Morning wrap: Wall Street rallies, Europe avoids Russian energy sanctions, ASX set to rise

ASX Futures (SPI 200) imply the ASX will open 38 points higher, up 0.51%.

Major US indices rallied as oil prices eased, President Joe Biden and world leaders held a trio of summits on Russia’s Ukraine invasion and Russia’s stock market resumes trading after a month-long halt. 

Let’s dive in.

Stocks

• Major US indices continue their V-shaped bounce back overnight, led by tech, material and healthcare sectors

• President Joe Biden and world leaders opened three emergency meetings to address Russia: a NATO summit, a G-7 summit and a European Union summit

  • The Biden administration will roll out more sanctions against Russia, including sanctions against more than 600 Russian targets

• Several Federal Reserve officials provided their views on inflation and the central bank’s plan of attack:

  • Minneapolis Fed Pres Neel Kashkari sees seven 25 bps hikes this year, warned the dangers of overdoing it

  • Chicago Fed Pres Charles Evans held the same view, as well as three more hikes next year to bring the cash rate between 2.75% to 3.0% 

  • Fed Gov Christopher Waller said he was watching the hot housing market to gauge the appropriate monetary policy response

• All US sectors finished in positive territory

• Energy, consumer staples, real estate and consumer discretionary sectors underperformed 

• 65% of US stocks advanced

• 60% of US stocks trade below their 200-day moving averages (62% yesterday, 61% a week ago)

• Uber +5% after striking a deal to list all New York City taxis on its app, according to The Wall Street Journal

• Tencent -3.5% after reporting its slowest quarterly revenue growth on record, weighed by Beijing’s regulatory tightening of the domestic tech sector

Economy

• US first-time jobless benefit claims fell by 28,000 to 187,000, the lowest reading since 1969

• US durable-goods orders fell -2.2%, more than double the forecasted decline

  • Supply chain issues weighed, with notable declines in passenger planes and autos

Commodities 

• Iron ore prices remained largely flat as Chinese market participants are "likely in wait-and-see mode prompted by rising covid cases in China", according to Fastmarkets

• Oil prices fell after the European leaders decided not to sanction Russian energy

• Gold prices are surging again in response to more Russian sanctions and the Fed’s more aggressive stance on interest rates

#1 Steel

The VanEck Steel ETF broke above May 2021 levels to close at 11-year highs. The ETF is up 30% year-to-date.

Source: TradingView

Steel prices are running hot due to several supply issues including:

• Russia and Ukraine were major supplies of steel supplies for Europe

• Chinese supplies at risk due to rising covid cases and the nation's 'zero tolerance' policy

• Surging coal prices

Major local steel names include BlueScope (ASX: BSL) and Sims (ASX: SGM)

#2 Lithium

The VanEck Rare Earths/Strategic Metals ETF was green again, now up 20% in the last 8 trading sessions. The ETF is around 7% away from all-time highs.

The ETF's top holdings (% of net assets) include:

• Zhejiang Huayou Cobalt (7.9%)

• China Northern Rare Earth Group (7.1%)

• Lynas Rare Earths (6.76%)

• Pilbara Minerals (6.46%)

• Allkem (6.07%)

Source: TradingView

Generally speaking, large cap ASX-listed lithium and rare earth stocks are still chopping back and forth after a massive run up.

However, several emerging producers and explorers have been trending strongly into all-time highs. Notable names include:

• Lake Resources (ASX: LKE)

• Core Lithium (ASX: CXO)

• Sayona Mining (ASX: SYA)

• AVZ Minerals (ASX: AVZ)

See a full list of ASX lithium stocks here.

#3 Energy

Oil prices eased as European leaders did not sanction Russian energy exports.

Mixed European manufacturing activity and weaker-than-expected durable goods data in the US also weighed on how oil demand will hold up in the next few months.

"Today’s weakness in oil prices should be limited given the geopolitical risk that still remains on the table and the fact that capital discipline by non-OPEC producers suggests it will take time to see other countries ramp up production," said Oanda senior market analyst, Ed Moya.

Energy was the worst performing sector on Wall Street overnight, up just 0.13% compared to the average sector increase of 1.43%.

#4 Gold

Gold prices have come back up to a 1-week high after a massive swing from US$2,070 to US$1,900.

"Even with initial jobless claims falling to the lowest levels since 1969, gold prices are surging as investors await the impact of the latest round of US sanctions that now prevent Russian sanctioned entities from any gold transactions," said Moya.

"A big part of today’s gold rally coincided with a wrath of Fed speak that suggests a much more aggressive pace of tightening policy, which will ultimately drive growth concerns by the time we get to the summer."

Higher gold prices could see some positive flow return to local gold names.

#5 Crypto

Its been a while since we mentioned crypto.

Bitcoin has managed to find its footing around the US$38,000 to US$44,000 range.

US$45,000 is proving to be a key area of resistance with two failed attempts to push above the price point in early February and early March.

Source: TradingView

Crypto-fans should keep an eye out for how Bitcoin trades around these levels, and if it can break US$45,000 as well as the 200-day moving average.

The ASX has limited options for crypto exposure, notable names include:

• DigitalX (ASX: DCC)

• Betashares Crypto Innovators ETF (ASX: CRYP)

ASX corporate actions occurring today:

• Ex-dividend: ABC, ACL, CVL 

• Dividends paid: AGG, ALI, AVJ, BVS, CAA, ECL, EVN, FFI, GLB, GMA, GNG, JYC, MHJ, MMS, MND, NAC, NSC, ORG, PME, PWH, RKN, SHJ,

• Listing: None today

• Issued shares: AEE, AS2, AUH, BDM, BGP, BNR, CCR, CIW, CLE, CNU, EGH, FBU, FLT, GBR, GLN, HLA, HLX, INA, KAR, LPD