Market Wrap

Morning Wrap: Wall St shakes off Target margin warning, ASX set to rise

Wed 08 Jun 22, 8:18am (AEST)

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ASX Futures (SPI 200) imply the ASX will open 45 points higher, up 0.63%.

Wall Street rallied off session lows, Target downgraded its margin outlook due to inventory issues, Apple reveals several updates at its WWDC conference and Goldman Sachs thinks oil will hit US$140 in the third quarter.

Let’s dive in.

Overnight summary

Tue 07 Jun 22, 10:18pm (AEST)

Name Value Chg %
Major Indices
S&P 500 4,161 +0.95%
Dow Jones 33,180 +0.80%
NASDAQ Comp 12,175 +0.94%
Russell 2000 1,920 +1.57%
Country Indices
Canada 20,928 +0.52%
China 3,242 +0.17%
Germany 14,557 -0.66%
Hong Kong 21,532 -0.56%
India 55,107 -1.02%
Japan 27,944 +0.10%
United Kingdom 7,599 -0.12%
Name Value Chg %
Commodities (USD)
Gold 1,855.00 +0.16%
Iron Ore 145.88 -
Copper 4.45 +0.33%
WTI Oil 119.63 +0.18%
Currency
AUD/USD 0.7232 +0.08%
Cryptocurrency
Bitcoin (AUD) 43,456 -0.80%
Ethereum (AUD) 2,549 -2.18%
Miscellaneous
US 10 Yr T-bond 2.972 -2.17%
VIX 24 -4.19%

Markets

Major US indices posted broad-based gains, shaking off an early pullback which was triggered by a downbeat update from Target.

  • Major US benchmarks closed 0.8-1.0% higher compared to session lows of:

    • S&P 500 -1.0%

    • Dow Jones -0.8%

    • Nasdaq -1.4%

  • The US 10-year Treasury yield fell to 2.97%, down from 3.0% - a level that tends to scare the market

  • 10 out of 11 US sectors advanced

  • Energy, industrials, healthcare, tech and real estate outperformed

  • Consumer discretionary was the only red sector

  • 67% of US stocks rose

  • 64% of US stocks trade below their 200-day moving average (66% on Tuesday, 68% a week ago)

    • Market breadth has been sitting around the high 60s to low 70s for the past few weeks. Even though there's a lot of bear market and recession labels being thrown around, some stocks are starting to stabilise

Stocks

  • Apple’s (+1.8%) Worldwide Developers Conference revealed the latest version of their new iPhone software called iOS 16, a new M2 chip for MacBooks and its very own buy now, pay later product

  • Target (-2.3%, session low: -7.3%) shares dipped on inventory issues, now sees operating margins of 2% in the second quarter compared to expectations of 5.3%

Economy

  • RBA raised interest rates by 50 bps to 0.85%

    • Westpac (ASX: WBC) was the first major bank to announce its plans to pass the rise in full to customers

  • US trade deficit fell to -US$87.1bn in April 

    • Reflects the drop in value of imports due to lockdowns in China and a rise in exports

    • The trade deficit was a record -US$107.7bn in March 

Commodities

  • Iron ore prices were relatively unchanged around US$145 amid stable demand from Chinese steelmakers, according to Fastmarkets

  • Oil prices managed to hold onto US$120 after bullish calls from Goldman Sachs and Morgan Stanley

  • Gold reclaimed US$1,850, bolstered by Target’s profit warning and a weak global outlook from the world bank 

 

US Sectors

Tue 07 Jun 22, 10:18pm (AEST)

Sector Chg %
Communication Services +0.51%
Consumer Discretionary -0.37%
Consumer Staples +0.42%
Energy +3.14%
Financials +0.69%
Health Care +1.30%
Sector Chg %
Industrials +1.36%
Information Technology +1.22%
Materials +0.72%
Real Estate +1.15%
Utilities +0.58%

Industry ETFs

Tue 07 Jun 22, 10:18pm (AEST)

Description Last Chg %
Commodities
Aluminum 57.7953 +1.09%
Copper Miners 41.25 +1.04%
Gold 171.82 +0.65%
Lithium & Battery Tech 76.27 -0.51%
Nickel 39.2999 +0.87%
Strategic Metals 101.3 +1.27%
Steel 64.02 +1.94%
Silver 20.37 +0.74%
Uranium 22.23 +5.98%
Industrials
Aerospace & Defense 104.45 +2.36%
Global Jets 19.84 +1.31%
Healthcare
Biotechnology 115.24 +2.25%
Cannabis 3.22 +2.80%
Description Last Chg %
Cryptocurrency
Bitcoin 19.56 -1.38%
Renewables
CleanTech 15.34 -0.20%
Hydrogen 14.64 -0.27%
Solar 76.79 +1.00%
Technology
Cloud Computing 18.02 +1.72%
Cybersecurity 26.78 +1.49%
E-commerce 18.68 +0.48%
Electric Vehicles 24.84 +0.48%
FinTech 25.16 +0.32%
Robotics & AI 23.79 +0.80%
Semiconductor 421.74 +0.80%
Sports Betting/Gaming 16.83 -0.24%
Video Games/eSports 52.65 +1.20%

ASX Sectors to watch

#1 Copper

Local copper stocks managed to withstand the RBA-induced selloff on Wednesday. Large cap names like Oz Minerals (ASX: OZL), Sandfire Resources (ASX: SFR) and 29 Metals (ASX: 29M) closed between 0.8% and 3.4% higher.

The London Metal Exchange (LME) reported a -20,200t decline in copper inventories to 120,775t on Wednesday, the largest tonnage decline in 20 years.

Cancelled warrants - metal that's been set aside for delivery - sits at 24%, indicating that more copper is due to leave LME inventories.

Copper spot prices have yet to stage a meaningful move as traders are in wait-and-see mode, looking for clues about China's post-lockdown economic activity.

HG1! 2022-06-08 08-12-13
Source: TradingView

#2 Uranium

The Uranium ETF rallied 6% to a 1-month high, pushing above its 200-day moving average on more than 100% its usual volume.

URA 2022-06-08 08-04-27
Source: TradingView

Uranium spot prices rose around 4% to US$52.5/lb, according to EvoMarkets.

The Biden administration is pushing lawmakers to support a US$4.3bn plan to buy enriched uranium directly from domestic producers, according to Bloomberg.

Today's events

ASX corporate actions occurring today:

  • Ex-dividend: None

  • Dividends paid: GCI, MOT, MXT

  • Listing: SPD

  • Issued shares: AMC, AS2, ATC, BEN, BRU, CM8, CYL, DUN, HRN, JGH, LIN, LRS, LRV, MGF, MPA, MXT, NAB, NBI, NXG, PCI, PDI, PLT, PPE, QVE, RLT, SPD, SRN, SRR, STK, STX, SYR, TKM, TNE, XRG, XRO

Other things of interest (AEST): 

  • NAB Business Confidence (May) at 11:30 am 

 

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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