Morning Wrap: S&P 500 snaps five-day losing streak, oil spirals lower, ASX set to bounce

ASX Futures (SPI 200) imply the ASX 200 will open 24 points higher, up 0.33%.

The S&P 500 breaks a five-day losing streak with technology stocks leading to the upside, the Energy sector continues to tumble as oil prices fall more than 10% this week, the FTC seeks to block Microsoft's US$69bn takeover of Activision Blizzard and iron ore briefly hits US$110 a tonne.

Let's dive in.

Overnight Summary

Thu 08 Dec 22, 9:32pm (AEDT)

US Sectors

Thu 08 Dec 22, 9:32pm (AEDT)

MARKETS

The S&P 500 snapped a five-day slide and finished close to session highs of 1.02%. Growth was able to pull ahead of defensive stocks for the session but still underperforming week-to-date.

• Technology led to the upside but still down around -3.4% for the week

• Defensives followed closely behind with notable gains from Healthcare, Real Estate, Utilities and Industrials

• Energy was again the worst performing sector as oil prices continue to puke. WTI is down -12.4% for the week, while Brent crude is -13.75%

• 56% of stocks advanced

• 47% of stocks trade below their 200-day moving average (47% on Thursday, 40% a week ago)

STOCKS

GameStop (+11.05%) shares surprisingly rallied after posting a wider-than-expected loss in the third quarter.

• “[GameStop] is attempting to accomplish something unprecedented in retail ... seeking to transform a legacy business once on the brink of bankruptcy.” - CEO Matthew Furlong

Amazon (+2.5%) plans to roll out a TikTok-like feature in its app to enable customers to buy products from a customised feed of photos and videos.

Microsoft (+1.3%) faces an antitrust complaint from the Federal Trade Commission regarding its planned US$69bn takeover of Activision Blizzard.

• "Microsoft has already shown that it can and will withhold content from its gaming rivals. Today we seek to stop Microsoft from gaining control over a leading independent game studio and using it to harm competition in multiple dynamic and fast-growing gaming markets.” - FTC

Disney (+0.5%) launched a new ad tier with 100 advertisers. Disney+ (no ads) costs US$10.99/month while Disney+ Basic (with ads) costs US$7.99/month.

• “We purposely paced ourselves in terms of the ramp-up of those advertising campaigns, knowing that by the middle of next year, when we have better targeting and measurement … we will be able to do much broader and more expansive audience-based buying” - Disney Ad Sales Chief Rita Ferro

WORLD NEWS

• Tesla to shorten production shifts, slow new hires in Shanghai (Bloomberg)

• Bond market points to still-hawkish Fed in battle against inflation (FT)

• Easing covid restrictions in China could fuel global inflation (Bloomberg)

• Consumers continue to drain savings, heading towards exhaustion (Axios)

• Beijing running out of medical supplies (FT)

• BofA's Subramanian calls tech a value trap, further rotation into energy (Bloomberg)

ECONOMY

No major economic developments. Next week will be a big one, notably:

COMMODITIES

Iron ore futures rose 0.3% to US$109.65 a tonne.

Oil prices reversed gains of 3-4% to close more than -1.0% lower.

• “Crude prices spiked higher after the Keystone Pipeline was shut after a leak in Nebraska … Today’s headlines appear to be only short-term negative for supplies but don’t change anything with the deteriorating crude demand outlook.” - Oanda senior market analyst, Ed Moya

Gold prices edged higher as it braces for a big week of upcoming inflation data points and the Fed’s interest rate decision.

QUICK BITES

A few interesting quotes from high-profile CEOs:

• Wells Fargo CEO Charles W. Scharf: "There's a slowdown happening. There's no question about it ... growth is shrinking that we've seen in card ... these return to normal trends we see will continue, and some individual and companies will be more impacted than others."

• United Airlines CEO Scott Kirby: "It feels like business travel, and this probably is indicative of pre-recessionary kind of behavior, has plateaued even though our total revenues are still going up."

• Costco CEO Walter Craig Jelinek: "Our jewelry business has slowed down. If you look at the really high-end television sets, they've slowed down. I think right now people are very, very value-conscious. They're always value-conscious, but I think more so now than ever."

Industry ETFs

Thu 08 Dec 22, 9:32pm (AEDT)

ASX Morning Brief

The ASX 200 is set to open +0.33% higher. The question is: Is this because stocks are responding to positive news or is the selling simply facing some exhaustion after a 3-day losing streak.

A few big names and leading sectors are looking a little heavy, notably:

• BHP was within 3% of all-time highs

• CBA was trading less than 1% away from all-time highs in late November. Now its down -3.6% since the 25 November high

• ANZ experienced a rather outsized -1.8% fall on Thursday

• Lithium stocks like Pilbara Minerals and Allkem are rolling over into key inflection points

The market is set to open higher but a lot more is needed to make amends for the past three days of distribution. Let's see if the open can hold up.

Sectors to watch

Energy: Weakening global demand continues to weigh on oil prices, which are now on a four day losing streak. Woodside finally gave into the freefall on Thursday, down -4.3%.

Copper: Copper prices rose 0.6% overnight to US$3.88/lb. Base metals have held up relatively well in recent weeks in anticipation of further lockdown easing in China. The Global X Copper Miners ETF rose 2.2% overnight to reflect the uptick in spot prices. We're seeing names like 29Metals show some sideways action after a big run up in early November.

Copper (Source: TradingView)

29Metals (Source: TradingView)

Key Events

Stocks going ex-dividend over the next week:

• Fri: None

• Mon: None

• Tue: None

• Wed: None

• Thu: Plato Income Maximiser (PL8)

ASX corporate actions occurring today:

• Dividends paid: CSR (CSR), Nufarm (NUF), Tamawood (TWD), Beacon Minerals (BCN), PTB Group (PTB), TerraCom (TER)

• Listing: Orpheus Minerals (ORP), Patriot Lithium (PAT)

Economic calendar:

• 12:30 pm: China inflation rate

• 12:30 am: US producer price index

• 2:00 am: US consumer sentiment