ASX Futures (SPI 200) imply the ASX 200 will open 79 points higher, up 1.2%.
Wall Street rallied after fund managers hit “record pessimism”, Netflix lost 1m subscribers in the second quarter and US corporate earnings are beating expectations but also getting smashed by the strong dollar.
Let’s dive in.
Wed 20 Jul 22, 8:38am (AEDT)
Name | Value | Chg % | |
---|---|---|---|
Major Indices | |||
S&P 500 | 3,937 | +2.76% | |
Dow Jones | 31,827 | +2.43% | |
NASDAQ Comp | 11,713 | +3.11% | |
Russell 2000 | 1,799 | +3.50% | |
Country Indices | |||
Canada | 18,938 | +1.84% | |
China | 3,279 | +0.04% | |
Germany | 13,308 | +2.69% | |
Hong Kong | 20,661 | -0.89% | |
India | 54,768 | +0.45% | |
Japan | 26,962 | +0.65% | |
United Kingdom | 7,296 | +1.01% |
Name | Value | Chg % | |
---|---|---|---|
Commodities (USD) | |||
Gold | 1,709.60 | -0.06% | |
Iron Ore | 104.76 | - | |
Copper | 3.295 | +0.12% | |
WTI Oil | 104.22 | 0.00% | |
Currency | |||
AUD/USD | 0.6898 | +0.08% | |
Cryptocurrency | |||
Bitcoin (AUD) | 34,140 | +8.06% | |
Ethereum (AUD) | 2,283 | +5.36% | |
Miscellaneous | |||
US 10 Yr T-bond | 3.019 | +1.99% | |
VIX | 25 | -3.16% |
Markets
Major US benchmarks rallied on the back of better-than-expected earnings from key companies.
A Bank of America fund manager survey showed a “dire level of investor pessimism” and “full capitulation” of sentiment, paving the way for a contrarian view that the bottom is in. The survey showed global growth optimism, profit optimism and equity allocations were at lowest levels since 2008, if not all-time lows.
All 11 US sectors were higher
Most sectors rallied more than 3%
Real Estate, Healthcare, Staples and Utilities underperformed benchmarks
81% of US stocks advanced
70% of US stocks trade below their 200-day moving average (74% on Tuesday, 75% a week ago)
Stocks
Boeing (+5.7%) announced several new orders for 787 Dreamliners and 737 Max jets
Netflix (+5.6%, after hours: +7.9%) shares rallied after a better-than-feared second quarter result. The streaming platform lost nearly 1m subscribers, far short of the 2m it had originally forecast during its first quarter report in April
Hasbro (+0.7%) beat quarterly profit expectations thanks to strong demand for card games such as “Magic: The Gathering”, “Wizard’s of the Coast” and “Dungeons & Dragons”
Johnson & Johnson (-1.5%) beat second quarter earnings expectations but downgraded its full-year profit outlook due to the strong US dollar. Almost half of the company's sales come from outside the United States
IBM (-5.3%) earnings beat Wall Street expectations, supported by growth in both software and infrastructure divisions. Shares in the tech company slumped on warnings of a potential US$3.5bn hit from a strong US dollar
Earnings
US corporate earnings we’re watching this week:
Wednesday: Netflix, Nasdaq
Thursday: Tesla, AT&T, American Airlines, Domino’s Pizza
Friday: Snapchat, Verizon, American Express, Twitter, Verizon
Economy
Eurozone inflation surged to 8.6% year-on-year in June, from 8.1% in May
The reading was in-line with consensus expectations
Core inflation, which excludes volatile food and energy prices, slowed to 3.7% from 3.8% a month earlier
The biggest contribution to inflation came from energy, followed by food, alcohol and tobacco, services and non-energy industrial goods
US housing starts fell to 1.56m in June, down from 1.59m in May
Below consensus expectations of 1.58m
Weakest levels since September 2021
Commodities
Iron ore futures erased early gains, down -2.1% to US$103.1 on Tuesday. China has set up a giant mineral resources group in a long-awaited move that is expected to give the country a bigger say in iron ore pricing
Oil prices briefly tumbled after a Bank of America fund manager survey showed global growth optimism was at an all-time low. Still, the supply side remains extremely tight and prices were quick to rebound
Gold prices continue to hover around US$1,700
Wed 20 Jul 22, 8:38am (AEDT)
Sector | Chg % |
---|---|
Communication Services | +3.63% |
Industrials | +3.58% |
Energy | +3.16% |
Materials | +3.11% |
Consumer Discretionary | +3.09% |
Information Technology | +3.08% |
Sector | Chg % |
---|---|
Financials | +3.07% |
Real Estate | +2.84% |
Health Care | +1.80% |
Consumer Staples | +1.08% |
Utilities | +0.68% |
Wed 20 Jul 22, 8:38am (AEDT)
Description | Last | Chg % |
---|---|---|
Commodities | ||
Uranium | 19.14 | +4.18% |
Steel | 48.31 | +2.65% |
Strategic Metals | 82.29 | +2.49% |
Copper Miners | 27.83 | +2.08% |
Lithium & Battery Tech | 71.47 | +0.76% |
Silver | 17.22 | +0.41% |
Gold | 159.16 | +0.24% |
Nickel | 27.431 | -0.82% |
Aluminum | 49.1252 | -2.34% |
Industrials | ||
Global Jets | 17.2 | +4.13% |
Aerospace & Defense | 95.75 | +3.60% |
Healthcare | ||
Biotechnology | 120.52 | +2.57% |
Cannabis | 17 | +0.77% |
Description | Last | Chg % |
---|---|---|
Cryptocurrency | ||
Bitcoin | 13.37 | +8.53% |
Renewables | ||
Hydrogen | 12.75 | +3.22% |
CleanTech | 13.64 | +2.64% |
Solar | 71.37 | +1.74% |
Technology | ||
Semiconductor | 368.17 | +4.41% |
FinTech | 22.23 | +3.91% |
Robotics & AI | 20.57 | +3.55% |
Electric Vehicles | 21.89 | +3.43% |
E-commerce | 16.8 | +3.15% |
Sports Betting/Gaming | 14.36 | +2.86% |
Cloud Computing | 16.28 | +2.70% |
Video Games/eSports | 47.67 | +2.08% |
Cybersecurity | 25.62 | +1.80% |
They call it 'Turnaround Tuesday' for a reason. Wall Street is about to handball us a very strong session.
Taking a quick look at the S&P 500, it's about to have another crack at the 50-day moving average (green). The S&P 500 has not traded above the 50-day since March 20.
Before investors get too optimistic and FOMO, it might be a good time to reflect what's happened with the S&P 500 so far this year.
Date | Performance |
---|---|
4 Jan to 24 Jan | -12.4% |
24 Jan to 9 Feb | +8.7% |
9 Feb to 24 Feb | -10.3% |
24 Feb to 29 Mar | +12.7% |
29 Mar to 20 May | -17.8% |
20 May to 2 June | +9.6% |
2 June to 17 June | -12.9% |
The current 'bear market rally' is up 8.3% from 17 June lows.
Just some food for thought. On to some ASX sectors to watch.
The Nasdaq is trying to breakout of its wedge, it needs another positive day to confirm its break out.
Overnight, beaten up tech names rallied the hardest, including:
Affirm +9.2%
Netflix +5.6%
Meta +5.1%
PayPal +4.9%
Block +4.5%
High flying SPI futures and the risk-on attitude should see some positive flows for local tech names.
The Global X Uranium ETF rallied 4.2%. The move appears to be driven more by broader market strength and improved appetite for risk assets.
Uranium spot prices remain mostly unchanged around US$46/lb.
Still, a good precursor for local uranium names.
Recession risks and new covid variants has kept the pent-up travel demand narrative at bay.
The US Jets ETF rallied 4.1% to a 1-month high. The ETF holds mostly US airlines and some small exposure to international carriers including Qantas (ASX: QAN).
US-listed BHP (ASX: BHP) and Rio Tinto (ASX: RIO) ADRs rose 0.4% and 1.4% respectively, which is:
a) A rather muted response compared to everything else
b) Don't get your hopes up for a massive rally at the open
Chinese iron ore futures open at 11:00 am AEST, which could provide further direction for local miners.
ASX corporate actions occurring today:
Ex-dividend: AIQ, KAT, PL8
Dividends paid: OPH, VEU
Listing: None
Issued shares: 3DA, AMD, BBC, BID
Other things of interest (AEST):
RBA Governor Lowe Speech at 9:10 am
UK Inflation Rate (June) at 4:00 pm
Canada Inflation Rate (June) at 10:30 pm
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