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ASX Live Coverage Summary – Monday, April 13
Welcome to our coverage of the Australian Stock Exchange (ASX) for Monday, April 13. Expect a flurry of updates prior to the market opening and throughout the trading day, concluding around 2:00 PM AEST.
S&P 500 Sector Valuations
As of 9:01 AM AEST, the S&P 500’s forward price-to-earnings ratio has contracted to 20x, yet it still ranks in the 77th percentile historically over the past three decades. Technology and Consumer Staples sectors are trading at 22x, while Financials are regarded as undervalued historically.
Source: Goldman Sachs
Decline in Software Stocks
The iShares Expanded Tech-Software ETF witnessed a notable 2.5% decline, marking a new multi-year low. This ETF has dropped 7.2% over the last three sessions and is down 28.8% year-to-date. The session recorded the highest down day volume on record, significantly surpassing its 20-day average.
Source: TradingView
Positives Amidst Pessimism
Despite several setbacks, a few encouraging data points were noted:
- CTA Positioning: With a $30 billion short in S&P 500, Goldman predicts $34 billion in upcoming buying.
- AI Demand: Amazon reported a $15 billion AWS AI run rate, while Meta’s new product launches reflect strong AI growth.
- Walmart’s Remarks: The consumer is showing resilience as tax refunds boost spending, though high oil prices pose challenges.
- Delta Airlines: Announced promising demand and revenue growth forecasts for Q2.
Oil Price Surge
At 8:45 AM AEST, Brent crude oil surged 7.1% to $100.94 per barrel and is now near $102.10. LNG prices have also risen sharply, with the Dutch TTF benchmark increasing by up to 18%.
Source: TradingView
Escalating Tensions: Hormuz Blockade
A blockade of the Strait of Hormuz has been announced following stalled US-Iran negotiations.
- The US Navy will restrict vessel movements immediately.
- This blockade threatens global energy supply, as Iran has maintained high export levels compared to regional neighbours.
- Analysts warn this could worsen global energy challenges.
Source: Bloomberg
Consumer Sentiment Gloom
As of 8:38 AM, the University of Michigan’s consumer sentiment index dropped to an unprecedented low of 47.6, indicating broad economic pessimism across various demographics and increased inflation expectations.
Federal Reserve Outlook
The CME Fedwatch tool indicates fluctuations in the likelihood of Fed actions. Currently, the probability of maintaining rates through year-end stands at 44.1%, with potential rate cuts and hikes also in consideration.
Source: CME Fedwatch Tool
Inflation Insights
Despite surging energy prices, March’s core inflation data came in lower than anticipated, with core CPI increasing 0.2% month-on-month and remaining below estimates. The energy sector, however, skyrocketed with an increase of 10.9% m/m.
Earnings Season Preview
As Wall Street prepares for the Q1 earnings season, expectations highlight significant challenges, including oil price shocks and rising AI disruption.
Market Opening
As of 8:30 AM, ASX 200 futures have risen by 70 points (+0.77%). A summary of last night’s important developments indicates declining US stock benchmarks, escalated inflation rates, and a halted peace agreement between the US and Iran, leading to reduced confidence.
This summary encapsulates the current market environment, revealing both challenges and areas of cautious optimism as we enter the trading day.
