Tech jumps as dip buyers arrest rout on late recovery: ASX to fall

Dip buyers arrested the tumble in tech shares for a mixed close on Wall St. Market participants eye upcoming economic print for an insight in the state of inflation. European markets falls as rate hike looms while Asian markets rise despite China’s covid-zero policy. 

The Australian sharemarket is set to fall after US stocks closed mixed easing from session lows, as concerns about rising interest rates continue to weigh on investors.

Nasdaq ekes out gain as dip buyers emerge

The Nasdaq eked out a gain, closing at a session high. It was down almost two per cent, right near a 10 per cent loss from its recent high, so correction territory. Dip buyers came in, the tech heavy index rallied to buck the trend from the Dow and S&P 500 to see Wall St closed mixed today.

Goldman Sachs predicts four rate hikes in 2022

The action comes after Goldman Sachs said that it expects the Fed to raise rates four times this year, as inflation continues to surge, and the jobs market remains tight. They previously predicted three rate hikes this year, which was in line with remarks from the Fed in its December meeting, but this forecast is coming ahead of key economic data this week.

We’re waiting for the consumer price and the producer price indexes on Wednesday and Thursday to give us more insight into the state of inflation. That print could be even hotter than what we saw in November with consumer prices at 6.8 per cent from the same time a year ago, the fastest inflation clip in nearly four decades. All this, amid the Omicron wave which could see an even steeper rise. The consumer inflation numbers are expected to come with a seven handle, so even hotter. Also on Wednesday, we have earnings from the big banks, which is expected to also move the needle.

Looking at today’s performance, before the recovery in tech, there was a tumble in technology stocks as government bond yields marched higher. The risk aversion button was on as we saw the price of the precious metal rise, an inflation hedge, which shows the shuffle till we find a firmer footing around this inflation theme. Cyclicals also struggled today amid a political tug of war between the White House, Senator Manchin and the Build Back Better program. There’s urgency with the Biden Administration for movement forward ahead of the midterm elections and this financial condition we are in.

Meanwhile, oil prices saw weakness after Libya’s largest oil field resumed production, and Kazakhstan’s Tenig oilfields are ramping up. Energy stocks soared last week as we learn to live with the virus, however what energy traders are looking at is the moves in China and how they will deal in curbing the spread of Omicron with 27 million people now in lockdown.

Wall St numbers

At the closing bell, the Dow Jones lost 0.5 per cent to 36,068, the S&P 500 fell 0.1 per cent to 4,670 while the Nasdaq closed 0.1 per cent higher at 14,943.

Across the S&P 500 sectors, take note of these, financials rose 1.2 per cent, healthcare added followed by technology firmer by 0.1 per cent and communication service. It’s nice to see that the tech decline was arrested today not only on the Nasdaq but also on the S&P500. Industrials was the worst performer down 1.2 per cent while energy shed the least by 0.3 per cent.

The yield on the 10-year treasury note dipped 1 basis point to 1.76 per cent, gold rose on a firmer greenback

European markets falls as rate hike looms

Across the Atlantic, European markets closed lower. Paris lost 1.4 per cent, Frankfurt lost 1.1 per cent, London’s FTSE fell 0.5 per cent amid the UK Government telling property developers that they must help pay $7.6 billion (£4b) to remove cladding from buildings. Housebuilders Redrow tumbled 4.9 per cent, Bellway fell 4.4 per cent, and Vistry Group closed 3.2 per cent lower.

Biotech firm Avacta Group cratered 33.6 per cent after stating that it’s stopping sales of its Covid-19 antigen lateral flow test. A move to improve its ability to detect the Omicron variant at lower viral loads.

On the London Stock Exchange, BHP fell 1.9 per cent, Rio fell 0.2 per cent, BP added 0.1 per cent and Shell closed 0.5 per cent lower.

Asian markets rise amid China’s covid-zero policy

Asian markets closed higher as the scramble to arrest the spread of Omicron continues in China.

Tokyo’s Nikkei was closed due to Old Age Day. Hong Kong’s Hang Seng added 1.1 per cent on a tech rebound offsetting the weakness in the property sector, China’s Shanghai Composite added 0.4 per cent after the country’s securities watchdog pledged to adopt various measures to avoid volatility and “firmly” prevent big fluctuations.

ASX 200 dips on tech rout again

Yesterday, the Australian sharemarket closed 0.1 per cent lower at 7,447 weighed down by technology, healthcare and consumer discretionary stocks as miners and energy stocks advanced.

In company news, shares in Incitec Pivot (ASX:IPL) closed 2.1 per cent higher at $3.37 after inking a deal to buy French explosives maker Titanobel for $142 million. It’s expected to close by June this year.

Elsewhere, Sequoia Financial (ASX:SEQ) has revealed its latest acquisition adding a legal practice under its wing. Previously known as Topdocs Legal, renamed to Docscentre Legal, the $330,000 deal is earnings accretive as of yesterday. Shares closed 0.7 per cent higher at 71.5 cents.

ASX-listed battery maker Novonix (ASX:NVX) has progressed further on plans to list on Wall St’s tech heavy Nasdaq. The news followed the first announcement in May after unveiling its plans to list on another exchange.

They were the best performing stock, closing 10.8 per cent higher at $10.36, followed by shares in AGL Energy (ASX:AGL), and Magellan Financial Group (ASX:MFG).

The worst-performing stock was Reliance Worldwide (ASX:RWC) closing 3.4 per cent lower at $6.02, followed by shares in Lifestyle Communities (ASX:LIC), and Clinuvel Pharmaceuticals (ASX:CUV).

The energy sector rose for its second straight day amid the moves in Kazakhstan and the political unrest in Libya, Russia, and Ukraine boosting oil prices higher. Woodside Petroleum (ASX:WPL) added 2.3 per cent, Origin Energy (ASX:ORG) rose 1.1 per cent, while Santos (ASX:STO) closed 0.7 per cent higher.

Along with the energy majors, utilities also propelled higher by AGL (ASX:AGL) adding 8.6 per cent as the third best performing sector.

After rises in base metal prices and the recent surge in thermal coal prices amid the export ban by Indonesia, there were strong performances in the materials sector. BHP (ASX:BHP) jumped 2.4 per cent, Rio Tinto (ASX:RIO) rose 2.3 per cent amid a target price upgrade, while Fortescue Metals (ASX:FMG) closed 1.3 per cent higher. Whitehaven Coal (ASX:WHC) soared 5.1 per cent.

The financial sector closed mixed with Commonwealth Bank (ASX:CBA) outperforming adding 0.7 per cent, followed by Westpac (ASX:WBC), up 0.4 per cent. Macquarie Group (ASX:MQG) was the biggest decliner, down 1.8 per cent, followed by ANZ Bank (ASX:ANZ) and National Australia Bank (ASX:NAB) both closing 0.1 per cent lower.

Supply chain concerns and staff shortages dragged on retailers as the Omicron wave continued to dent consumer sentiment and spend. Wesfarmers (ASX:WES) fell 2.3 per cent, Coles (ASX:COL) slid 1.6 per cent and Woolworths (ASX:WOW) closed 0.7 per cent lower. Elsewhere JB Hi-Fi (ASX:JBH) tumbled 2.4 per cent, while Harvey Norman (ASX:HVN) closed 1.2 per cent lower.

For a breakdown on what moved the market in detail, join me for the wrap report yesterday here

SPI futures

Taking all of this into the equation, to kickstart today’s session, the SPI futures are pointing to a 0.6 per cent fall.

Local economic news

The Australian Bureau of Statistics is set to release the November print on both retail trade and international trade which are the figures around exports and imports. For retail trade, it’s expected to grow 3.8 per cent for the month.

We also have the weekly ANZ and Roy Morgan consumer confidence reading with focus on how the Omicron wave is slated to move the needle around sentiment.

Company news

Westpac (ASX:WBC) is set to delist its American depositary shares from the New York Stock Exchange later this month. The move comes as part of Westpac’s plans to simplify its share listings to Westpac ordinary shares offered to investors here in Australia and New Zealand.

Westpac has had an American depositary shares program since October 1989 managed by The Bank of New York Mellon.

The delisting is expected to occur ten calendar days after the filing so that trading will be suspended on the last day of this month.

Shares in Westpac (ASX:WBC) closed 0.4 per cent higher to $21.83 yesterday.

Dividend-pay

Gryphon Capital Income Trust (ASX:GCI)
Metrics Income Opportunities Trust (ASX:MOT)
Metrics Master Income Trust (ASX:MXT)
Perpetual Credit Income Trust (ASX:PCI)

Commodities

Iron ore has lost 1.5 per cent to US$125.45. Its futures are pointing to a rise of 1.1 per cent.

Gold added $3.30 or 0.2 per cent to US$1801 an ounce. Silver was up $0.08 or 0.4 per cent to US$22.49 an ounce.

Oil fell $0.51 or 0.7 per cent to US$78.39 a barrel.

Currencies

One Australian Dollar at 8:15am has weakened since yesterday, buying 71.75 US cents (YP:71.94), 52.85 Pence Sterling, 82.68 Yen and 63.35 Euro cents.