Charts and caffeine: Will Wall Street's relief rally hit the ASX?

The Morning Wrap

Livewire Markets

Welcome to Charts and Caffeine - our brand new daily markets wrap featuring the best charts and reads from across Livewire's team of experienced editors. Let's get you caught up on the overnight session.

  • Dow Jones 31,880.24 + 1.98%
  • Nasdaq 11,535.27 +1.59%
  • S&P 500 3,973.75 + 1.86%
  • CBOE VIX 28.48 -3.23%
  • FTSE 100 7513.44 +1.67%
  • CAC 40 6358.74 +1.17%
  • DAX 14175.40 +1.38%

  • DXY 102.09 -1.03%
  • US10YR 2.854% +0.0641
  • Brent Crude US$113.47/bbl +0.82%

This week, we'll get more insight into the retail space stateside with earnings from Costco (NAS:COST) and Best Buy (NYSE: BBY) and you'd think they should be feeling nervous after Target and Walmart's efforts last week. 

On all things macro, there is only one thing worth watching - the Federal Reserve minutes. Hiking is a definite moving forward, the size of it may be in question.

Stock(s) to watch

Bubs (ASX:BUB) and A2 Milk (ASX:A2M) could be watching briefs after the United States said it was now able to receive baby formula again. The country has been suffering from a shortage of products, with US President Joe Biden invoking the Defense Production Act to give two companies priority on the ingredients and equipment required to make it. 

In anticipation, Citi upgraded A2 Milk to a neutral from sell - a move that sent its share price north but nowhere near making up the losses over the past few months.

Source: Trading View
Source: Trading View
(Source: Macrobond Financial)
(Source: Macrobond Financial)

The war in Ukraine is affecting food supplies all around the world, with the Indian ban on wheat exports making things just that much more challenging. While that heals the concerns of local consumers, it certainly makes the global supply chain more constrained.

At its peak, the Betashares FOOD ETF was up nearly 20% year-to-date. It's pared those gains since but the trade has still worked out pretty well and could last a long while yet depending on how this conflict develops.

The fast stat

The RBA’s balance sheet tripled to $617 billion during the pandemic and will likely remain much larger than pre-COVID-19 levels even after it winds down its stimulus.

Yesterday, Reserve Bank Assistant Governor Christopher Kent said the roll-off of all this bond-buying could take up to a decade. That should be good news for the Australian dollar (in case your portfolio is banking on a lower currency).  

The quote

The inheritance from the old government to the new government is full of challenges, and that’s why I feel a sense of responsibility about being upfront with people about the nature and magnitude of these challenges.

Today's quote (and swipe, I might hasten to add) comes from new Treasurer Jim Chalmers. Chalmers, in noting the steady and notable decline in real wages, said inflation is almost out of control - choosing to blame that on inheriting a bad Budget. 

If the new Treasurer wants to avoid what (real) out-of-control inflation looks like, take a look at the UK's inflation effort over the past few years.

Go, inflation, go! 
Go, inflation, go! 

The tweet

There is always another sarcastic take on the housing affordability crisis in Australia - and this one hits a little too close to home. If only election cycles actually presented lasting ideas for making your first home that little bit more bearable.

No, I'm not talking about the ideas listed here:

Access to Super? A stake in your mortgage? Have we got the answer to Australia's housing affordability crisis?

The best in business news

Biden’s Latest Taiwan Gaffe Hikes Suspicion, Tensions in Beijing (Bloomberg): The White House is walking back, back again after President Joe Biden. said he would initiate a military defence of Taiwan with US aid - adding "that's the commitment we made."

The only problem? The official White House policy is quite different. The US line is best described as "strategic ambiguity" - meaning some aid may be provided to Taiwan however the US does not intend to actually send forces to the region. That's quite the difference!

Don’t let Taiwan dominate relations with China, Kissinger warns (AFR): On a similar theme, former US Secretary of State Henry Kissinger warned the current administration on changing the script when it comes to Taiwan. 

Airbnb to Quit China Business Amid Lockdowns, Competition (WSJ): The business fallout from doing work in China continues. This time, it's the zero COVID policy smashing the bottom line of Airbnb. 

Get the wrap

We're trying something new around here - a daily market preview with a sarcastic yet intelligent twist. If you've enjoyed this edition, hit follow on my profile to know when I post new content and click the like button so we know what you enjoy reading.

3 stocks mentioned

The Morning Wrap
Markets Wrap
Livewire Markets

Livewire and Market Index's pre-opening bell news and analysis wrap. Available weekday mornings and written by Chris Conway, Kerry Sun, and Hans Lee.

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