Morning wrap: Wall Street claws back losses, tech stocks outperform, ASX set to rise

ASX Futures (SPI 200) imply the ASX will open 21 points higher, up 0.29%. 

US stocks finished in red but managed to claw back most of its losses. 

There are concerns that Russia’s financial meltdown could lead to some degree of contagion.

The ongoing sanctions against Russia is also expected to fuel higher commodity prices, which means inflationary pressures are likely to persist.

Stocks

• The Dow Jones (blue chip) and S&P 500 (large cap) both bounce around 1.3% off session lows

• The Nasdaq (tech) outperformed as most tech stocks managed to close the session higher

• Buyers stepped up in the final hour of trade after digesting new, severe sanctions against Russia over the weekend. This included:

  • Russian banks cut off from SWIFT,  a financial platform used to transfer money assets

  • Western countries freezing Russian central bank’s assets 

  • Airspace bans, asset freezes and travel bans against a long list of Russian individuals and companies

• 49% of US stocks fell, indicating a mixed session

• 63% of US stocks trade below their 200-day moving average (63% on Monday, same as a week ago) 

• 92% of US companies have reported quarterly earnings. S&P 500 earnings are on-track to hit a record high for a fourth consecutive quarter

• On average, operating earnings per share rose 41% 

Economy

• Australian retail turnover rose 1.8% in January following a -4.4% decline in December

  • The rise was the second highest reading in the last two years

  • Food retailing had the largest, up 2.2%

• The US trade deficit jumped 7.1% in January to US$107.6bn, a fresh all-time high

  • Reflects huge demand for imported goods, notable autos and oil 

• The Russian ruble plunged -30% against the US dollar. 1 US dollar is now worth 108 rubles compared to 84 rubles on Friday

• Russia’s Central Bank doubles interest rates to 20% in an attempt to protect the ruble and curb hyperinflation 

Commodities 

• Iron ore prices climbed following a possible severe cyclone in Port Hedland, a key shipment port in Western Australia 

• Brent crude oil briefly rallied above US$100 on the back of the Russian sanctions. Though, the US and consuming countries are reportedly considering another release of 60-70m barrels from strategic reserves 

• Palladium prices spiked 5.6% as Russian exports account for approximately 45% of global production  

• Uranium prices rallied 3.8% to US$48.3/lb according to fuel brokers Numerco

#1 Uranium

The Uranium ETF closed above the 200-day moving average for a second session. The ETF is now up 13.6% in the last three sessions.

Uranium spot prices also closed at a 4-month high of US$48.3/lb.

There’s been several recent positive developments for the sector, including: 

• Sprott’s Physical Uranium Trust due to debut on the NYSE this week

• Germany considering extending the life span of remaining nuclear reactors

• Russia supplies circa 20% of uranium fuel for Europe and the US, these supplies are now at risk 

The positive session for European and US uranium stocks could carry over local names on Tuesday.

See a list of uranium stocks here.

#2 Tech

Tech stocks are normally the most hard hit on red days. 

Interestingly, US tech stocks outperformed the market. Notable winners include: 

• Tesla +7.5%

• Affirm +6.8% 

• Block +6.4%

This could set up local Block (ASX: SQ2) shares for a positive open, which could also reverberate with the rest of the BNPL sector.

The question is whether or not the stocks can hold onto morning gains, or fade towards close.

The broad-based outperformance for tech could also help other local tech names such as:

• WiseTech Global (ASX: WTC)

• NextDC (ASX: NXT)

• Xero (ASX: XRO)

#3 Travel

The US Global Jets ETF fell -2.2% after Russia closed its airspace for 36 countries in response to Western sanctions. Notable decliners include: 

• Booking -4.8% 

• Delta Airlines -3.9% 

• United Airlines -3.7% 

• Airbnb -2.3%

This might not be as impactful for local travel and airline stocks. Lets see what the weak overnight sentiment means for local shares.

#4 Banks 

US bank stocks were under pressure including: 

• Citi -4.7%

• JP Morgan -4.3% 

• Bank of America -2% 

• Wells Fargo -1.6% 

Again, this might not be too relevant for local bank stocks. But its still strange to see the US banking sector underperform the broader market by such a wide margin.

ASX corporate actions occurring today:

• Ex-dividend: APX, AUB, BGA, DMP, EBG, EDV, EGH, GAP, HGH, HMC, IDX, NBI, ORA, ORG, SDG, WOT

• Dividends paid: CIA, DDR, NSR, SLF

• Listing: 5EA

• Issued shares: 29M, ABR, ACR, AGY, AKO, AND, AUT, CCR, CDP, CHM, EZL, FBU, GMD, GNX, HLS, ILU, KGN, LKO, MAY, MDR, MRD, MRL, MRR, NAB, ORA