Between the Bells

The Aussie share market fell 0.15% this week (Mon-Thu), with industry sectors mixed. The consumer staples sector took the biggest hit, down 3.6%, while the tech sector managed to gain 0.5% after suffering major losses recently.

 In this week’s wrap, Sophia covers:

• (0:48) The wage price spiral
• (1:50) Why biotech company Imugene (ASX:IMU) gained the most
• (2:39) A stock to consider if you want to buy into tech
• (3:03) Infomedia (ASX:IFM) jumping 29% after acquisition proposal
• (4:10) The most traded stocks & ETFs by Bell Direct clients
• (4:46) One economic news item to watch out for

The local market jumped 1% or 70 points higher yesterday to close at 7,182 points. 

Sectors wise, the majority of the industry sectors were in the green, with the materials and tech  sectors rallying the most. Meanwhile, the consumer staples sector declined 1% and the financial sector experienced a bit of pressure with three of the big banks, CBA, WBC and NAB declining.

The best performer was Champion Iron (ASX:CIA) which lifted 5.3% after signing a deal to acquire an iron ore pelletizing facility for $2.7 million. Subject to positive findings, a joint venture may be formed to produce iron ore pellets for sale to third parties, including the feasibility partner. Travel stocks like Corporate Travel Management (ASX:CTD) and Flight Centre (ASX:FLT) performed well, despite no news from either company. What seems to have supported their gains was many international travel stocks taking off, with the rise seemingly spurred by Nasdaq-listed United Airlines Holdings (UAL), who upgraded their guidance. Meanwhile, the worst performers yesterday were PolyNovo (ASX:PNV), Sims (ASX:SGM) and Eagers Automotive (ASX:APE). 

The most traded stocks by Bell Direct clients included Fortescue Metals (ASX:FMG), Champion Iron (ASX:CIA) and Sims (ASX:SGM).

Moving to the US, stocks fell sharply, as earnings from big retailers Target and Walmart renewed fears of rising inflation. Target shares slumped 25% after its first-quarter earnings were much lower than estimated due to higher fuel and compensation costs. And Walmart, who posted earnings on Tuesday also posted earnings that fell short of expectations, citing higher fuel and labour costs. This saw the Dow Jones post its biggest loss since 2020, falling over 1,100 points. The S&P500 dropped over 4%, its worst drop since June 2020 and the tech-heavy Nasdaq index slipped 4.7%.

What to watch today:

• Following the sell-off in the US, the SPI futures are suggesting that our local market is set to open 1.8% lower this morning.
• Reporting wise, both Aristocrat Leisure (ASX:ALL) and Nufarm (ASX:NUF) will release their half-year results. We’ll also hear from Webjet (ASX:WEB). The travel company will share its full-year results. So, keep watch of those three stocks. 
• Economic news wise, all eyes will be on the unemployment rate for April that will be announced at 11:30am AEST. Consensus forecasts suggest the Aussie economy may have added between 25,000-30,000 jobs last month, and if that data comes in as expected, the nation’s official unemployment rate could drop to 3.9%, setting a multi-decade low in the process.
• Moving to commodities:
  • The oil price dropped 2% to US$109 a barrel, after government data showed US refiners had ramped up output, which eased worries of a supply crunch. 
  • The gold price lifted slightly, as a slide in US Treasury yields helped offset pressure from a firmer dollar. 
  • Other metals like silver, copper and platinum all declined between 1-2%. 
  • The spot iron ore price trading about 1.6% lower to US$125 a tonne.
• Stocks going ex-dividend today include Westpac (ASX:WBC), Pendal Group (ASX:PDL) and Virgin Money UK (ASX:VUK). This often results in the company’s share price falling, as investors take their profits.
• And finally, Adbri (ASX:ABC), Gold Road Resources (ASX:GOR) and Woodside Petroleum (ASX:WPL) are holding their AGMs today. 

Trading Ideas:

• Bell Potter have maintained its Buy rating on Eagers Automotive (ASX:APE) albeit with a reduced price target from $17.25 to $15.50. APE released a trading update and provided first-half 2022 guidance, which was in line with Bell Potter’s expectations. The company noted that demand for new vehicles continues to materially exceed supply and as a result the new car order book has increased by more than 25% since the end of December last year. A

The local market yesterday closed with a gain of 0.27%. Energy stocks lead the ASX200, up more than 2% at the close, as oil prices rallied in response to Shanghai’s reopening, and as investors await developments around a proposed EU ban on Russian oil. Utilities and materials also closed in positive territory, as did the financials, with the major banks all higher.

The 10 best performing stocks on the ASX200 yesterday included energy stocks like Beach Energy (ASX:BPT) and Whitehaven Coal (ASX:WHC), both gaining around 6%. The best performer yesterday was Lynas Rare Earths (ASX:LYC), its share price seeing some recovery this week, after last week falling to a year-to-date low of $8.37, however is now trading at $9.42. This was despite no news from the company that would be price sensitive. However, yesterday the materials index closed just over 1% higher, which boosted LYC’s share price. Meanwhile, logistics company, Brambles (ASX:BXB), was the worst performing stock on Tuesday after confirming they’ll not be moving forward with the proposal from private equity company CVC Capital Partners, which sent BXB’s shares into reverse. Shareholders took their profits as BXB fell 8% yesterday.

The most traded stocks by Bell Direct clients yesterday included Whitehaven Coal (ASX:WHC), Lynas Rare Earths (ASX:LYC), Lake Resources (ASX:LKE), BHP Group (ASX:BHP) and Westpac (ASX:WBC).

It was a strong trading session in New York overnight, as US equities were in positive territory. The Dow Jones up 1.3%, the S&P500 up 2% and the Nasdaq rallying 2.8%.

What to watch today:

• Following US equities, the ASX200 is set to rise, with the SPI futures suggesting the market will lift 0.98% at the open this morning.
• In commodities, oil is currently trading flat. There are hopes that Venezuela could supply more oil to the market, after the US extended a limited license for Chevron, which is an oil company that operates in Venezuela, allowing them to maintain operations. There have also been negotiations for future business, temporarily lifting a ban on such discussions. Additionally, a pullback in the US dollar supported bullion demand, but the gold price is slightly lower, while seaborne iron ore is also trading in the red.
• In economic data, today the wage price index for the first quarter will be released at 11:30am AEST, expected to rise to 2.5% year-over-year from 2.3% in Q4 2021.
• Watch Eagers Automotive (ASX:APE) and Telix Pharmaceuticals (ASX:TLX) as both companies will hold their AGMs today.
• Watch Aurora Energy Metals (ASX:1AE) as it lists on the ASX today.

Trading Ideas:

• Bell Potter maintain their Buy rating on Pendal Group (ASX:PDL), following a strong set of H1 results that were ahead of Bell Potter’s expectations. Bell Potter have increased their FY22 estimates due to the strong revenue and lower costs and have increased their price target to $6.80. PDL last closed at $5.08, implying 35.8% share price growth in a year.
• Trading Central have identified a bullish signal in Emerald Resources (ASX:EMR), indicating that the stock price may rise from the close of $1.12 to the range of $1.33 to $1.39 over 20 days, according to the standard principles of technical analysis.

Yesterday the market was up as much as 1% in the first hour of the session, following a strong trading session over on Wall Street, and soon after that the market started to drop, following weak economic data from China. China’s April retail sales dropped 11.1% on the year, when the market was expecting a 6% drop, so it fell almost twice the forecast. Additionally, the unemployment rate in China rose to 6.1%. 

Locally, the Australian market dropped but still managed to close with a 0.25% gain. Leading the ASX200 was transport and logistics company Brambles (ASX:BXB), which gained over 11% yesterday to its highest price in 8 months. This was after news of a potential takeover offer by private equity group CVC for $20 billion. Meanwhile, Imugene (ASX:IMU), City Chic Collective (ASX:CCX), and Zip (ASX:ZIP) declined the most. 

Bell Direct clients were trading mostly ETFs yesterday, including VAF, VEU and EMKT. 

It was a volatile session overnight in the US. The Dow Jones closed with a slight gain of 0.08%, while the S&P500 dropped 0.39%. The Nasdaq was the session’s underperformer, as tech stocks continue to fall, closing 1.2% lower. 

What to watch today:

• The SPI futures are suggesting the local market will rise 0.32% at the open this morning. 
• In economic news, today we’ll receive the RBA’s meeting minutes, at 11:30am AEST. These are the minutes from the central bank’s meeting earlier this month and it may draw some attention, as this was the meeting when the RBA lifted the cash rate. 
• In commodities, the oil price has jumped again as concerns of tighter global supplies outweighed the weakening global demand outlook. Gold and seaborne iron ore are also trading higher. 
• James Hardie Industries (ASX:JHX) is set to release its quarterly earnings. 

Trading Ideas:

• Citi has a Buy rating on Brambles (ASX:BXB) with a $12.29 price target. Citi say that compared to traditional leveraged buyout targets, BXB has little excess assets on its balance sheet, and CVC (who are the private equity group proposing the takeover bid) see the market as undervaluing the operating business and complex strategic initiatives over the medium term.
• Trading Central have identified a bearish signal in Metcash (ASX:MTS), indicating that the stock price may fall from the close of $4.63 to the range of $4.40 to $4.44 over 19 days according to the standard principles of technical analysis.

Before we jump into today’s session, let’s have a quick look at what happened in last Friday’s session. The local market surged 1.9%, and despite this being the strongest lift we’ve seen since late January, it wasn’t enough to recover Thursday’s losses, with the market still closing 1.8% lower last week. 

Sectors wise, all the industry sectors were in the green. The tech sector rallied the most, up 7%, and this follows the Nasdaq closing in the green during its Thursday session and a stronger-than-expected result from BNPL company Affirm, which lifted 23% aftermarket.

The best performers were mainly tech stocks. Afterpay-parent Block (ASX:SQ2) led the way, rising 15%, followed by Life360 (ASX:360) which rose 14.3% and PolyNovo (ASX:PNV) which lifted 14%. On the flip side, gold miners like Gold Road Resources (ASX:GOR), Evolution Mining (ASX:EVN) and Newcrest Mining (ASX:NCM) struggled on Friday, after the gold price tumbled.

The most traded stocks by Bell Direct clients last Friday included Macquarie Group (ASX:MQG), CSL (ASX:CSL) and BHP Group (ASX:BHP).

Moving to the US, stocks also jumped higher, helping prevent the S&P500 from tumbling into bear market territory. The Dow rose over 400 points, the S&P500 lifted 2.4% and the Nasdaq surged 3.8%. Despite Friday’s gains, the major averages posted losses for the week.

What to watch today:

• Following the positive session in the US, the SPI futures are suggesting that our local market is set to open 0.8% higher this morning.
• A company to watch today is Goodman Group (ASX:GMG), as the industrial property company is set to release its third quarter update, with the market looking for an upgrade to its guidance, as many brokers believe GMG will outperform its provided FY22 EPS growth of 20%.
• Moving to commodities: 
  • The oil price lifted about 4% on Friday to US$110 a barrel as US gasoline prices jumped to a record high and China seemed likely to ease its pandemic restrictions.
  • The gold price fell more than 1%, following the dollar’s strong run and more aggressive US interest rates on the horizon. 
  • The spot iron ore price traded about 1.2% higher to US$124 a tonne.
• One new company debuting on the ASX today is natural resources company, Southern Cross Gold. It will be trading under the ticker code SXG. 
• Dicker Data (ASX:DDR), Macquarie Group (ASX:MQG) and Autosports Holding (ASX:ASG) are set to go ex-dividend today.

Trading Ideas:

• Citi have initiated coverage on Australian retailer, Universal Store Holdings (ASX:UNI) with a Buy rating and price target of $5.83. Citi sees the company having multiple medium-term growth drivers, including increased store rollout, margin expansion opportunities, as well as increased private brand penetration and direct sourcing. At its current share price of $4.50 this implies about 30% share price growth in a year. 
• Trading Central has a bullish signal on aerial imagery technology company, Nearmap (ASX:NEA) indicating that the stock price may rise from the close of $1.20 to the range of $1.49 - $1.57 in the next 17 days according to standard principals of technical analysis.  

The Aussie share market declined 3.7% this week (Mon-Thu), with all the industry sectors in the red as rates, war, inflation, and an upcoming election give investors plenty to think about.

In this week’s wrap, Sophia covers:

• (0:38) Block (ASX:SQ2) falling 30%
• (1:00) Why the tech sector crashed
• (1:46) Seven tech stocks Bell Potter has a buy rating on
• (2:25) The best and worst performing stocks in the All Ords
• (2:45) The most traded stocks & ETFs by Bell Direct clients
• (3:20) One economic news item to watch

The Aussie share market managed to post a small gain of 0.2%, snapping its three-day losing streak. Aussie investors digested the latest consumer confidence data from Westpac showing that confidence was down 5.6% to 90.4 points in May, the measure's lowest level since August 2020, when COVID lockdowns were hitting Victoria. 

So how did the overall market perform? The majority of the industry sectors were in the green.  The healthcare sector led the pack, but it was the financial sector that did come under a bit of pressure, weighed down by a 3.9% drop in NAB’s share price, after the stock traded ex-dividend yesterday.

The best performer was Lifestyle Communities (ASX:LIC), up an impressive 15.1%. This followed some insider buying and a bullish note out by Goldman Sachs, where the broker reiterated its buy rating and $24.65 price target. Other top stocks include City Chic Collective (ASX:CCX) and Life360 (ASX:360). On the other hand, Link Administration (ASX:LNK) closed 15.1% lower to $4.22. During the trading session, the company requested a trading halt, after its shares sank 12%. The company then responded to the ASX query and noted that it was not aware of any material information about its proposed acquisition by Dye & Durham and weren’t aware of any reason for the decline in its share price and elevated trading volumes yesterday. 

The most traded stocks by Bell Direct clients yesterday included Macquarie Group (ASX:MQG), Westpac (ASX:WBC) and Galileo Mining (ASX:GAL).

Moving to the US, all three benchmarks closed in the red. The Dow Jones fell over 300 points, the S&P500 down 1.7% and the Nasdaq dropped 3.2%. This comes as investors digested the latest US inflation data. April’s CPI showed an 8.3% jump, which was higher than the 8.1% increase expected by economists polled by the Dow Jones. Now with the annual rate ticking down from 8.5% to 8.3%, it’s still unclear if we’ve seen the peak. Some believe the data could be sign that the Fed is behind the curve in curbing inflation. And following the data release, the 10-year Treasury yield briefly jumped above the 3% mark, however settled at 2.9%. 

What to watch today:

• Following the negative session over in the US, the SPI futures are suggesting that the market is set to open 0.5% lower.
• This morning, Commonwealth Bank (ASX:CBA) will deliver its third-quarter trading update. 
• Other companies reporting today include mining and infrastructure solutions provider, Orica (ASX:ORI) who will be releasing its half-year profit and announcing its interim dividend. And cloud-based accounting software business, Xero (ASX:XRO) will today be releasing its full-year results.
• Moving to commodities, the oil price traded higher off the back of supply concerns as flows of Russian gas to Europe fell. The gold price lifted as the US dollar retreated following the latest US inflation data release. And the spot iron ore price traded lower and is sitting at around US$123 a tonne.   
• If you’re a shareholder of Myer Holdings (ASX:MYR), you will receive your fully franked interim dividend of 1.5 cents per share today.
• Tabcorp (ASX:TAH), Ampol (ASX:ALD) and Sigma Healthcare (ASX:SIG) are holding their AGMs today.

Trading Ideas:

• Citi have maintained its Buy rating on Ardent Leisure (ASX:ALG) with a price target of $1.96. At its current share price of $1.20, this implies about 63% share price growth in a year. 
• Trading Central has a bullish signal on medical device company, PolyNovo (ASX:PNV) indicating that the stock price may rise from the close of $1.12 to the range of $1.54 - $1.64 in the next 79 days according to standard principals of technical analysis.  

The major mining stocks lead the market’s losses yesterday and the market lost 1%, following a fall in commodity prices and doubts about Chinese growth, in its push to achieve its zero COVID strategy. Shanghai’s lockdown has been reinstated with some stricter rules, including the ban of food delivery services. Locally, materials, energy and utilities were down the most yesterday. 

Looking at the ASX200 leaderboard, insurance company AUB Group (ASX:AUB) declined the most yesterday after news that the company is set to acquire UK insurance broker Tysers for $880 million. And with the fall in commodities, mining stocks fell, including Chalice Mining (ASX:CHN), Paladin Energy (ASX:PDN), Rio Tinto (ASX:RIO), De Grey Mining (ASX:DEG) and Newcrest Mining (ASX:NCM) to name a few. Pendal (ASX:PDL) surged more than 8% after reporting underlying earnings 22% above market consensus, and PolyNovo (ASX:PNV) gained 16% amid news of more insider buying. 

The most traded stocks by Bell Direct clients yesterday included Lake Resources (ASX:LKE), Macquarie Group (ASX:MQG), BHP Group (ASX:BHP), Westpac (ASX:WBC) and Rio Tinto (ASX:RIO). 

In US equities, the major benchmarks closed mixed ahead of the release of the US inflation reading. Tonight, April’s consumer price index will be announced in the US, expected to rise 0.2% from the month prior and 8.1% year over year, according to the Dow Jones consensus estimate. The Dow Jones fell for the fourth consecutive day, down about 35 points, while the S&P500 edged 0.25% higher. The Nasdaq gained 1%, with a rebound in some mega-cap technology stocks leading the gains, including Microsoft and Apple which gained 1% each.  

What to watch today:

• The Australian market is set to slightly fall at the open this morning, with the SPI futures suggesting a drop of 0.1%, after a mixed night in the US. 
• Follow price movements of technology stocks today. Tech stocks crashed in the Chinese market, however performed well over in the US. A trading idea to consider is Technology One (ASX:TNE), which Bell Potter have retained their Buy rating on, with a lower price target of $12.50 from $14. On the 24th of May, TNE will report its half-year earnings, and Bell Potter expect TNE to report recurring revenue growth of 38%. 
• Watch lithium developer AVZ Minerals (ASX:AVZ), which is due to return from a trading halt this morning. 
• In commodities, oil prices have fallen again, trading 3.5% lower. Gold also remains under pressure from a strong US dollar. And seaborne iron ore is over 1% lower.
• In economic data, Westpac’s consumer confidence index for May will be released today. This will give us an indication of how consumers are feeling this month. Last month, consumer sentiment fell by 0.9%, and is expected to fall 1% this month. 
• Other companies reporting their earnings today are CSR Limited (ASX:CSR) and GrainCorp (ASX:GNC). 
• GPT Group (ASX:GPT), Smart Group Corporation (ASX:SIQ) and Unibail-Rodamco-Westfield (ASX:URW) will hold their AGMs today. 

Trading Ideas:

• Bell Potter maintain their BUY rating on Coronado Global Resources (ASX:CRN), and expect the company to generate strong free cash flow on their met coal price outlook. The price target has been lowered to $2.50, and CRN’s last share price was $2.17, implying 15.2% share price growth in a year. 
• Trading Central have identified a bullish signal in Sezzle (ASX:SZL), indicating that the stock price may rise from the close of $0.85 to the range of $1.01 to $1.05, over 21 days according to the standard principles of technical analysis. 

Yesterday, the Aussie share market started the new trading week extending its losses from the previous trading session. 

The benchmark S&P/ASX200 index slipped 1.2%, reaching its lowest level since mid-March. It comes as China intensifies its zero-COVID policy, which in turn has deepened the supply chain crisis. Looking at the sector performances, the market was broadly sold off, with both the real estate and tech sectors posting the biggest losses. The energy, consumer staples and healthcare sectors did however manage to all close slightly higher.

The best performer yesterday was once again medical device company, PolyNovo (ASX:PNV), in part due to its directors toping up on PNV shares, however it also seems investors are taking advantage of its share price weakness to purchase more shares. Meanwhile, the worst performers included NOVONIX (ASX:NVX), Imugene (ASX:IMU) and Magellan Financial Group (ASX:MFG). Investors are continuing to sell Imugene shares, following the termination of its supply agreement with Merck. 

The most traded stocks by Bell Direct clients yesterday included Fortescue Metals Group (ASX:FMG), ANZ (ASX:ANZ) and Macquarie Group (ASX:MQG).

In the US, the sell-off continued with all three benchmarks coming under pressure. The Dow Jones fell more than 600 points, the S&P500 down 3.2% and the Nasdaq slipped 4.3%. All sectors were in the red, apart from the consumer staples sector. Amid the losses, the benchmark 10-year Treasury yield hit its highest level since late 2018, trading well above 3%, which continued to crush tech names like Meta, Alphabet, Netflix, and Apple.

What to watch today:

• If you go by the SPI futures, the market is set to open 1.39% lower.
• Reporting wise, capital market business, Pendal Group (ASX:PDL) will be releasing its half-year results today. 
• Economic news wise, business confidence for April will be announced today. Business confidence currently stands at a five-month high of 16 points, however April’s reading is forecasted to fall to 12 points.
• Moving to commodities, the oil price tumbled around 6% as China’s lockdowns weigh on demand outlook. The gold price extended its decline to fall more than 1% on Monday, as the US dollar pushed to near two-decade highs. And the spot iron ore price has fallen about 4%, trading at $US136 a tonne.
• Private toll road developer, Atlas Arteria (ASX:ALX) is holding its AGM today.

Trading Ideas:

• Citi have maintained its Buy rating on Domino’s Pizza (ASX:DMP) with a price target of $108.42. At its current share price $67.60, this implies about 60% share price growth in a year. 
• Trading Central has a bearish signal on Northern Star Resources (ASX:NST) indicating that the stock price may fall from the close of $9.06 to the range of $7.10 - $7.50 in the next 35 days according to standard principals of technical analysis.  

Last week concerns around aggressive monetary tightening by central banks saw markets sharply decline. Week-to-date the Australian market closed just over 3% lower, with all sectors lower.

On Friday the market closed 2.2% lower, its worst trading session since February. Again, a broad based sell off ended with all sectors in the red. Tech and property shares declined the most. 

Paladin Energy (ASX:PDN), Life360 (ASX:360) and Xero (ASX:XRO) were the worst performers. Stocks that managed to make slight gains included ResMed (ASX:RMD), Wesfarmers (ASX:WES), Mineral Resources (ASX:MIN), Costa Group (ASX:CGC), Cromwell Property Group (ASX:CMW), Amcor (ASX:AMC) and Medibank (ASX:MPL). PolyNovo (ASX:PNV) managed to gain 4%, following news that its chairman and non-executive director bought 500,000 and 100,000 shares in the company respectively. 

The most traded stocks by Bell Direct clients on Friday were Macquarie Group (ASX:MQG), Lake Resources (ASX:LKE), the Vanguard Australian Shares ETF (ASX:VAS), BHP Group (ASX:BHP) and CSL (ASX:CSL).

In New York, stocks further declined, extending the week’s losses. The Dow Jones closed 0.3% lower, the S&P500 down 0.6%, while the Nasdaq closed 1.4% lower. 

What to watch today:

• The SPI futures are suggesting the Australian share market will fall 0.7% at the open this morning. 
• In commodities, the price of oil is trading higher, amid concerns of tight global supply, ahead of the EU’s impending embargo on Russian oil. The gold price is higher, after coming under pressure last week. And iron ore has dropped, with seaborne iron ore trading 5% lower. So, watch iron ore stocks today such as Rio Tinto (ASX:RIO), Fortescue Metals (ASX:FMG), Champion Iron (ASX:CIA) and Mineral Resources (ASX:MIN).  
• Watch Westpac (ASX:WBC)’s share price movements today. This morning Westpac released its half year earnings, reporting first half of 2022 statutory net profit, up 63% compared to the second half of 2021 and down 5% compared to the first half of 2021. And a fully franked interim dividend of 61 cents per share. 
• If you hold Metrics Income Opportunities Trust (ASX:MOT) you can expect to receive your dividend payment today. 

Trading Ideas:

• Bell Potter maintain their BUY rating on Life360 (ASX:360), with a 9% decrease to their price target to $7.50, which is still over 100% premium to the share price. 
• Trading Central have identified a bearish signal in Bravura Solutions (ASX:BVS), indicating that the stock price may fall from the close of $1.66 to the range of $1.40 to $1.44, over 17 days, according to the standard principles of technical analysis.