rate was 3.9% in April
Fell slightly to hit a near 50-year low
US first-time claims for unemployment benefits rose 21,000 last week to 218,000
Economists polled by The Wall Street Journal expected claims to total 200,000
The labour market is starting to show some cracks. Mega cap tech companies like Amazon and Facebook have recently indicated plans to scale back hiring and reduce staff
Jobless claims typically rise before the start of a recession, so eyes on whether or not this trend continues
US Philadelphia Fed Manufacturing Index fell sharply to 2.6 pts in May
Economists were expecting a reading of 15 pts
This is the lowest level of activity since the beginning of the pandemic
Slower demand as a result of higher prices, supply chain disruptions and shortages were to blame
Iron ore prices reclaimed the US$130 a tonne level
Sentiment was firmer among traders who saw Shanghai begin lifting lockdowns, but downstream demand remains muted, according to Fastmarkets
Oil prices bounced from session lows of US$105 to US$111 as the EU nears a deadline to pay for Russian oil with a rubles account
Gold is having its best days since March and finally acting like a safe haven again
A pullback in Treasury yields, the US dollar and concerns about economic growth is driving positive inflows for the yellow metal
Friday, 20 May 2022
Friday, 20 May 2022
|Lithium & Battery Tech||69.06||+3.37%|
|Aerospace & Defense||98.36||-1.21%|
|Robotics & AI||22.37||+1.92%|
What an odd session. If you look at the ETF table above, it feels like US markets rallied maybe 2-3% overnight.
Note: These are mostly Global X ETFs. Their weightings and investments are typically in the largest listed companies of the respective industries
Shanghai nickel futures soared more than 6% to 215,400 yuan a tonne (~US$32,100).
The Rare Earth/Strategic Metals ETF is showing a lot of strength after an almost -35% correction in the last two months.
A solid +3.7% for the ETF could position local lithium stocks for a positive session.
The Global X FinTech and Cloud ETFs rallied at least 3.5%, even though the Nasdaq was down -0.44%. Notable overnight winners include:
Which will impact local tech stocks more: the Nasdaq or the solid performance of several individual stocks?
Its been a very choppy past 48 hours for oil, bouncing between US$115-105.
Oil markets are bracing for some degree of demand destruction as households continue to be squeezed from almost every angle.
There are also reports that China is looking to take advantage of discounted Russian oil to top up state reserves - a move that would otherwise undermine Western sanctions.
Even though oil is facing several downside risk factors, the lack of supply and a strong short-term travel outlook is keeping prices high.
Gold is finally acting the way it should as recession fears have triggered a pullback in Treasury yields and the US dollar.
"The dollar is getting sold against everything and that is great news for gold. Right now, investors are looking for safety and Treasuries and gold should both outperform in the short-term," said Oanda senior market analyst, Ed Moya.
ASX gold miners went from looking bullish and trying to break out in mid-to-late April to rapidly deteriorating 10-25% in the past few weeks.
Weaker yields and an easing dollar could see some positive flow follow through for beaten up gold miners.
ASX corporate actions occurring today:
Dividends paid: CMW, HCW, HDN, JMS, KAT
Issued shares: ABE, ADX, BXB, FDV, HCH, LKE
Other things of interest (AEST):
Australian Federal Election on Saturday
Don’t forget to vote
Finance Writer & Social Media
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