Market Wrap

Morning wrap: Wall Street falters as Biden imposes sanctions on Russia, ASX to edge lower

Wed 23 Feb 22, 8:17am (AEST)

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ASX Futures (SPI 200) imply the ASX will open 6 points lower, down -0.08%.

The selloff intensified on Wall Street after Russian President Vladimir Putin deployed troops to two separatist regions in Ukraine.

US stocks tried to bounce off session lows after President Joe Biden outlined sanctions against Russia including blocking Russian banks from raising foreign debt.

Overnight summary

Wed 23 Feb 22, 8:17am (AEST)

Name Value Chg %
US Indices
S&P 500 4304.76 -1.01%
Dow Jones 33,597 -1.42%
NASDAQ 100 13,382 -1.23%
Russell 2000 1,981 -1.43%
Country Indices
Canada 20,908 -0.48%
China 3,457 -0.96%
Germany 14,693 -0.26%
Hong Kong 23,520 -2.69%
India 57,301 -0.66%
Japan 26,450 -1.71%
United Kingdom 7,494 +0.13%
Name Value Chg %
Commodities (USD)
Gold 1,902.90 +0.16%
Iron Ore 141.11 -
Copper 4.506 -0.30%
WTI Oil 92.27 +1.32%
Currency
AUD/USD 0.7221 +0.44%
Cryptocurrency
Bitcoin (AUD) 52,623 -1.13%
Ethereum (AUD) 3,621 -1.83%
Miscellaneous
U.S. 10 Year Treasury 1.948 +0.83%
VIX 29 +5.77%

Key points

Stocks

  • Major US indices closed towards session lows as stocks failed to bounce

  • The S&P 500 (large cap), Dow Jones (blue chip) and Nasdaq (tech) were all trading at least 1% off session lows until the last hour of trade

  • All three major indices are now trading at or below late January lows

  • 71% of US stocks declined, indicating a broad-based selloff

  • 66% of US stocks are below their 200-day moving average (+2% from last session)

  • Home Depot beat December quarter earnings expectations and said it sees sales growth for the year ahead. The company’s stock still fell -8.9%

Economy

  • US manufacturing purchasing managers’ index (PMI) rose to 57.5 from 55.5 last month 

  • US services PMI increased to 56.7 from 51.2 last month 

  • A reading over 50 indicates growth or expansion in the sector 

  • Traders are now pricing in a 100% certainty that the US Federal Reserve will raise interest rates in March 

  • According to CME’s FedWatch Tool, there is currently a 63% possibility of a 25bps hike and a 36% likelihood of a 50 bps hike 

Commodities 

  • Nickel and aluminium prices continue to trend higher amid concerns that Russian sanctions could impact global supply

  • Iron ore prices continue to falter as most iron ore traders in China put stock replenishment plans on hold due to uncertainty about further regulatory measures, according to Fastmarkets 

  • Oil prices hit a wall as prospects of additional Iranian supply and the possibility of OPEC+ ramping up output outweighed the Russia-Ukraine escalation 

  • Gold closed well off session highs after Biden outlined sanctions

 

US Sectors

Wednesday, 23 February 2022

Sector Chg %
Communication Services -0.98%
Consumer Discretionary -3.04%
Consumer Staples -0.83%
Energy -1.53%
Financials -0.42%
Health Care -0.25%
Sector Chg %
Industrials -0.92%
Information Technology -0.88%
Materials -1.38%
Real Estate -0.24%
Utilities -0.07%

Industry ETFs

Wednesday, 23 February 2022

Description Last Chg %
Commodities
Aluminum 69.0386 +1.12%
Copper Miners 40.86 -0.15%
Gold 177.12 +0.21%
Lithium & Battery Tech 74.61 -1.76%
Nickel 32.2099 +1.66%
Strategic Metals 105.9 -2.80%
Steel 56.87 -0.26%
Silver 22.12 +0.86%
Uranium 20.84 +0.34%
Industrials
Aerospace & Defense 104.3 -1.37%
Global Jets 22.56 -1.95%
Healthcare
Biotechnology 125.04 -0.70%
Cannabis 5.25 -5.33%
Description Last Chg %
Cryptocurrency
Bitcoin 25.11 -5.26%
Renewables
CleanTech 14.37 -2.37%
Hydrogen 15.61 -3.20%
Solar 62.48 -3.73%
Technology
Cloud Computing 20.61 -0.97%
Cybersecurity 27.88 0.00%
E-commerce 23.65 -3.55%
Electric Vehicles 27.8 -2.52%
FinTech 30.99 -1.81%
Robotics & AI 28.71 -0.91%
Semiconductor 466.57 -0.61%
Sports Betting/Gaming 21.03 -1.33%
Video Games/eSports 60.13 -2.10%

ASX Sectors to watch

#1 Energy 

Surging oil prices hit a wall as the US-Iran nuclear talks could quickly bring 1.3m barrels per day back into markets. 

“Yesterday, Iran Foreign Ministry spokesman Khatibzadeh noted that significant progress has been made in reviving the 2015 nuclear deal. Energy traders are looking at a long list of geopolitical risks and see the Biden administration being extra motivated to make a deal with Tehran,” said Oanda senior market analyst, Ed Moya. 

“Crude prices still seem like they have a good chance to make a run towards the US$100 level, but it might take a major escalation by Russia for that breakout to happen … Whatever dips happen with crude prices will likely be short-lived.”

See a list of ASX energy stocks here

#2 Gold

Even when gold is on the move, it isn’t. 

The yellow metal sat around US$1,900 towards the end of the US session. 

“The likelihood of a regional war seems high and that will likely keep inflationary pressures elevated for much of the year.  Bullion seems like it is taking a little break right now, but investors will soon be saying, “I love gold” as geopolitical and growth concerns will drive safe-haven demand,” said Moya. 

See a list of ASX gold stocks here

#3 Aluminium and nickel

Aluminium and nickel prices continue to climb multi-year highs amid supply disruption concerns from Russia in an already tight market.  

That said, broader market weakness and bearish sentiment could outweigh bullish spot prices

On Tuesday, South 32 (ASX: S32) fell -3.3% despite another positive session for aluminium prices. On the same day, nickel hopeful Mincor (ASX: MCR) rallied 6.4%.

#4 Tech

ASX tech stocks fell sharply on Tuesday as investors continued to flee from risky and richly valued pockets of the market.

The pain is likely to continue given the weakness in risk-on sectors overnight. This includes sectors such as cryptocurrency, renewables and household US tech stocks.

Notably, Block fell -3.9% and Affirm closed -2.5% lower.

Today's events

ASX corporate actions occurring today:

  • Ex-dividend: AGL, AUI, CDA, DHG, DOW, DUI, FSA, IRE, JBH, MFG, MYS, NGI, NWL, SEQ, SGF

  • Dividends paid: DJW

  • Issued shares: 88E, ADD, ADT, CHK, D2O, DBF, HMD, HMI, KME, LRS, MGF, MLS, NAB, NES, PFG, PGL, PIC, PNI, RFR, SLR, SRN, TAR, TCL, TPD, VHT, WAM

 

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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