Morning wrap: Wall Street falters as Ukraine worries mount, ASX set to bounce

ASX Futures (SPI 200) imply the ASX will open 28 points higher, up 0.4%.

Major US indices ended lower on Friday as sentiment continued to be weighted by the worsening conflict between Russia and Ukraine.

Stocks

• The US market exhibited a classic risk-off attitude on Friday with technology stocks underperforming, bond yields selling off and gold hitting fresh 16-month highs

• The Nasdaq (tech) closed towards session lows, signalling that sellers were in control. The index is down -15% year-to-date 

• The S&P 500 (large cap) and Dow Jones (blue chip) closed well off session lows, buoyed by an outperformance across energy, utilities and real estate sectors

• Goldman Sachs thinks that most of the Russia-Ukraine crisis is already priced into the market

• “Equities were already falling before this had happened, and because European markets were not very expensive at the outset, we do think a lot of bad news is already priced in,” said Peter Oppenheimer, chief global equity strategist

• 66% of US stocks declined

• 64% of US stocks trade below their 200-day moving averages, (63% yesterday, 63% a week ago)

Economy

• The US added 678,000 jobs in February, beating consensus estimates of 423,000

• • Leisure and hospitality, business services and healthcare posted strong job gains

• US unemployment rate fell from 4.0% to 3.8% while the participation rate edged slightly higher

• US wage growth was underwhelming, with average hourly earnings rising just 1 cent to US$31.58

• • Slow wage growth may deter the US Federal Reserve from raising interest rates too quickly 

Commodities 

• Iron ore prices were relatively stable last Friday following a sharp surge the day before. Trading activity at Chinese ports showed signs of slowing down, with most steel mills choosing to remain on the market sidelines, according to Fastmarkets

• Commodities tied to Russia including oil, nickel, platinum and gold continued to rally. More details below  

#1 Oil

Oil charts have gone completely vertical since the beginning of the Russian invasion.

“Oil prices has been a one-way market, but the potential return of Iranian crude supplies could provide much relief to this very tight market," said Oanda senior market analyst, Ed Moya.

 "Over the weekend, IAEA chief is expected to visit Tehran and could make a breakthrough over the last roadblocks that are preventing a revival of the 2015 Iran nuclear deal."

JPMorgan has forecast a number of possible scenarios for where oil prices could go, subject to the Iran deal and the release of strategic petroleum reserves (SPR).

See a list of oil stocks here.

#2 Gold

A strong US employment report and sluggish wage growth is expected to push a more dovish view from Fed members. 

Demand for safe haven assets was elevated after Russian troops hit a nuclear power plant in Ukraine. There were initial concerns that this could trigger a nuclear catastrophe - the fire has since been extinguished and early reports show no rise in radiation levels. 

“Russia’s military campaign continues to make gains and that is leading to fears they have an ambition to take control of all of Ukraine.  With both European equities and the euro in freefall, demand for safe-havens will not be easing anytime soon,” said Moya.

See a list of gold stocks here.

#3 Travel

The US Global Jets ETF hit a fresh 15-month low as the Russia-Ukraine war may halt the industry’s comeback story.

The ETF has bounced off the $19.30 area multiple times in prior sell offs. Slicing through this area of support is not a good look. The ETF is now trading lower than when Pfizer announced successful trials for its covid vaccine.

Source: TradingView

Notable movers on Friday include:

• United Airlines -9%

• American Airlines -7%

• Airbnb -5.9%

• Booking.com -5.6% 

There is also the concern that surging fuel prices may weigh on earnings, and force airlines to pass price hikes onto customers.

#4 Tech

Tech stocks bore the brunt of the selling last Friday. The Global X FinTech ETF fell -4.3% and close to late-February lows. Notable losers include: 

• Affirm -8.4%

• Block -6.7%

This will mean local Block (ASX: SQ2) will tumble at open. This could also flag weakness for the broader BNPL and tech sector, including:

• Xero (ASX: XRO)

• WiseTech Global (ASX: WTC)

• Altium (ASX: ALU)

#5 Uranium

ASX uranium stocks all fell as much as -25% on Friday after Russian troops set Europe’s largest nuclear power plant, Ukraine’s Zaporizhzhia, on fire. 

Ukrainian Minister of Foreign Affairs elevated the panic by tweeting: 

“Russian army is firing from all sides upon Zaporizhzhia NPP, the largest nuclear power plant in Europe. Fire has already broke out. If it blows up, it will be 10 times larger than Chornobyl! Russians must IMMEDIATELY cease the fire, allow firefighters, establish a security zone!”

It has since been confirmed that the fire has not affected essential equipment and that there has been no change in local radiation levels. 

Encouragingly, uranium prices hit fresh 10-year highs of US$51.2/lb last week. 

The panic has since subsided and ASX uranium stocks should bounce on Monday.

See a list of uranium stocks here.

#6 Copper and Nickel

Copper prices hit all-time highs of US$4.94/lb on Friday.

See a list of copper stocks here.

Nickel price charts have also gone complete vertical since the beginning of the war. Spot prices gained another 9% last Friday to almost US$30,000 a tonne.

See a list of nickel stocks here.

ASX corporate actions occurring today:

• Ex-dividend: AFG, ALU, BEN, BRI, CSL, ECL, MVF, NAC, NSC, NST, PRU, QBE, REA, RHC, SGM, SUL, VEA

• Dividends paid: MAM, PCI, RYD, TCF

• Issued shares: HDN, HMC, MKR, NAB, PEB, PFE, PIC, RDT, RF1, RTG, SDR, XTC

Economic news:

• China Balance of Trade (Jan-Feb) at 2:00 pm AEDT