Market Wrap

Morning wrap: Wall Street slumps amid Russia-Ukraine escalation, ASX set to slide

Mon 21 Feb 22, 8:32am (AEST)

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ASX Futures (SPI 200) imply the ASX will open 51 points lower, down -0.7%. 

Major US indices fell last Friday, locking in a second week of losses after reports of an explosion in the separatist-held city of Donetsk in east Ukraine.

The likelihood of warfare is growing, making it difficult for investors to take on more risk.

Investors should note that the US markets will be closed on Monday in observance of Presidents Day.

Overnight summary

Sun 20 Feb 22, 9:32pm (AEST)

Name Value Chg %
US Indices
S&P 500 4348.87 -0.72%
Dow Jones 34,079 -0.68%
NASDAQ 100 13,548 -1.23%
Russell 2000 2,009 -0.93%
Country Indices
Canada 21,008 -0.79%
China 3,491 +0.66%
Germany 15,043 -1.47%
Hong Kong 24,328 -1.88%
India 57,833 -0.10%
Japan 27,122 -0.41%
United Kingdom 7,514 -0.32%
Name Value Chg %
Commodities (USD)
Gold 1,900.80 -0.06%
Iron Ore 141.11 -
Copper 4.514 -0.20%
WTI Oil 91.66 -0.11%
Currency
AUD/USD 0.7166 -0.08%
Cryptocurrency
Bitcoin (AUD) 53,393 -5.00%
Ethereum (AUD) 3,652 -5.49%
Miscellaneous
U.S. 10 Year Treasury 1.932 -2.03%
VIX 28 -1.28%

Stocks 

  • The Dow Jones (blue-chip) and Nasdaq (tech) closed around late-January lows, an ominous sign that risks are leaning towards the downside

  • President Joe Biden believes the risk of a Russian invasion is very high, which will place Wall Street on edge until the situation de-escalates, which now appears quite unlikely 

  • 61% of US stocks fell 

  • 64% of US stocks are below their 200-day moving average (+1% from last session)

  • Digital media streaming device company Roku plunged -22% on its December quarter results. The once pandemic darling flagged a troubling near-term outlook with rising expenses and slower-than-expected revenue growth

  • Draftkings took a -21.6% dive after the company flagged deepening losses for 2022 amid intensifying competition in the US sports betting market

Economy

  • The US housing market experienced an unexpected surge of buying in January as buyers tried to lock in lower mortgage rates 

  • January home sales rose 6.7%, well above consensus expectations of a -1.3% decline

  • A US leading economic index fell -0.3% in January, weighed by surging omicron cases, supply-chain disruptions and high inflation 

  • The index is a weighted gauge of 10 indicators used to signal business-cycle peaks and troughs 

Commodities 

  • Nickel prices have climbed fresh 11-year highs amid concerns about low inventories and potential sanctions against Russian producers

  • Aluminium prices have run to fresh all-time highs, driven by the same concerns around geopolitical tensions in Ukraine and the prospect of Russian sanctions

  • Iron ore markets remain stable against previous days as sentiment remains subdued after Chinese watchdogs began investigating local buyers and sellers for malicious trading activity and misinformation

  • Oil prices have stabilised around the US$92-93 a barrel mark 

  • “US oil production is struggling to increase and with OPEC+ likely to struggle hitting their quotas, which means whatever dip in crude prices we see will be temporary,” said Oanda senior market analyst, Ed Moya

 

US Sectors

Sun 20 Feb 22, 9:32pm (AEST)

Sector Chg %
Communication Services -0.87%
Consumer Discretionary -0.70%
Consumer Staples +0.11%
Energy -0.79%
Financials -0.12%
Health Care -0.82%
Sector Chg %
Industrials -0.91%
Information Technology -1.10%
Materials -0.19%
Real Estate -0.46%
Utilities -0.32%

Industry ETFs

Sun 20 Feb 22, 9:32pm (AEST)

Description Last Chg %
Commodities
Aluminum 68.85 +0.36%
Copper Miners 41.05 -0.46%
Gold 177.25 -0.07%
Lithium & Battery Tech 75.75 -1.50%
Nickel 31.86 +1.79%
Strategic Metals 105.81 +0.09%
Steel 56.72 +0.26%
Silver 22.04 +0.36%
Uranium 21.19 -1.65%
Industrials
Aerospace & Defense 105.59 -1.07%
Global Jets 22.83 -1.18%
Healthcare
Biotechnology 126 -0.76%
Cannabis 5.46 -3.85%
Description Last Chg %
Cryptocurrency
Bitcoin 25.7 -2.30%
Renewables
CleanTech 14.76 -2.64%
Hydrogen 16.23 -3.82%
Solar 63.96 -2.31%
Technology
Cloud Computing 21.07 -2.18%
Cybersecurity 28.41 -1.87%
E-commerce 24.23 -2.39%
Electric Vehicles 28.27 -1.66%
FinTech 31.81 -2.58%
Robotics & AI 29.46 -2.55%
Semiconductor 471.84 -1.12%
Sports Betting/Gaming 22.04 -4.58%
Video Games/eSports 60.71 -0.96%

ASX Sectors to watch

The US market exhibited a classic risk-off attitude as growth sectors bore the brunt of the selling. Investors should watch out for weakness in sectors such as tech, healthcare and consumer discretionary.

While defensive and value-sectors like consumer staples, financials and utilities could outperform.

#1 Tech

The tech sector is a punching bag for investors having a hard time holding onto risk. 

The Global X FinTech, Cloud and eCommerce ETFs all declined more than -2% last Friday, down to around 20-month lows. 

Notably, Block and Affirm fell -6% and -0.9% respectively. 

This flags another challenging session for local tech sector and BNPL stocks.

#2 Sports betting 

US sports betting giant DraftKings said it expects to deliver a loss between US$825m to US$925m in 2022. The company is splurging on marketing for market share and launches in new markets.

The once pandemic darling is now down -76% from March 2021 highs.

This could weigh on local bookmakers with US operations, including:

#3 Lithium 

The Global X Lithium & Battery Tech ETF declined -1.5%, close to an 8-month low. 

From a technical perspective, the ETF has struggled to break above the 200-day (blue) and threatening to fall below the US$74 support level.

Lithium & Battery ETF
Source: TradingView

This marks a challenging divergence from lithium prices, which continue to mark all-time highs on an almost daily/weekly basis.

Today's events

ASX corporate actions occurring today:

  • Ex-dividend: ANN, STO, VCX

  • Dividends paid: None today

  • Issued shares: ADV, AGE, BIR, BRK, CG1, CRR, ELT, FCL, MEB, MLM, MP1, NAB, PDI, PIC, RBR, RNE, TMZ, 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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