Asian Open: Futures point to a brighter open, commodities lower

Tuesday US cash market close:

• The Dow Jones Industrial rose 599.1 points (1.82%) to close at 33,544.34
• The S&P 500 index rose 89.34 points (2.51%) to close at 34,058.75
• The Nasdaq 100 index rose 411.924 points (3.16%) to close at 13,458.56

Asian futures:

• Australia's ASX 200 futures are up 41 points (0.58%), the cash market is currently estimated to open at 7,138.40
• Japan's Nikkei 225 futures are up 320 points (1.27%), the cash market is currently estimated to open at 25,666.48
• Hong Kong's Hang Seng futures are up 547 points (2.99%), the cash market is currently estimated to open at 18,962.08
• China's A50 Index futures are up 179 points (1.45%), the cash market is currently estimated to open at 12,891.98

Reports continue to suggest that Russia has made little to no progress on their advance of Kyiv, and there remains hope that it could be over sooner than expected following talks with Russia on Tuesday. Moreover, Zelensky said that Ukraine may be willing to accept a security guarantee to stop that war, although this would mean they would be unable to join NATO.

Tech stocks bounce from key support

The Nasdaq led Wall Street higher with a 3.2% rally, the S&P 500 rose 2.1% and the Dow was up 1.8%. The Nasdaq 100 momentarily flirted with a cross below 13k – where several technical levels reside, before reversing higher and forming a bullish outside day. In the area we have the May lows, 38.2% Fibonacci level, 100-week eMA and of course the psychological round number to help provide technical support, at least of the near-term.

ASX 200:

ASX 200: 7097.4 (-0.73%), 15 March 2022

• Financial (0.99%) was the strongest sector and Materials (-3.74%) was the weakest
• 5 out of the 11 sectors closed higher
• 6 out of the 11 sectors closed lower
• 7 out of the 11 sectors outperformed the index
• 79 (39.50%) stocks advanced, 109 (54.50%) stocks declined

Outperformers:

• +27.3% - Uniti Group Ltd (UWL.AX)
• +3.7% - Dicker Data Ltd (DDR.AX)
• +3.25% - Healius Ltd (HLS.AX)

Underperformers:

• -19.42% - Yancoal Australia Ltd (YAL.AX)
• -10.29% - Chalice Mining Ltd (CHN.AX)
• -9.36% - Champion Iron Ltd (CIA.AX)

Producer prices higher on gasoline and food

Perhaps not so surprisingly, gasoline and food were the main components behind higher producer prices in February, which rose 10% y/y (0.8% m/m) whilst core PI rose 6.6% y/y (0.2% m/m). It provides yet more evidence (as if more was really needed) that inflation is likely to remain high over the coming months and will do little to dispel any expectation of a Fed hike today.

US dollar mixed ahead of today’s FOMC meeting

The US dollar index remains just below its 22-month high ahead of today’s meeting, although USD/CHF broke above 0.9400 and tested its 200-week eMA. USD/JPY looks comfortable above 118, although its volatility has finally subsided after a strong bullish breakout last week. AUD and EUR are effectively flat by the close.

CHF and JPY were the weakest majors whilst commodity majors CAD and NZD were the strongest. Whilst this is in line with a risk-on session, we think it is more of a case of repositioning after a spell of risk-off.

Oil lips below $100

With hopes that war could be coming to an end, concerns over supply chain disruptions are also easing, which has seen commodity prices continue to pull back. Brent and WTI futures closed below $100 for the first time in seven days. But it has been such a wild ride over that period it feels much longer, with both markets down around -30% over the past five sessions.

Gold is another market which has fallen from grace, which touched a low of 1908 before recovering to 1928. Platinum shed around -4.3%, and silver down -0.6%.

We can see on the daily chart that silver has closed below a broken trendline for a second consecutive day. With FOMC looming it’s likely we’ll see limited range trading ahead of the meeting, but volatility could return after it. We’re keen on exploring potential shorts below 25.30 (whether it be fading into minor rallies or entering a break of yesterday’s low), whilst a break above 52.30 places it onto the back burner. Initial downside target is around 24.0, near the monthly pivot point and 50/200-day eMA’s.

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