Morning Wrap: Wall Street edges higher, Gold takes out another high, ASX to rise

US shares reversed early losses as investors looked ahead to earnings season and tomorrow’s stateside inflation print. And that’s in spite of comments from Federal Reserve chairman Jerome Powell, who said the central bank may need to take unpopular short term decisions to cool price surges. In other news, Morgan Stanley has joined Goldman Sachs in arguing 2023 will be China’s year to shine. And gold cracks another multi-month high.

Let’s go.

MARKETS

• The US 10-year yield rose 8 basis points to 3.61%.

• Gold hit a seven-month high while Brent crude is near US$80/barrel

• 68% of stocks advanced

• 52% of stocks traded above the 200-day moving average

STOCKS

Bed Bath and Beyond (BBBY) shares jumped nearly 19%. The move came after its earnings call, and just days after the company warned of potential bankruptcy.

Meta Platforms (META) shares jumped after a new survey revealed the company is the one most expected by investors to be the top-performing mega cap internet stock this year.

Shares in Coinbase (COIN) jumped almost 6% after the cryptocurrency exchange shared plans to trim its workforce by 20%.

WORLD NEWS

Several Top Rivian Executives Depart the Electric-Vehicle Startup (WSJ)

Morgan Stanley Joins Goldman in Bullish Call on Chinese Assets (Bloomberg)

Chinese ‘spy’ facing deportation from Australia over fraud claims (SCMP)

Bolsonaro plans return to Brazil soon in wake of riots (FT)

ECONOMY

As mentioned above, US Federal Reserve Chairman spoke last night at an event in Stockholm focused on central bank independence. In some of his prepared remarks, he noted how bringing inflation remained his top priority while rebuffing claims the central bank may take on a new mandate centred around climate change.

“...we should "stick to our knitting" and not wander off to pursue perceived social benefits that are not tightly linked to our statutory goals and authorities…”

Overnight, the World Bank revised down its global economic growth forecasts to 1.7% for 2023 and 0.5% for developing countries and advised that slowdowns of this scale have previously foreshadowed a global recession.

Reported by Chris Conway of Livewire Markets.

After four winning sessions in a row, the ASX 200 pulled back a touch yesterday, down 20 points (-0.3%) to 7131.

There wasn’t much in yesterday’s session. BHP pulled back from a high not seen since 2021. Heading into today’s session, it appears those losses are set to be reversed, with SPI Futures higher in line with modest gains on Wall Street.

Below is the chart of the S&P500. Yesterday we showed the charts of the ASX200, which is looking decidedly better than that of the S&P, and the Aussie materials sector, noting the correlation between the two. And whilst the inference is that our market could be largely driven by commodity performance, what the S&P500 will also have a major impact. On that front, there is plenty of work for the bulls to do in the US, with multiple layers of resistance above the current market price – as can be seen on the chart.

Sectors to Watch

• In the US overnight: Big tech, MedTech, airlines, industrial metals, oil services, machinery, semis, multis, biotech, telecom were among the outperformers. Managed care, hospitals, logistics, waste, food, beverages were some of the laggards.

• The big miners should be supported by a rising iron ore price, up 3.1% to US$121.95 a tonne. Gold and oil were also stronger.

ASX corporate actions occurring today: Trading ex-div: Turner Automotive Group (TRA) 4.6 cps

Dividends paid: None

Listings: Acusensus Limited – 12 January, 11:00am

Economic calendar: AU – Monthly CPI Indicator, monthly retail sales, job vacancies – 11:30am