Morning wrap: Wall Street flat after no surprises from Fed minutes, ASX to open flat

ASX Futures (SPI 200) imply the ASX will open 3 points higher, up 0.04%. 

Major US indices closed relatively flat but well off session lows as investors digested updates of Russia’s military build-up near Ukraine and minutes of the Federal Reserve’s latest meeting.

Stocks 

• Russia announced the end of Crimea military drills, pulling troops back from the Ukraine border

• NATO remains unconvinced by Russia’s assurances, saying that forces continue to build around Ukraine

• The hawkish tone of the Fed minutes was largely within investor expectations, reiterating its support for more aggressive rate increases and a significant reduction of its balance sheet

• 57% of US stocks advanced even though the markets closed relatively flat 

• 60% of US stocks remain below their 200-day moving average (61% yesterday)

• Roblox shares plunged -26% after the gaming platform’s December quarter results fell short of analyst expectations

• Upstart soared 34% after the fintech company smashed earnings expectations and announced a share buy-back program 

Economy

• Sales for US retailers in January rose 3.8% compared to consensus expectations of a 2% increase. The figure represents the largest jump since last March

Commodities 

• Most iron ore market participants are optimistic about demand in the second quarter of 2022, expecting real estate and construction activity to accelerate, according to FastMarkets  

• Seaborne trades remained thin as most buyers are hesitant about closing deals amid recent announcements made by China’s National Development and Reform Commission (NDRC) about misleading price information and malicious trading 

• Gold has recouped Thursday’s losses, supported by rapidly rising inflation and lingering Russian invasion concerns

#1 Tech

eCommerce platform Shopify fell -16% even after topping December quarter earnings expectations. Revenue rose 41% to US$1.38bn while analysts were expecting US$1.34bn. 

The negative sentiment from Shopify likely drove a -5.1% decline for eCommerce peer Etsy.

This could weigh on local eCommerce stocks, notably:

• Kogan (ASX: KGN)

• Redbubble (ASX: RBL) 

The upbeat earnings into a harsh selloff narrative might also be something for investors to watch out for.

US-listed BNPL giants Block and Affirm also underperformed the broader market, down -5.4% and -4.2% respectively.

This will mean a weak open for local Block (ASX: SQ2) shares, which will weigh on the broader S&P/ASX 200 Tech sector.  

#2 Iron ore 

The US-listed counterparts of BHP (ASX: BHP) and Rio Tinto (ASX: RIO) both rose 1.8% overnight, shaking off the recent iron ore concerns coming out of China. 

Both iron ore majors are holding 7-8 month highs after trading sideways since mid-January.

#3 Lithium 

The Rare Earth/Strategic Metals and Lithium & Battery Tech ETFs closed a respective 3.1% and 0.4% higher overnight.

Lithium stocks have taken a breather but spot prices continue to set new highs on an almost daily basis.

Lithium carbonate prices hit 430,000 yuan (US$63,500) on Wednesday, up around 110% since last November.

Lithium stocks may exhibit more sideways action, especially since both ETFs are trading 10-20% below all-time highs.

The spot price uptrend appears to have plenty of gas left in the tank, which should provide lithium stocks with plenty of support amid a volatile broader market.

#4 Copper

Copper prices began to recoup some losses driven by fears of a Russian invasion of Ukraine. Prices are stabilising around the US$4.53/lb level. 

Even without a major move from spot prices, the Global X Copper Mines ETF closed at a fresh 8-month high. 

This could buoy local copper names including:

• Oz Minerals (ASX: OZL)

• Copper Mountain (ASX: C6C)

ASX corporate actions occurring today:

• Ex-dividend: GPT, KOV, KPG

• Dividends paid: KAT, MIR, QRI

• Issued shares: 4DS, ACU, ANX, ATC, B4P, BXB, CCZ, CHR, CUS, CXM, DDD, DEG, FRX, KAU, KKO, LKE, LKO, MX1, NAB, NPM, PEK, PGC, PGD, PPE, PRU, SYR, TPD, TRT, VBS, VGL, VMY, WAK, WAM, WCN, WGR, XTC

Other things of interest 

• 11:30 am: Australia January unemployment rate