Market Wrap

Morning wrap: Wall Street rallies thanks to 17% jump in Facebook, ASX set to rise

Fri 29 Apr 22, 8:32am (AEST)

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ASX Futures (SPI 200) imply the ASX will open 50 points higher, up 0.68%.

Wall Street rallied sharply thanks to better-than-expected earnings from Facebook-parent Meta, Apple and Amazon released underwhelming results after hours, US GDP unexpectedly declined in the March quarter and China will remove coal import tariffs to improve supply.

Let’s dive in.

Overnight summary

Fri 29 Apr 22, 8:32am (AEST)

Name Value Chg %
US Indices
S&P 500 4287.5 +2.47%
Dow Jones 33,916 +1.85%
NASDAQ Comp 12,872 +3.06%
Russell 2000 1,918 +1.80%
Country Indices
Canada 21,121 +1.82%
China 2,975 +0.58%
Germany 13,980 +1.35%
Hong Kong 20,276 +1.65%
India 57,521 +1.23%
Japan 26,848 +1.75%
United Kingdom 7,509 +1.13%
Name Value Chg %
Commodities (USD)
Gold 1,896.00 +0.25%
Iron Ore 151.19 -
Copper 4.414 0.00%
WTI Oil 105.01 -0.33%
Currency
AUD/USD 0.7099 +0.01%
Cryptocurrency
Bitcoin (AUD) 56,040 +0.72%
Ethereum (AUD) 4,126 +0.81%
Miscellaneous
US 10 Yr T-bond 2.863 +1.60%
VIX 30 -5.09%

Stocks

  • Major US averages finished sharply higher as a 17.5% jump in Meta shares brought investors back into tech stocks

  • The major averages are around breakeven for the week, but for the month of April:

    • Dow Jones -2.2%

    • S&P 500 -5.4%

    • Nasdaq -9.5%

  • All 11 US sectors were green

  • Tech and energy outperformed

  • 71% of US stocks advanced

  • 67% of US stocks trade below their 200-day moving average (69% on Thursday, 61% a week ago)

  • Meta (+17.6%) released earnings after hours on Thursday. Daily active users, which declined in the December quarter for the first time, bounced back from 1.93bn to 1.96bn. EPS and average revenue per user exceeded expectations

  • PayPal (+11.5%) after downgrading its full-year outlook and revoked its medium-term forecast. The company now expects revenue growth between 11-13% in 2022

  • McDonalds (+2.9%) beat first-quarter earnings and revenue expectations thanks to higher prices in the US and strong international sales growth

  • Amazon (-10% after hours) after first-quarter growth rates came in at the slowest pace since the dot-com bust in 2001. Revenue rose just 7% compared to 44% a year ago

  • Apple (-4% after hours) after CFO Luca Maestri warned of several challenges in the current quarter. Though, the company topped consensus expectations across all key financial metrics, declared a US$90bn share buyback and a 5% dividend

  • The upcoming session will be very interesting given the after hour declines from heavyweights Amazon and Apple

  • US earnings to watch this week:

    • Fri: ExxonMobil, AstraZeneca, Shevron

Economy

  • US GDP unexpectedly declined -1.4% in the March quarter, well below consensus expectations of a 1.1% expansion. The main drags on growth include: 

    • Rising omicron infections at the start of the year

    • The Russian invasion of Ukraine

    • Deceleration of private investment, which helped boost GDP growth in the second-half of 2021

    • -8.5% pullback in defence spending

    • A massive -US$89.2bn trade deficit in February as imports greatly outweighed exports

Commodities

  • Iron ore prices remain unchanged at US$150. Transport has improved in regions recently affected by movement restrictions and some steel mills have been able to restock existing inventory ahead of China’s Labour Day long weekend, according to Fastmarkets

  • Oil prices continue to recover from lows earlier this week that sent prices below US$100 a barrel

  • Gold is trying to stabilise after hitting a recent low of US$1,870, weighed by a strong US dollar

 

US Sectors

Friday, 29 April 2022

Sector Chg %
Communication Services +3.88%
Consumer Discretionary +2.32%
Consumer Staples +1.43%
Energy +3.13%
Financials +1.30%
Health Care +1.35%
Sector Chg %
Industrials +1.14%
Information Technology +4.04%
Materials +1.56%
Real Estate +1.85%
Utilities +1.11%

Industry ETFs

Friday, 29 April 2022

Description Last Chg %
Commodities
Aluminum 65.185 -1.78%
Copper Miners 40.14 +0.90%
Gold 175.98 +0.54%
Lithium & Battery Tech 64.33 +1.17%
Nickel 44.21 -1.27%
Strategic Metals 95.44 -0.06%
Steel 62.4 +2.18%
Silver 21.49 -0.33%
Uranium 23.55 +0.68%
Industrials
Aerospace & Defense 105.3 +0.54%
Global Jets 21.52 +2.04%
Healthcare
Biotechnology 119.05 0.00%
Cannabis 4.02 +1.24%
Description Last Chg %
Cryptocurrency
Bitcoin 24.23 +2.93%
Renewables
CleanTech 14.01 -0.29%
Hydrogen 15.71 -1.34%
Solar 64.16 +0.92%
Technology
Cloud Computing 19.45 +2.93%
Cybersecurity 29.5 +1.69%
E-commerce 19.36 +2.27%
Electric Vehicles 23.76 +3.11%
FinTech 26.76 +4.11%
Robotics & AI 23.71 +2.70%
Semiconductor 396.8 +5.51%
Sports Betting/Gaming 16.98 +2.89%
Video Games/eSports 49.41 +1.60%

ASX Sectors to watch

So you're telling me, the stock market rallies on news that GDP contracted instead of showing economic growth. What a time to be alive.

Besides tech, most ETFs were up or down less than 1% overnight including copper mines, uranium, gold and lithium/rare earths.

#1 Tech

The Nasdaq was due for a bounce, further exacerbated by the better-than-expected earnings from Meta. However, with Apple and Amazon both down in after hours, the upcoming session could be very choppy.

Nevertheless, Meta's strong showing helped lift the Global X Fintech, Cloud and eCommerce ETFs between 2-4%. Though, these gains are inconsequential in the bigger picture, as these ETFs are all down around -30% year-to-date.

Local tech stocks will likely take the overnight session at face value and try to push higher in the morning. A 4.7% rally for Block will mean a strong open for local Block (ASX: SQ2) shares.

It will be interesting to see if tech gains fade into the afternoon as the market digests Apple and Amazon's mixed after hours earnings.

#2 Energy

Oil prices continue to consolidate, with the range tightening and potentially setting up for a breakout (or breakdown).

USOIL 2022-04-29 08-12-50
Volatility in oil prices beginning to contract (Source: TradingView)

"The same factors remain at play here and could be the catalyst for an eventual breakout, be it further Chinese lockdowns, slow output growth from OPEC+, new supply disruptions, larger reserve releases etc. Or, of course, an escalation in tensions between Russia and the West, leading to an immediate embargo," said Oanda senior market analyst, Craig Erlam.

"The Kremlin has taken us down that path in the natural gas space, imposing rouble demands on buyers that have led to Poland and Bulgaria being cut off. The stand-off could spill over into oil markets."

#3 Travel

Travel is one of few sectors that have held up relatively well amid the market's recent selloff.

Local names like Corporate Travel Management (ASX: CTD), Flight Centre (ASX: FLT) and Kelsian Group (ASX: KLS) are around unchanged for the week.

The US Global Jets ETF was up 2% overnight and retesting the 200-day moving average.

Jets ETF
US Global Jets ETF closes above the 200-day (Source: TradingView, Annotations by Market Index)

Southwest Airlines delivering a wide-than-expected first quarter loss but managed to double revenues. The company said it was experiencing a "sharp rebound" in March.

Today's events

ASX corporate actions occurring today:

  • Ex-dividend: MOT, MXT, PGG

  • Dividends paid: BIS, CWP, D2O, FGX, KPG, LSX, MNY, PGF, PIC, PL8, REP, RFF, RIC, WLE, YAL

  • Listing: MMA

  • Issued shares: 360, MGF, MMA, MRI, PGO, PNL

Things of interest (AEST):

  • EU GDP Growth Rate (March Quarter) at 7:00 pm

    • Consensus 5%

 

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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