Between the Bells

 Investors played it safe yesterday and traded cautiously, following the news that Germany is pushing for discussions with the European Union to ban Russian gas imports. This may lead to energy rationing in Europe and would push prices higher. 

The market closed slightly higher yesterday, with utilities, materials and tech making the most gains. It was a profitable session again for mining stocks: BHP Group (ASX:BHP), Fortescue Metals (ASX:FMG) and Rio Tinto (ASX:RIO) were all in the green. And lithium miners such as Allkem (ASX:AKE), Mineral Resources (ASX:MIN), Liontown Resources (ASX:LTR) and Pilbara Minerals (ASX:PLS) were all higher. Gold miners also gained, even while the gold price was lower. Financials closed 0.3% lower yesterday, as the four major banks lost ground. While Magellan Financial Group (ASX:MFG) is finally picking back up again, yesterday reaching a 1-month high. Its shares lifted with help from the biggest mover on the ASX200 yesterday, investment manager Pendal Group (ASX:PDL), which rose 18% after receiving a $2.4 billion takeover bid from Perpetual. Perpetual’s share price however, declined the most yesterday. Iluka Resources (ASX:ILU), also gained following the approval of its $1.2 billion refinery in Eneabba in Western Australia, and this will be the first fully integrated, rare earths separation facility in Australia. 

The most traded stocks by Bell Direct clients yesterday included Commonwealth Bank (ASX:CBA), Core Lithium (ASX:CXO), Pilbara Minerals (ASX:PLS) and NOVONIX (ASX:NVX). 

Overnight, US equities were in the green. The Dow was up 0.3%, the S&P500 up 0.8%, while the Nasdaq rallied 1.9%. 

What to watch today:

• Off the back of a strong rally across global markets, the Australian market is set to rise 0.67% at the open this morning, according to the SPI futures. 
• In economic data, at 2:30pm today (AEST), the RBA will announce its interest rate decision, which is expected to remain unchanged at 0.1%. 
• In commodities, the oil price is trading more than 4% higher, with the possibility of more sanctions on Russia. 
• Seaborne iron ore has extended its gain. And the gold price is also higher, following last week’s fall. 

Trading Ideas:

• Bell Potter maintain their Speculative Buy rating on De Grey Mining (ASX:DEG) and have lowered their valuation to $1.72. Bell Potter also have Hold rating on Gold Road Resources (ASX:GOR) with a $1.70 price target, and a Speculative Hold rating on DGO Gold (ASX:DGO) with a valuation of $4.37. 
• Trading Central have identified a bullish signal in Black Rock Mining (ASX:BKT), indicating that the price may rise from the close of $0.27 to the range of $0.31 to $0.33, over 35 days, according to the standard principles of technical analysis. 

On Friday mining stocks made strong gains, with BHP Group (ASX:BHP) contributing the most, rising over 4%. The energy sector rebounded on Friday, however week-to-date, it was the worst performer as the price of oil declined further.

Allkem (ASX:AKE) closed 8.5% higher, after reporting record pricing ahead of the June quarter. AKE’s gains also boosted other lithium miners, including Pilbara Minerals (ASX:PLS), Mineral Resources (ASX:MIN) and AVZ Minerals (ASX:AVZ).

The most traded stocks by Bell Direct clients on Friday included VAS, the Vanguard Australian Shares ETF, Allkem (ASX:AKE), Core Lithium (ASX:CXO), Wesfarmers (ASX:WES) and Fortescue Metals (ASX:FMG).

European and US equities began the second quarter on a positive note. All three US benchmarks closed higher. The Dow up more than 100 points or 0.4%, the S&P500 up 0.3% and the Nasdaq up 0.3%.

What to watch today:

• The local market is set to rise 0.25% at the open this morning if you’re going by the SPI futures.
• In commodities, the oil price is trading lower as the lockdowns in China have caused demand concern, as well as news that the International Energy Agency have agreed to join the US in the largest release of oil reserves on record. The weekly loss was more than 13%, which was the largest weekly fall in 2-years. The US will release 1 million barrels per day for 6 months, starting in May.
• The gold price is also trading lower, after the US jobs report displayed a tight labour market, provoking expectations for a 50-basis point increase in the Fed funds rate in May, to tame inflation.
• Seaborne iron ore has jumped, trading 6% higher, just under US$160 a tonne, as iron ore futures on the Dalian Commodity Exchange were higher.

Trading Ideas:

• Bell Potter maintain their BUY rating on Perpetual (ASX:PPT) and have lowered their price target on PPT from $44.30 to $42.80. PPT last closed at $34.23, implying 25% share price growth in a year. And Bell Potter see 30.3% upside over the next year, including the 5.3% yield.
• Trading Central have identified a bullish signal in Pilbara Minerals (ASX:PLS), indicating that the stock price may rise from the close of $3.43 to the range of $3.90 to $4.05, over 29 days, according to the standard principles of technical analysis.

The Aussie share market gained 1.3% this week (Mon-Thu), with all industry sectors advancing, apart from the energy sector.

In this week’s wrap, Sophia covers:

• (0:10) Key insights from the Federal Budget
• (3:12) Why Life360 (ASX:360) & NOVONIX (ASX:NVX) rallied
• (3:55) 88 Energy (ASX:88E) crashing after disappointing results
• (4:16) The most traded stocks by Bell Direct clients
• (4:35) Four economic news items to watch out for

The local market pushed 0.67% higher yesterday, in what was a broad-based rally. Tech shares led the way, as well as some automotive companies that benefited from the Federal Budget, following the drop in the fuel excise. While the energy and materials sectors posted small losses.  

Looking at the ASX200 leaderboard, tech names like Life360 (ASX:360), Megaport (ASX:MP1), Afterpay’s parent company Block (ASX:SQ2), NOVONIX (ASX:NVX) and Xero (ASX:XRO) were amongst the best performers. Magellan Financial Group (ASX:MFG) jumped 7%, despite funds continuing to flow out of the business. Meanwhile, South32 (ASX:S32) declined 3.5% after the company announced a delay to the acquisition of an additional shareholding in Mozal Aluminium.

The most traded stocks by Bell Direct clients yesterday, they included Lake Resources (ASX:LKE), Mineral Resources (ASX:MIN) and Fortescue Metals (ASX:FMG). 

In the US, all three benchmarks closed in the red, with the Nasdaq down the most. Both the Dow and S&P500 snapped their 4-day winning streaks as investors remain cautious on Ukraine developments, as well as the bond market. 

What to watch today: 

• Despite the pullback in the US, the futures are suggesting that the Aussie share market is set to open 0.13% higher this morning.  
• In commodities, the oil price rebounded, jumping 3% on tight supply and investor concerns about potential new Western sanctions against Russia. The gold price managed to gain off the back of a weaker US dollar and a slight pullback in US bond yields. The gold price is currently at US$1,934 an ounce. The aluminium, zinc, nickel, and palladium prices are all trading between 2.5 – 5% higher. And the spot iron ore price is trading flat at US$148 a tonne.
• Stocks going ex-dividend today include Eagers Automotive (ASX:APE) and Harvey Norman (ASX:HNV).

Trading Ideas: 

• Bell Potter have maintained its BUY rating on Eagers Automotive (ASX:APE) and have increased its price target to $17.25 (previously $16.75). APE announced the proposed acquisition of a portfolio of dealerships and associated properties located in Canberra, ACT. The acquisition allows APE to gain entry into the ACT and be able to rollout easyauto123 in that market. APE closed 2.9% higher yesterday to $14.50, which implies about 19% share price growth in a year. 
• Trading Central has a bullish signal on Goodman Group (ASX:GMG), indicating that the stock price may rise from the close of $23.06 to the range of $24.60- $24.90 in the next 28 days according to standard principals of technical analysis. 

Last night the Federal Budget was announced. There was a major focus on the cost of living and national security. Some of the positive news included cutting the fuel excise by 50%, in an effort to bring down petrol prices; low & middle income earners are to receive an additional $420 back on their tax returns; combining paid parental leave; a one-off payment of $250 to welfare recipients; and an expansion to the first home buyers scheme, with only a 5% deposit required to buy a house with no lenders mortgage insurance. 

Ahead of the Federal Budget release yesterday, the local market reached an 11-week high. The rally touched all industry sectors, except the materials and energy sectors. 

Telix Pharmaceuticals (ASX:TLX) was the biggest mover on the ASX200 yesterday, after its lead product received approval from the US Food and Drug Administration. And Magellan Financial (ASX:MFG) rebounded 7%, after a large sell-off. Meanwhile Whitehaven Coal (ASX:WHC) was down the most. 

Lake Resources (ASX:LKE) was once again the most traded stock by Bell Direct clients. Yesterday the lithium developer announced it had signed a non-binding memorandum of understanding with Japanese trading company Hanwa Co, for offtake of 15,000 to 25,000 tonnes per annum of lithium carbonate over 10 years, from one of its projects in Argentina, the Kachi Project. The lithium carbonate is to be priced at average quarterly benchmark market prices.  

US equities extended its winning streak overnight, as traders followed ceasefire negotiations in Europe and key levels in the bond market. The Dow gained over 300 points, or 1%, the S&P500 closed 1.2% higher, while the tech heavy Nasdaq closed 1.8% higher. 

What to watch today:

• The local market is set to rise 0.75%, going by the SPI futures. 
• In commodities, the oil price is lower following negotiations between Russia and Ukraine.
• Gold extended losses, nearing its lowest level in 4 weeks. And seaborne iron ore is slightly higher at US$150.14 a tonne. 
• Around 15 stocks are set to go ex-dividend today. This often sees shares fall, as investors take their profits. 

Trading Ideas:

• Bell Potter have a Speculative Buy rating on Mesoblast (ASX:MSB) and have lowered their valuation from $3.75 to $2, implying 75.6% share price growth in a year.
• Trading Central have identified a bullish signal in Reliance Worldwide (ASX:RWC), indicating that the price may rise from the close of $4.30 to the range of $4.80 to $4.95, over 26 days, according to the standard principles of technical analysis. 

The local market managed to close with a small gain of 0.08% yesterday, a 10-week high for the benchmark ASX200 index. Sectors wise, the materials sector posted the biggest gain, and the financials, utilities and consumer staples sectors also lifted. While the remaining sectors posted losses, with the tech sector down the most. 

Looking at the ASX200 leaderboard, materials stocks led the way, with seven making the top 10 list, including BHP Group (ASX:BHP) up 2.3%, fertiliser company, Incitec Pivot (ASX:IPL) up 2.3% and Champion Iron (ASX:CIA) up 2.2%. On the flipside, tech shares were amongst the worst performers, with Xero (ASX:XRO), Tyro Payments (ASX:TYR), Novonix (ASX:NVX) and WiseTech Global (ASX:WTC) posting losses. 

The most traded stocks by Bell Direct clients yesterday, included Woodside Petroleum (ASX:WPL), Westpac (ASX:WBC) and Telstra (ASX:TLS). Westpac’s share price is up about 10% from the start of this year and Citi are optimistic on the stock, naming Westpac as its top choice compared to the other big four banks. 

Moving to the US, all three benchmarks are in the green, with the Nasdaq up the most. This was thanks to a modest 8% jump in Telsa’s share price, after the electric vehicle maker said it wants to split its stock to pay a stock dividend. Energy stocks slid alongside the price of oil, which we will touch on shortly.

What to watch today: 

• The futures are suggesting that the Aussie share market is set to open 0.52% higher this morning.  
• Economic news wise, retail sales for February will be released today. This estimates the turnover and volumes for retail businesses, including store and online sales. 
• Tonight, all eyes will be on the 2022-23 Federal Budget that will be announced at 7.30 pm (AEDT). It’s a pre-election budget, with the election less than a couple of months away.
• In commodities, the oil price slid over 9% as new lockdowns in Shanghai prompted fears of a slowdown in demand, given China is the world’s largest oil importer. The WTI crude oil price has fallen to around US$103 a barrel. The gold price also fell about 1.8% on a firmer US dollar and yields. On the flipside, the spot iron ore price is trading 2.8% higher to US$146 a tonne.
• Sigma Healthcare (ASX:SIG) is set to release its financial year 2022 results.

Trading Ideas: 

• Bell Potter have maintained its BUY rating on electric services company, GenusPlus Group (ASX:GNP) and have increased its price target to $1.72 (previously $1.40). Bell Potter maintain their positive view on GNP’s demand outlook. This is supported by planned upgrades to east coast interconnector infrastructure, ageing distribution infrastructure and structural tailwinds in renewables investment. GNP closed about 0.8% lower yesterday to $1.21, which implies about 42% share price growth in a year. 
• Trading Central has a bullish signal on NEXTDC (ASX:NXT), indicating that the stock price may rise from the close of $11.08 to the range of $12.40- $12.70 in the next 24 days according to standard principals of technical analysis. 

On Friday the ASX200 closed 0.26% higher and rose to a two-month high at 7,406 points, supported by a rise in metal and energy prices. Seven of the eleven sectors closed in the green, with materials and utilities in the lead. Healthcare stocks led the market losses.

On the ASX200 leaderboard, BlueScope Steel (ASX:BSL) was the top performer, rising over 5% to $21.46, boosted by the rising price of steel. The steel price is higher due to the Russia-Ukraine war and China’s COVID lockdown. Meanwhile, Telix Pharmaceuticals (ASX:TLX) declined the most. The company made two announcements last week: firstly, that it has begun developments of its Belgian radiopharmaceutical production facility, and secondly, that one of its clinical trials has progressed to the next stage. Although positive announcements, its share price remained in the red. 

The most traded stocks by Bell Direct clients on Friday included Lake Resources (ASX:LKE), which has gained 85% this month, since the 1st of March. Aurelia Metals (ASX:AMI) was also highly traded, as investors sold shares in the gold miner after it announced lower grades of mineralisation in the Dargues Gold Mine. Core Lithium (ASX:CXO) is also lower after announcing the resignation of its CEO, Stephen Biggins. 

Global markets continue to track negotiations over the Russia-Ukraine war. European stocks closed slightly higher, and in US equities, the Dow was up 0.4%, the S&P500 up 0.5%, posting its second consecutive winning week, while the Nasdaq was slightly lower, down 0.2%. 

What to watch today:

• The ASX200 is set to rise 0.45% at the open this morning, if you’re going by the SPI futures. 
• In economic news, retail sales data for February will be released today, as well as ANZ’s data on job advertisements for March. 
• In commodities, oil turned positive on Friday, trading at US$113.90 a barrel on reports of a missile strike and fire at the Saudi Aramco facility. 
• Gold has steadied at approximately US$1,960 an ounce, after jumping the two previous sessions. And seaborne iron ore is higher, trading just under US$150 a tonne.
• Companies that are set to go ex-dividend today include Cochlear (ASX:COH) and Reece (ASX:REH). 

Trading Ideas:

• Bell Potter have a Speculative Buy rating on DGO Gold Limited (ASX:DGO), recognising the higher level of risk and volatility of returns. The company has prospective operations and cash flows and Bell Potter have lowered their valuation from $4.47 to $4.41. DGO last closed at $2.63, implying 68% share price growth in a year. 
• Trading Central have identified a bullish signal in Charter Hall (ASX:CHC), indicating that the stock price may rise from the close of $15.99 to the range of $17.90 to $18.30, over 40 days, according to the standard principles of technical analysis. 

The Aussie share market has advanced 1.3% this week (Mon-Thu). Oil prices once again rose over US$120 a barrel, which helped boost both the utilities and energy sectors. 

In this week’s wrap, Sophia covers:

• (0:42) Lithium explorer, AVZ Minerals (ASX:AVZ) gaining over 20%
• (1:54) Cettire (ASX:CTT) falling 21% after its CEO sold 35 million shares
• (2:08) The most traded stocks by Bell Direct clients
• (2:30) The impact of Russia's uranium economic isolation
• (5:09) Five economic news items to watch out for

On Wednesday, Australian shares rose to a two-month high, as tech shares gained 3.5%, following the US tech rally. The local tech sector was led by Afterpay’s parent company Block (ASX:SQ2), which rose to its highest closing price since the company officially listed on the ASX in January, at $188.10. 

Financials closed at the sector’s highest level since mid-November. Major banks, NAB, CBA, Westpac and ANZ all closed with solid gains, which may partly reflect comments on the increase in interest rates by US Federal Reserve Chairman Jerome Powell. Morgan Stanley has said that ANZ and NAB could announced a $1 billion and $2 billion buyback, respectively, in May, while CBA may launch another share buyback, with an additional $2 billion, if it goes ahead with plans to sell its 10% stake in the Chinese Bank, the Bank of Hangzhou. 

Looking at the ASX200 leaderboard shares in Uniti Group (ASX:UWL) led among blue chips. UWL surged 10.7% before entering into a trading halt in afternoon trade. This followed news of a $5 a share bid for Uniti, made by Macquarie Asset Management and PSP Investments. This new proposal beats the current offer on the table from Morrison & Co by approximately 11%. Meanwhile Fisher & Paykel Healthcare (ASX:FPH) fell 8%, after the company announced it expects a decline in its sales guidance for FY22 and also warned that freight costs are weighing on margins. 

The most traded stocks by Bell Direct clients yesterday included Lake Resources (ASX:LKE), Northern Star Resources (ASX:NST) and the Australian Foundation Investment (ASX:AFI).

 US equities closed in the red, with all three major benchmarks lower. The Dow was down 1.3%, the S&P500 down 1.2% and the Nasdaq down 1.3%.  

 What to watch today:

• Following the broad sell-off in New York overnight, the SPI futures are suggesting the ASX200 will fall 0.73% at the open this morning. 
• In commodities, the oil price rallied, trading at US$114 per barrel, after Russia announced that a storm in the Black Sea had damaged one of the world’s largest oil pipelines, which has disrupted exports from Russia and Kazakhstan. 
• The gold price is also higher, however remains under pressure as the Fed calls for an aggressive monetary tightening to combat inflation. 
• Iron ore is lower, moving away from the 7-month high hit earlier this month, following demand concerns with the resurgence of COVID-19 cases in China. 
• Companies that are set to go ex-dividend today include Cash Converters (ASX:CCV), Healius (ASX:HLS) and Spark New Zealand (ASX:SPK). 

 Trading Ideas:

• Bell Potter maintain their BUY rating on Uniti Group (ASX:UWL) and have increased their price target from $4.50 to $5. This price target is a premium to the office price of $4.50 by Morrison & Co, in the bidding war for Uniti. 
• Trading Central have identified a bullish signal in Ioneer (ASX:INR) indicating that the price may rise from the close of $0.58 to the range of $0.69-$0.71, over 19 days, according to the standard principles of technical analysis. 

The local market was back in the green yesterday, up 0.9% with the materials and energy sectors boosting the market. Overall, the market was mixed, with six of the 11 industry sectors closing lower, with the tech sector down the most.

Looking at the ASX200 leaderboard, Liontown Resources (ASX:LTR) was the best performer, up 6.3%, followed by AVZ Minerals (ASX:AVZ) and BHP Group (ASX:BHP), which added 5.1%. Computershare (ASX:CPU) posted a solid gain of 4.3%. One of the tailwinds helping Computershare recently is the outlook for rising interest rates, which will help increase its margins. On the flipside, tech shares were amongst the worst performers, with Block (ASX:SQ2) and Life360 (ASX:360) giving up some of their gains from the prior session. 

The most traded stocks by Bell Direct clients yesterday, they included Commonwealth Bank (ASX:CBA), Woodside Petroleum (ASX:WPL) and Allkem (ASX:AKE). 

Moving to the US, as at the time of recording, all three benchmarks are in the green as investors digest Federal Reserve Jerome Powell’s latest rate hike comments. Goldman Sachs on Monday upped its forecast to 50 basis point hikes at the May and June Fed meetings.

What to watch today: 

• The futures as at 7:30am AEDT, are suggesting that the Aussie share market is set to open 0.4% higher this morning.  
• Economic news wise, the manufacturing and services flash PMI for March will be released today. PMI stands Purchasing Managers’ Index which is essentially an index of the prevailing direction of economic trends in the manufacturing and service sectors. The flash PMI today is a forward-looking estimate of the final PMI, which is set to be released next week.
• In commodities, the oil price was mixed, currently trading down about 0.8%. It now looks unlikely that the European Union will pursue an embargo on Russian oil.  
• The gold price slipped to a near one-week low off the back of Federal Reserve Jerome Powell’s hawkish stance, which sent Treasury yields higher. Now gold is highly sensitive to rising US interest rates, as they increase the opportunity cost of holding non-yielding bullion.
• Seek (ASX:SEK), Myer Holdings (ASX:MYR) and Supply Network (ASX:SNL) are set to go ex-dividend today. 

Trading Ideas:

• Bell Potter have maintained its BUY rating on Nickel Mines (ASX:NIC) and have lifted its price target by 7% to $1.88. The comes as PT Oracle Nickel Industry, the operating entity housing the Oracle Nickel RKEF project, has been granted material corporate tax relief. This removes an expense of ~US$50 million per annum from its estimates for ten years. Now NIC closed about 1.5% higher yesterday to $1.29, which implies about 46% share price growth in a year. 
• Trading Central has a bullish signal on Pilbara Minerals (ASX:PLS), indicating that the stock price may rise from the close of $3.00 to the range of $3.40- $3.55 in the next 24 days according to standard principals of technical analysis.