Market Wrap

Morning wrap: Wall Street posts best day of 2022, ASX set for soft start

Mon 31 Jan 22, 8:37am (AEST)

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ASX Futures (SPI 200) imply the ASX will open 16 points lower, down -0.2%. 

US stocks rallied strongly last Friday, notably in the last hour of trade. The rebound was led by technology stocks, on the back of better-than-expected earnings from Apple, Mastercard and Visa.

Overnight summary

Mon 31 Jan 22, 8:37am (AEST)

Name Value Chg %
US Indices
S&P 500 4515.55 +1.89%
Dow Jones 35,132 +1.17%
NASDAQ 100 14,240 +3.41%
Russell 2000 2,028 +3.05%
Country Indices
Canada 21,098 +1.72%
China 0 0.00%
Germany 15,471 +0.99%
Hong Kong 23,802 +1.07%
India 58,863 +1.46%
Japan 27,078 +0.28%
United Kingdom 7,464 -0.02%
Name Value Chg %
Commodities (USD)
Gold 1,798.70 +0.13%
Iron Ore 138.79 -
Copper 4.336 +0.27%
WTI Oil 88.38 +0.26%
Currency
AUD/USD 0.7068 +0.04%
Cryptocurrency
Bitcoin 54,516 +1.51%
Ethereum 3,807 +4.54%
Miscellaneous
U.S. 10 Year Treasury 1.782 0.00%
VIX 25 -10.23%

Key points

  • The S&P 500 (large cap) and Dow Jones (blue chip) both avoided a four-week losing streak, rebounding back above their 200-day moving averages 

  • The Nasdaq (tech) narrowly avoided a fifth straight week of declines 

  • The rebound does not mean the market is out of the woods just yet. Major indices need more than just a single-session bounce to escape correction territory. Only time will tell if this is the start of a comeback

  • Apple rocketed 7% after reporting its largest ever quarterly revenue result. The tech giant delivered 11% sales growth despite global supply chain challenges. Revenue came in at US$123.9bn vs. US$118.7bn estimates, according to Refinitiv 

  • On the economic front, the US reported a -0.6% decline in December personal spending. This is at a time where consumer sentiment is at 10-year lows amid inflation and covid concerns 

  • China’s official manufacturing PMI came in a 50.1 in January vs. 50.3 a month ago. Manufacturing activity was weighed by the nation’s ‘zero tolerance’ approach to covid. Any reading below 50 represents a contraction


US Sectors

Monday, 31 January 2022

Sector Chg %
Communication Services 0.00
Consumer Discretionary 0.00
Consumer Staples 0.00
Energy 0.00
Financials 0.00
Health Care 0.00
Sector Chg %
Industrials 0.00
Information Technology 0.00
Materials 0.00
Real Estate 0.00
Utilities 0.00

All sectors except energy closed in positive territory.

▲ Tech

Mega cap tech stocks including Alphabet, Facebook-parent Meta, Microsoft and Amazon all rallied more than 2.8%.

Apple, Visa and Mastercard delivered better-than-expected earnings, further supporting the tech-led rally.

▲ Materials 

The US-listed counterparts of BHP (ASX: BHP) and Rio Tinto (ASX: RIO) fell -2.5% and -2.6% respectively last Friday. 

However, iron ore prices have continued to march higher, up 6.6% to US$147.9 a tonne. 

A sharp rise in demand has been anticipated for after the week-long holiday in China when steelmakers are likely to resume production and need to replenish iron ore inventories,” a Shanghai-based analyst told Fastmarkets.

▼ Energy

Oil prices diverged in performance. The international benchmark, Brent Crude gained 0.9% to US$90.67 a barrel while the US benchmark, West Texas Intermediate eased -0.02% to US$87.24 a barrel.  

The supply side continues to support a tight market as OPEC+ is expected to stick to their plan of increasing output by 400,000 bpd in March, even though their compliance last month only hit 60% of plan,” said OANDA senior market analyst, Ed Moya. 

“Now that $90 oil is here, it won’t take much to get prices to $100 and that will just intensify the global energy crisis.  News of an Omicron subvariant have not rattled markets as boosters appear to still be getting the job done.”


Industry ETFs

Monday, 31 January 2022

Description Last Chg %
Commodities
Aluminum 64.0829 -0.99%
Copper Miners 36.96 +1.22%
Gold 167.1 +0.59%
Lithium & Battery Tech 74.8 +4.64%
Nickel 29.3261 -0.05%
Strategic Metals 97.11 +4.61%
Steel 52.33 -0.04%
Silver 20.71 +0.43%
Uranium 19.97 +3.46%
Industrials
Aerospace & Defense 99.69 +1.44%
Global Jets 20.42 +3.92%
Healthcare
Biotechnology 127.97 +3.04%
Cannabis 4.68 +8.76%
Description Last Chg %
Cryptocurrency
Bitcoin 23.77 +1.64%
Renewables
CleanTech 13.75 +7.42%
Hydrogen 14.49 +9.59%
Solar 60.51 +8.21%
Technology
Cloud Computing 22.14 +5.42%
Cybersecurity 27.42 +4.38%
E-commerce 23.77 +6.44%
Electric Vehicles 27.1 +4.21%
FinTech 32.14 +5.57%
Robotics & AI 28.39 +4.61%
Semiconductor 455.03 +5.37%
Sports Betting/Gaming 20.87 +4.26%
Video Games/eSports 59.12 +5.70%

ASX Sectors to watch

#1 BNPL 

US-listed BNPL rival Affirm rallied 17.1% last Friday, on no news. The outsized move was likely influenced by the better-than-expected earnings from Visa and Mastercard.  Before today’s rebound, Affirm shares had declined -70% between November highs and last Thursday’s lows. 

Visa’s quarterly revenue topped US$7bn for the first time, supported by a strong rebound in travel spending and continued growth in eCommerce. The company said that it's seeing a “massive shift in adoption of debit and credit”.

This could see some positive flow for beaten up local BNPL stocks that have also declined more than -50% from all-time highs.

#2 Tech 

BNPL was deserving of its own section, though, the tech-led rally on Wall Street could drive a rebound for local tech stocks.

The FinTech and Cloud ETFs both rallied more than 3.5% last Friday, bouncing off of 16-month lows. While encouraging, tech stocks need to continue rebounding or at the very least, consolidate around recent lows. 

#3 Copper

Copper prices fell -2.6% to US$4.31/t, potentially influenced by China's weak manufacturing figures.

Local copper miners like Oz Minerals (ASX: OZL) and Sandfire Resources (ASX: SFR) have experienced a sharp -10% correction after rallying to all-time highs two weeks ago.

#4 Iron Ore

As mentioned earlier, iron ore prices have rallied back up to 4-month highs of US$147.9 a tonne.

Beyond the big three iron ore majors, other notable iron ore players include:


Today's events

ASX corporate actions occurring today:

  • Ex-dividend: CBC, MOT, MXT, PGG 

  • Dividends paid: KPG, PL8, RF1, RFF, SCP, SEC

  • IPOs: CMO, FXG

  • Issued shares: ANP, AVL, CCR, CMO, CXM, CXO, EMH, EUR, FXG, LCK, LCL, NAB, NZK, PHO, RAD, RLT, RNT, SEQ, SKF, SYA, TYR, 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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