US markets weaker, Hedge funds target ASX lithium companies



US equities fell overnight as Wall Street braced for big company earnings reports slated for later in the week that could signal how inflation is impacting businesses.

The earning season kicks off with earnings from PepsiCo and Delta Air Lines tomorrow and Wednesday, followed by bank stocks JPMorgan Chase, Morgan Stanley, Wells Fargo and Citigroup later in the week.

Amazon and Alphabet shed more than 3 per cent each. Tesla slipped 6.5 per cent while Netflix slid nearly 5.2 per cent. Nike, Caterpillar and Walt Disney dropped more than 2 per cent, dragging the Dow lower.

Twitter shares fell 11.3 per cent after Elon Musk terminated a deal worth $44 billion to buy the social media company. The billionaire took issue with the number of bots and fake accounts on the platform and said Twitter wasn’t being truthful about how authentic activity on the platform was. After the close Twitter’s lawyers said in a letter that Elon Musk’s effort to terminate the acquisition was invalid and wrongful. This is a story that will drag on for a long time.

Casino stocks Wynn Resorts and Las Vegas Sands led Monday’s losses, falling more than 6 per cent each on the back of worsening Covid trends in China, including a week-long shutdown of casinos in Macau. Shanghai also detected its first case of the BA.5 subvariant.

In further China news, Ganfeng Lithium has agreed to buy Argentinean-focused mining group Lithea for up to $962m, as China steps up its battle for the metals needed to power electric vehicles.

In Australia today watch out for the continued short-selling attack on lithium companies like Lake Resources (ASX:LKE) and Core Lithium (ASX:CXO), with J Capital issuing its latest short report on Monday, targeting Australian lithium producer Lake Resources. Of course these reports are always released after the event – post J Capital already securing a short position in the company. Both Core and Lake have around 8-9 per cent of their issued capital short sold at present – with both stocks only recently moving into the ASX200 – an event that has made scrip readily available to borrow for short sellers. The last time J Capital issued a short report was on Vulcan Resources (ASX:VUL) – when the report had some factual errors which later resulted in J Capital issuing an apology.

Lithium companies in the US were weaker, with Albermarle down 3 per cent, Livent 3.7 per cent and Lithium American 3.8 per cent. It appears that lithium, one of the markets biggest momentum trades is now being targeted by hedge funds.

Bitcoin futures were off 6.2 per cent, but held above $20K.

WTI crude ended down 0.7 per cent in choppy trading.

Copper settled down 2.6 per cent after capping its fifth-straight week of declines on Friday.

In Australia today the SPI futures are pointing to an 18 point gain post yesterday’s weakness.

Figures around the globe

US markets closed lower. The Dow Jones fell 0.5 per cent to 31,174, the S&P 500 lost 1.2 per cent to 3,854 and the Nasdaq dropped 2.3 per cent to 11,373.

Across the Atlantic, European markets closed mostly lower. Paris fell 0.6 per cent, Frankfurt lost 1.4 per cent and London’s FTSE closed flat.

Asian markets closed mixed. Tokyo’s Nikkei gained 1.1 per cent, Hong Kong’s Hang Seng lost 2.8 per cent and China’s Shanghai Composite lost 1.3 per cent.

Yesterday, the Australian sharemarket dropped 1.1 per cent or 76 points to 6,602.

Ex-dividends

There are two companies set to trade without the right to a dividend:

Metcash (ASX:MTS) is paying 11 cents fully franked.
Sunland Group (ASX:SDG) is paying 30 cents fully franked.

Dividends payable

A number of companies are set to pay eligible shareholders today, including:

NZME (ASX:NZM)
SPDR S&P/ASX 200 Financials EX A-REIT (ASX:OZF)
SPDR S&P/ASX 200 Resources (ASX:OZR)
SPDR S&P/ASX 50 (ASX:SFY)
SPDR S&P/ASX Small Ordinaries (ASX:SSO)
SPDR S&P/ASX 200 (ASX:STW)
SPDR MSCI Australia Select High Dividend Yield (ASX:SYI)

Commodities

Iron ore futures are trading flat at US$114.05 a ton.

Iron ore futures are pointing to a 3.3 per cent fall.

Gold lost $10.60 or 0.6 per cent to US$1731.70 an ounce.

Silver was down $0.10 or 0.54 per cent to US$19.13 an ounce.

Oil fell $0.70 or 0.7 per cent to US$104.09 a barrel.

On the London Stock Exchange, Rio lost 0.5 per cent, BP lost 0.5 per cent and Shell lost 0.6 per cent.

Currencies

One Australian dollar at 7:10 AM has weakened compared to the US dollar yesterday, buying 67.36 US cents (Mon: 68.51 cents), 56.65 Pence Sterling, 92.60 Yen and 67.08 Euro cents.

source

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