Money flows to lithium, coal, oil again. Tech sours as rate rises will be aggressive Money flows to lithium, coal, oil again. Tech sours as rate rises will be aggressive Money flows to lithium, coal, oil again. Tech sours as rate rises will be aggressive

Money flows to lithium, coal, oil again. Tech sours as rate rises will be aggressive

Equities 6 minutes to read
Jessica Amir

Market Strategist

Summary:  Inflation too hot to hand, markets brace for 8 US rate hikes. The oil price rises 7% to $115. Japan faces a historic power crunch. While coal mines expand and lithium stocks take off in Australia. Why to expect volatility till the end of quarter, expect iron ore stocks to rise again, along with oil giants. Could the AUD to rally up and the Euro decline further?

Co-written by Market Strategists Jessica Amir in Australia, Redmond Wong in Hong Kong, Charu Chanana in Singapore.

What’s happening in equites that you need to know?

  • The Australian share market (ASX200) punched 0.9% higher, (to 7,341 points), seeing the market close at highest level in since 19 January, above a key hurdle (a resistance level) its 200 day moving. Meaning, we could see the ASX200 hitting higher highs. Why? Well the Aussie share market is made up of 30% commodities stocks, many of which are thriving in this new cycle. The theme of the day was energy. All leaders in the ASX are either supplying clean energy (lithium) or are selling petroleum and or coal. Battery mineral suppliers lithium ASX200 newcomers AVZ (AVZ) rose 6% after entering the benchmark index yesterday. Another lithium star on the block, Liontown Resources (LTR) rose 6%. While the world’s biggest mining giant BHP (BHP) and the ASX’s biggest stock, BHP shares rose 5%, after China announced it would pledge more stimulus to support its economy. And BHP makes most of its money from China. Meanwhile coal company, New Hope (NHC) shares surged almost 10% after reporting its earnings surged 582% in the half year, and it will pay a special dividend as it can see thermal coal prices heading higher. The CEO says it’s forward sales book will support robust returns for the company, given supply remains constrained. Meanwhile the company announced it gained approval to expand its coal mine.
  • In Asia Hong Kong’s Hang Seng (HSI.I) and China’s CSI300 (000300.I); Hang Seng Index and Hang Seng TECH Index (HSTECH.I) rose 1% while CSI300 was little changed. China Evergrande (03333), Evergrande Properties Services (06666) and China Evergrande  New Energy Vehicle (00708) announced delays in reporting results. During audits, it was found that RMB13.4 billion of Evergrande Properties Services’ bank deposits had been sieged by banks as a result of the company’s guarantees to third parties. Evergrande group’s management holds an investment meeting this evening. Alibaba (09988) rallied over 4% following an increase of its share buyback $25 billion from $15 billion. Pinduoduo ADR (PDD) lost over 6% overnight in the U.S. after revenue miss. HK & China Gas (00003) fell as much 15% after earnings miss. 
  • Also in Asia, Japan has a historic power crunch. The Japanese government has issued a historic power supply warning in Tokyo, on the back of cold weather and several power plant outages after powerful earthquakes last week. Power reserves fell as low as 0% today in key cities of Tokyo and Tohoku. Tepco (JP: 9501) said it would receive electricity from other regional utilities to overcome the power crunch. Japan's biggest utilities may also be forced to boost output from gas-fired power plants and seek LNG supplies from the spot market. USD/JPY rose to a 6-year high, prompting gains in Nikkei 225 of 1.4% and 1.3% in the Topix with Powell’s hawkish comments from last night implying a 50bps hike is possible in May.
  • In the US, equities could be headed for a sobering Tuesday. The S&P 500 (US500.I) and Nasdaq 100 (USNAS100.I), are tipped to open lower. But a bright spark will once again be oil stocks as the oil rise jet packed back up 7% to $115.

What you need to consider

  • Tech stock rout is likely to get worse. Market are now pricing in the US Fed Reserve could rise interest rates 8 times this year, instead of 7, and rise interest rates as high as 2.5%. Simply, this means companies that companies with higher debt, will be doing it tough, as their debt repayments rise. Plus inflation is too hot to handle. The Fed doesn’t want 10% inflation. So if you have tech stock gains, consider taking profits and moving to where money is flowing.
  • Extra volatility ahead till end of month and quarter. On top of markets bracing for triple Rs (record inflation, rising rates and a possible recession), there is extra volatility in markets right now, as it’s quarterly rebalance time, where investment managers adjust portfolios (take profits from stocks that are up this quarter (i.e. commodities) and are forced to buy into underperforming downward facing tech stocks). Plus you will likely see misleading gains in tech stocks, as traders close their short positions in tech stocks. So expect short lived gains in tech – before the sector likely falls again, while commodities rally up.

Trading ideas

  • Iron ore is a hot commodity again. With China putting state owned firms to buy minerals and metals, and with China ramping up stimulus iron ore stock are on fire and are hitting new highs. BHP, Rio, Champion Iron and Fortescue Metals, and Vale are setting highs and are worth watching or long term investing in.
  • Oil is heading higher again. Not good for consumers, but good for oil investors and investors in oil equities. Woodside Petroleum (WPL) on the ASX is a key beneficiary, along with Occidental Petroleum (OXY) in the US, with both having secure US rigs and 30+ year resources to call on, at a time when banks won’t lend to new/junior explorers.
  • Declining Euro. As the market turning its focus back to Fed tightening, the recent rallies in Chinese as well as global equity markets are at risk of losing momentum. The outlook of rising US interest rates outpacing those in Europe will pressure the Euro with the possibility of declining towards the March 7 low of 1.08. 
  • Further rise in Singapore’s core CPI on Wednesday will prompt more tightening moves from MAS. The hawkish Fed is likely to prompt more policy tightening from the Monetary Authority of Singapore (MAS) in April, even as most other central banks in Southeast Asia will still likely maintain their accommodative policies. Rising core inflation in Singapore means the curve will be steepened, and that should support the SGD.  Wednesday’s CPI release from Singapore remains on a key watch ahead of the April policy meeting.

Earnings to watch

Hong Kong & mainland China

  • Mar 22: Anta Sports (02020), Chow Sang Sang (00116), CSPC (01093), Minth (00425), Shimao Services (00873), Wuxi Bio (02269), Xiaomi (01810)
  • Mar 23: AAC (02018), China Mobile (00941), CIMC Enric (03899), Fosun (00656), Geely (00175), Haidilao (06862), Kingsoft (03888), Tencent (00700), (TCOM)
  • Mar 24: BAIC Motor (01958), China Life (02628), China Overseas Property (02669), China Resources Beer (00291), NIO (09866)
  • Mar 25: Greentown Service (02869), Longfor (00960), Meituan (03690)

For a global look at markets – tune into 
our Podcast

For prior Australian market and APAC updates - click here. 


Saxo Capital Markets (Australia) Limited prepares and distributes information/research produced within the Saxo Bank Group for informational purposes only. In addition to the disclaimer below, if any general advice is provided, such advice does not take into account your individual objectives, financial situation or needs. You should consider the appropriateness of trading any financial instrument as trading can result in losses that exceed your initial investment. Please refer to our Analysis Disclaimer, and our Financial Services Guide and Product Disclosure Statement. All legal documentation and disclaimers can be found at

The Saxo Bank Group entities each provide execution-only service. Access and use of Saxo News & Research and any Saxo Bank Group website are subject to (i) the Terms of Use; (ii) the full Disclaimer; and (iii) the Risk Warning in addition (where relevant) to the terms governing the use of the website of a member of the Saxo Bank Group.

Saxo News & Research is provided for informational purposes, does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of our trading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. No representation or warranty is given as to the accuracy or completeness of this information. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. No Saxo Bank Group entity shall be liable for any losses that you may sustain as a result of any investment decision made in reliance on information on Saxo News & Research.

To the extent that any content is construed as investment research, such content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication.

None of the information contained here constitutes an offer to purchase or sell a financial instrument, or to make any investments.Saxo Capital Markets does not take into account your personal investment objectives or financial situation and makes no representation and assumes no liability as to the accuracy or completeness of the information nor for any loss arising from any investment made in reliance of this presentation. Any opinions made are subject to change and may be personal to the author. These may not necessarily reflect the opinion of Saxo Capital Markets or its affiliates.

Please read our disclaimers:
- Full Disclaimer (
- Analysis Disclaimer (
- Notification on Non-Independent Investment Research (

Saxo Capital Markets (Australia) Limited
Suite 1, Level 14, 9 Castlereagh St
Sydney NSW 2000

Contact Saxo

Select region


The Saxo trading platform has received numerous awards and recognition. For details of these awards and information on awards visit

Saxo Capital Markets (Australia) Limited ABN 32 110 128 286 AFSL 280372 (‘Saxo’ or ‘Saxo Capital Markets’) is a wholly owned subsidiary of Saxo Bank A/S, headquartered in Denmark. Please refer to our General Business Terms, Financial Services Guide, Product Disclosure Statement and Target Market Determination to consider whether acquiring or continuing to hold financial products is suitable for you, prior to opening an account and investing in a financial product.

Trading in financial instruments carries various risks, and is not suitable for all investors. Please seek expert advice, and always ensure that you fully understand these risks before trading. Saxo Capital Markets does not provide ‘personal’ financial product advice, any information available on this website is ‘general’ in nature and for informational purposes only. Saxo Capital Markets does not take into account an individual’s needs, objectives or financial situation. The Target Market Determination should assist you in determining whether any of the products or services we offer are likely to be consistent with your objectives, financial situation and needs.

Apple, iPad and iPhone are trademarks of Apple Inc., registered in the US and other countries. AppStore is a service mark of Apple Inc.

The information or the products and services referred to on this website may be accessed worldwide, however is only intended for distribution to and use by recipients located in countries where such use does not constitute a violation of applicable legislation or regulations. Products and Services offered on this website is not intended for residents of the United States and Japan.

Please click here to view our full disclaimer.