Asian Open: Best day for WTI in 22 months on supply concerns

Thursday US cash market close:

• The Dow Jones Industrial rose 417.66 points (1.23%) to close at 34,480.76
• The S&P 500 index rose 53.81 points (2.51%) to close at 34,058.75
• The Nasdaq 100 index rose 161.815 points (1.16%) to close at 14,118.60

Asian futures:

• Australia's ASX 200 futures are up 27 points (0.37%), the cash market is currently estimated to open at 7,277.80
• Japan's Nikkei 225 futures are up 10 points (0.04%), the cash market is currently estimated to open at 26,662.89
• Hong Kong's Hang Seng futures are down -218 points (-1.02%), the cash market is currently estimated to open at 21,283.23
• China's A50 Index futures are down -30 points (-0.22%), the cash market is currently estimated to open at 13,594.35

Russia is reported to have made no further progress on their advance on Ukraine, with senior officials pointing to signs of low morale among Russia’s troops. Joe Biden is to speak to Xi Jin Ping today for the first time since Russia invaded Ukraine and is expected to warn the Chinese leader against aiding Russia in any way.

Wall Street extended its rally for a third day which saw the S&P 500 lead the way with a 2.5% rally. All 11 sectors posted gains, led by energy and materials sectors. The Nasdaq 100 rose 1.2% and closed above 14k, the Dow was up 1.2% and closed above its 50-day eMA.

ASX 200:

Trading on ASX24 was halted yesterday due to technical issues but all systems are now back up a running.

Energy and materials stocks are expected to outperform today in light of rising commodity and (in particular) oil prices overnight. 7200 is a key level of support over the near-term, with the 7340/58 resistance zone in focus for bulls.

ASX 200: 7250.8 (1.05%), 17 March 2022

• Info Tech (3.55%) was the strongest sector and Utilities (-0.62%) was the weakest
• 9 out of the 11 sectors closed higher
• 2 out of the 11 sectors closed lower
• 4 out of the 11 sectors outperformed the index
• 143 (71.50%) stocks advanced, 44 (22.00%) stocks declined

Outperformers:

• +10.14% - Zip Co Ltd (Z1P.AX)
• +7.46% - Novonix Ltd (NVX.AX)
• +6.6% - Magellan Financial Group Ltd (MFG.AX)

Underperformers:

• -4.46% - Coronado Global Resources Inc (CRN.AX)
• -4.08% - Meridian Energy Ltd (MEZ.AX)
• -2.39% - Yancoal Australia Ltd (YAL.AX)

Best day for WTI since May 2020

Yesterday was oil’s most bullish day since May 2020. And when you consider it was trading around $20 back then, that’s quite some achievement. The excitement stemmed from warnings from IEA that up to 3 million bpd of Russian oil could be cut off, allowing oil to rally over 8%. WTI found support at its 50-day exponential MA and closed above its 20-day before finding resistance around $104. Today we’d be keen on seeking dips towards $99.20 / Wednesday’s high, for a break above $104 to brings historical highs around $110 into focus.

Commodities bounce

China’s vow to provide more stimulus provided commodities a new lease of life overnight. Copper rallied over 2% for a second day, palladium rose from tis 50-day eMA and palladium is back above $1000.

The Aussie rebounds with commodities

The Australian dollar retained its lead of FX majors yesterday after a strong employment report (and very hawkish Fed) increased the pressure on RBA tighten policy sooner. A broad rebound in commodity markets also played its part in the Aussie’s success. AUD/USD rose to just shy of 74c, AUD/CHF has risen to a 5-month high although met resistance at its 50-month eMA and trades just below the October 2021 high.

GBP/AUD fell to a 4-day low after traders were disappointed with a cautious 25-bps hike from the BOE. Rates were hiked to 0.75% yet concerns over the outlook, which stemmed from high energy costs, was the reason the Governor himself to dissented. Some traders were also expecting 50 bps hike, resulting in a weaker pound against all majors except the dollar.

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