ASX Futures (SPI 200) imply the ASX will open 69 points higher, up 0.97%.
Wall Street recouped yesterday’s losses amid a broad-based rally led by energy and material stocks.
Wed 02 Mar 22, 9:34pm (AEST)
|U.S. 10 Year Treasury||1.865||+9.26%|
Investors appear to be taking a break from defensive sectors as consumer staples, utilities and healthcare stocks underperformed the broader market
US Federal Reserve Chair Jerome Powell held his testimony to the House Financial Services Committee, flagging inflation as a major risk to the economy and the likelihood of a 25 bps rate hike in March
Overall, Powell's comments contained no surprises and the markets were pleased that the Fed won't go too aggressive with rate hikes
“The bottom line is we will proceed, but we will proceed carefully, as we learn more about the implications of the Ukraine war on the economy,” said Powell
72% of US stocks advanced, indicating a broad-based rally
62% of US stocks trade below their 200-day moving average (66% yesterday, 68% a week ago)
The US private sector added 475,000 new jobs in February, well above the 400,000 forecast by economists surveyed by The Wall Street Journal
Australia’s GDP growth rate for the December quarter was 3.4% and up 4.2% for the full year
The Bank of Canada hiked interest rates for the first time since October 2018, raising rates from 0.25% to 0.50%. The central bank said that the Russia-Ukraine crisis has increased uncertainty while adding more inflationary pressures to the economy. There are expectations of another hike in April
China’s top government officials have ordered state-owned energy and commodity companies to “scour markets for materials … to fill any potential gaps brought on by the conflict”, according to Bloomberg
Fastmarkets reported a bullish uplift in Chinese iron ore futures amid supply concerns resulting from the Russia-Ukraine crisis. Iron ore was making headway thanks to an uptrend in steel prices and a recovery in downstream demand
Commodities tied to Russia continue to go berserk. In the last two days:
Brent crude is up 17% to US$115 a barrel
Nickel prices are up 8% to US$26,000/lb, an 11 year high
Palladium prices are up 7.5% to an 8-month high
Wed 02 Mar 22, 9:34pm (AEST)
Wed 02 Mar 22, 9:34pm (AEST)
|Lithium & Battery Tech||75.58||-0.44%|
|Aerospace & Defense||110.71||+0.71%|
|Robotics & AI||29.02||+2.48%|
The market is in an extremely bipolar state where investors are feeling immensely bullish one day, and running for the hills the next - and rightfully so, this is what uncertainty feels like.
US stock trader Mark Minervini Tweeted this morning that market conditions are beginning to improve, saying:
“This is one of the best day’s action coming from breakout names since the correction started. If we can build on today with the proliferation of constructive setups and breakouts can hold, then we are heading in the right direction. I’ve incrementally added a few select names.”
From a technical perspective, the S&P/ASX 200 Energy Index is breaking out to a 2-year high after trading sideways for two-years. A breakout after such a prolonged period of consolidation is typically a very bullish sign.
Though, the upside for energy stocks will continue to be dictated by the news coming out of Russia-Ukraine, and to a lessor extent, OPEC+.
“Oil prices are surging once again today and have topped US$110 as reports of disruptions to Russian exports as a result of the sanctions emerge. This is something that was already being priced into the markets prior to and after the invasion and the severity of the sanctions have justified those moves,” said Oanda senior market analyst, Ed Moya.
“And at a time when the market is already extremely tight, something OPEC+ still seems unwilling to acknowledge after leaving planned increases unchanged again in April.”
See a list of energy stocks here.
Steel prices in Europe are surging as a result of increasing energy costs due to the Russia-Ukraine conflict.
The VanEck Steel ETF has rallied 13% in the last five sessions to a 6-month high. With notable gains from the world's largest iron ore producer, Vale SA, which rallied 3% overnight.
This could see positive flow come through for local steel names, notably:
As well as local iron ore names, see a full list of iron ore stocks here.
The VanEck Rare Earths/Strategic Metals ETF rallied 3.3% overnight and has held up relatively well in recent weeks.
Most local lithium and rare earth stocks have taken a breather after a massive run up in the last 12-months. This is against the backdrop of surging lithium prices, which is likely why lithium stocks have managed to stand tall amid the broader market volatility.
See a list of lithium stocks here.
The Global X Copper Mines ETF has hit a 10-month high as copper prices test US$4.6/lb.
This could see some strength in local names such as:
See a list of copper stocks here.
Uranium spot prices broke above US$50/lb for the first time since September last year. Most ASX uranium stocks are trading well below last September levels.
The Global X Uranium ETF is up 18% in the last five sessions, trading around a two-month high. Some catalysts for uranium that we've pointed out in past market wraps include:
Sprott’s Physical Uranium Trust due to debut on the NYSE this week
Germany considering extending the life span of remaining nuclear reactors
Russia supplies circa 20% of uranium fuel for Europe and the US, these supplies are now at risk
See a list of uranium stocks here.
ASX corporate actions occurring today:
Ex-dividend: ABA, AMO, ASX, BLX, CAA, CAJ, COL, DBI, EBO, EGN, FRI, FWD, GNG, HIT, HLA, IBC, IEL, IFM, IGO, IVC, JIN, KSL, MND, NEC, NHF, PAC, PBP, PME, PNI, SFC, SHA, SLH, WOW
Dividends paid: BKI
Australia Balance of Trade (Jan) at 11:30 am AEDT
Finance Writer & Social Media
Get the latest news and media direct to your inbox