Morning Wrap: Wall St snaps three day slide, uranium ETF had its best day of the year, ASX to rise

Wall Street ends a three-day slide, uranium stocks surge as India and Japan embrace nuclear power, Treasury yields begin to test recent highs and oil prices continue to bounce.

Let's dive in.

MARKETS

The US market is finally seeing some support instead of the 'open flat and then sell off -1% intraday' kind of price action we saw earlier this week. The S&P 500 is around 1.40% above its 50-day moving average, so it does have some breathing room before things get a little ugly from a technical perspective.

The disinflationary narrative is starting to lose momentum as commodity prices begin to stabilise and trend higher. We've seen the US 2-year Treasury yield - often viewed as a gauge for short-term interest rate expectations - rebound from August lows of 2.8% to now 3.4%.

“It’s getting to the point where you can set your clock to it.  When the yield on the 10-year US Treasury hits 3%, sell stocks," said Bespoke Investment earlier this week.

Source: Bespoke Investment

• All 11 US sectors higher

• Energy led thanks to higher oil prices

• A mix of defensive and growth underperformed benchmarks including Tech, Health Care and Staples

• 60% of US stocks advanced

• 53% of US stocks trade below their 200-day moving average (54% on Wednesday, 46% a week ago)  

STOCKS

• Peloton (+20.4%) struck a deal to sell some of its fitness equipment and accessories on Amazon’s US eCommerce site

• Bed Bath & Beyond (+18%) shares rallied after a Wall Street Journal report said the retailer had secured a financing source to help boost liquidity

• SoFi Technologies (+4.5%) shares rallied after President Joe Biden said he will forgive US$10,000 in federal student loans for most borrowers. SoFi is an American online personal finance company and online bank  

• Cleveland-Cliffs (+2%) announced that it is hiking the price on all of its carbon steel products by a minimum of US$75 per tonne

• Ford (+1.3%) plans to delay its Spanish roll-out of EVs by June 2024, citing a “revised outlook for Europe.”

• Nvidia (+0.2%, after hours: -5.1%) reported second quarter earnings that missed Wall Street expectations. The result is in-line with Nvidia’s preliminary earnings posted two weeks ago, where the chipmaker warned that its earnings have significantly slowed due to disappointing gaming sales

  • Nvidia CFO: “Revenue was lower than our outlook issued in May primarily due to weaker Gaming revenue.”

  • "We are navigating our supply chain transitions in a challenging macro environment and we will get through this"

EARNINGS

Earnings we’re watching this week: 

• Thu: Dollar tree, Peloton, VMware, Affirm, Dell, Workday, GAP

• Fri: Sinopec, Pinduoduo

ECONOMY

• US durable goods orders was flat month-on-month in July from 2.2% in June

  • Orders for non-defence capital goods excluding aircraft rose 0.4% month-on-month

  • “Orders for durable goods fell flat in July, and while a better-than-expected outcome in core capital goods shipments may be a short-run positive for GDP, a deterioration in orders including outright declines in key categories signals slower growth ahead,” warned Wells Fargo 

COMMODITIES

• Iron ore futures rose 0.22% to US$105.2 a tonne

  • Futures briefly spiked 4.4% to a session high of US$109.5 on Wednesday

  • The 64 countries worldwide under the World Steel Association’s monthly survey posted a -5.4% year-on-year decline in their crude steel output to total 1.1bn tonnes over January to July

• Oil continues to catch bids as the pendulum swings back in favour of the tight supply and the lack of spare production capacity narrative

  • “Oil’s outlook still looks positive here as shale is not taking off, ESG constraints remain, and strong demand for refined product exports,” said Oanda senior market analyst, Ed Moya

  • “US stockpiles will likely continue to decline over the coming weeks over strong export demand. ​ Oil prices could surge over the next few weeks if OPEC+ is forced to cut output and if Iran nuclear deal talks falter again. ​ The Saudis don’t want to see oil prices disconnected from market fundamentals and that should suggest this oil market will remain very tight,” he added

• Gold firmed up even against a slightly higher US Dollar and Treasury yields. The yellow metal is in no man’s land as it awaits further direction post Jackson Hole 

#1 Uranium

As we noted in the Evening Wrap, local uranium stocks started to rally around 2:00 pm AEST on Wednesday after Japanese Prime Minister Fumio Kishida said that the government plans to explore and develop next-generation nuclear power plants, Bloomberg reported.

In parallel, India's largest power producer was also reportedly looking to develop another massive nuclear project.

The Global X Uranium ETF rallied 11.7% overnight for its best day so far this year. The ETF witnessed rather large volumes, with 5.3m shares traded compared to a 20-day average of 1.68m.

Is more momentum on the cards for local uranium names?

Source: TradingView, Annotations by Market Index

#2 Hydrogen & Cleantech

Perhaps drawing inspiration from supportive policy shifts from Japan and India, the Global X Hydrogen, Cleantech and Solar ETFs rose 4.8%, 2.3% and 2.1% respectively.

The ETFs have tumbled in the last 1-2 weeks in-line with the broader market. They've started to stabilise and defend key areas like previous highs and short-term moving averages. Still, more right hand side is needed.

Source: TradingView, Annotations by Market Index

#3 Energy

Oil is starting to show more evidence that its made a decisive move out of the downward channel. Now, it's starting to test the 50-day moving average.

Woodside (ASX: WDS) is really starting to get a move on. If not for the brief spike to $35 on 10 June, Wednesday's rally would've marked a fresh two-and-a-half year high.

Source: TradingView, Annotations by Market Index

Stocks going ex-dividend:

• Thu: AGG, BBN, BFG, CDA, DDR, HT1, JBH, PMC, REA, RKN, VG1, MFD

• Fri: ARG, AWC, GUD, NCM, LLC

• Mon: ANN, CGF, CRN, PNI, VG8, WOR

• Tue: BAP, BPT, DOW, EVN, GCI, SDG, NWL, DMP

• Wed: AX1, BKL, CIN, EDV, IRE, MEA, NSC, OML, PIA, TAH, TWE 

ASX corporate actions occurring today:

• Dividends paid: AMH, APZ, GMG

• Listing: None

• Issued shares: ANZ, ARE, ATS, BCN, CWY, GBZ, ICI, IVZ, KLL, MDR, MGF, OPT, PGD, PNN, RCW, RF1, RUL, SDF, SP3, TCL, TRS

Other things of interest (AEST): 

• Korea Interest Rate Decision at 11:00 am

• Germany GDP Growth Rate (Q2) at 4:00 pm

• US GDP Growth Rate (Q2) at 10:30 pm

• US Corporate Profits (Q2) at 10:30 pm