Asian Open: Wall Street broadly lower amidst volatile trade

Monday US cash market close:

• The Dow Jones Industrial fell -797.42 points (-2.37%) to close at 32,817.38
• The S&P 500 index rose -127.78 points (2.51%) to close at 34,058.75
• The Nasdaq 100 index fell -518.449 points (-3.75%) to close at 13,319.38

Asian futures:

• Australia's ASX 200 futures are down -84.5 points (-1.19%), the cash market is currently estimated to open at 6,954.10
• Japan's Nikkei 225 futures are down -170 points (-0.67%), the cash market is currently estimated to open at 25,051.41
• Hong Kong's Hang Seng futures are up 26 points (0.12%), the cash market is currently estimated to open at 21,083.63
• China's A50 Index futures are down -58 points (-0.42%), the cash market is currently estimated to open at 13,846.27

The equity markets selloff which began in Asia swiftly made its way through the European and US session, with all major benchmarks and cyclical sectors in the red. Ultimately, fears of stagflation were reignited as oil prices ‘on fire’ which saw investors rush for the exit.

A couple of key milestones were achieved, with the Dow Jones entering a technical correction as it fallen over -10% from its record high, and the DAX entered a technical bear market having fallen over -20% from its own record high. On a closing basis, the Nasdaq 100 is just 0.02% from confirming its own bear market.

ASX 200:

75% of the ASX 200 stocks declined yesterday, although energy stocks were a clear winner as they tracked oil prices higher. The sector rallied over 5% yesterday during its most bullish session since November 2020 and rose to a post-pandemic high.

But it’s not clear they will continue higher today. But with Western leaders umming and ahing over whether they really will try to embargo Russia oil, WTI gave back most of its earlier gains and it’s likely to see the energy sector struggle today. And the weak lead from Wall Street and AXS futures pointing lower, a break and hold below 7,000 today is could also on the cards for the ASX 200.

ASX 200: 7038.6 (-1.02%), 07 March 2022

• Energy (5.25%) was the strongest sector and Information Technology (-4.68%) was the weakest
• 2 out of the 11 sectors closed higher
• 9 out of the 11 sectors closed lower
• 4 out of the 11 sectors outperformed the index
• 41 (20.50%) stocks advanced, 151 (75.50%) stocks declined

Outperformers:

• 12.26% - Coronado Global Resources Inc (CRN.AX)
• 9.52% - Woodside Petroleum Ltd (WPL.AX)
• 7.08% - Zimplats Holdings Ltd (ZIM.AX)

Underperformers:

• -8.16% - Imugene Ltd (IMU.AX)
• -7.93% - Qantas Airways Ltd (QAN.AX)
• -7.52% - PEXA Group Ltd (PXA.AX)

Volatile trade for commodities

London Nickel prices rose over 67% yesterday and the London gas and oil futures contract was up over 8%, on concerns of an energy supply disruptions via embargoes. And UK PM’s comments that they may need increase oil and gas production as they wean themselves off of Russian energy suggests this may be a slow process to adjust, which is further supporting London pricing.

WTI futures rose close to 13% at yesterday’s open and traded above $130 before pulling back to $120. Brent Heating futures printed an intraday record high and gained over 10% by the close.

Key metals such as palladium, platinum and copper tracked oil prices higher and then lower. Palladium hit a record high but trades just beneath its open, and copper printed a bearish outside day after tapping $5 for the first time in history.                

Gold bucked the metals trend and held onto most of the day’s gains, trades just below $2000 after tapping it earlier in the session and appears set to test its record high.

US dollar reclaims safe-haven flows

The US dollar was top of the leader board yesterday, rising against all other FX majors. EUR/USD fell to a 22-month low, GBP/USD hit a 16-month low, and even AUD and NZD traded lower by the close despite posting strong gains earlier in the day. Looking across the Aussie pairs, they’ve had an epic run but it now appears set for at least a pause in trend, if not a corrective phase.

AUD/USD had risen nearly 7% from its YTD low by yesterday’s high, which met resistance at the monthly R2 pivot and upper trend channel. Moreover, being an elongated bearish engulfing candle, it could be a key reversal which closed below its 200-day MA. At the very least this serves as a warning for bulls to tread carefully, tighten stops of step aside. But a break below 0.7300 would take it back beneath its broken trendline and be of interest for countertrend traders.

Up Next (Times in AEDT)

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