Between the Bells

The Aussie share market started the new trading week in the green, closing 0.16% higher yesterday, as news came in mid-session that the US and Russian President have agreed to meet, which eased some fears of an imminent invasion of Ukraine.

 Sectors wise, the utilities sector led the way, lifting over 3%. Most of the other sectors also rose, except for the tech sector, healthcare sector, and consumer discretionary sector which fell.  

 The a2 Milk Company (ASX:A2M) jumped 11% after releasing its half-year results. While a disappointing decline was posted, some upbeat commentary from its management seems to have offset the profit miss. AGL Energy (ASX:AGL), lifted 11% after announcing its board had rejected a takeover offer from Atlassian billionaire Mike Cannon-Brookes and Canada’s Brookfield Asset Management, stating that the unsolicited bid of $7.50 a share undervalued the company. Meanwhile, tech stocks like Zip (ASX:Z1P), Block (ASX:SQ2) and Tyro Payments (ASX:TYR) were amongst the worst performers. 

 Some of the most traded stocks by Bell Direct clients yesterday included AVZ Minerals (ASX:AVZ), Lake Resources (ASX:LKE), AGL Energy (ASX:AGL), as well as Fortescue Metals (ASX:FMG).

 Across the sea, the German DAX dropped 3%, the CAC fell 2%, and the FTSE lost 0.4%. While Wall Street was closed on Monday for the President’s Day holiday.

 What to watch today:

• As European stocks plunged and markets continued to be shaken by the tensions in Ukraine, the futures are suggesting the Aussie share market will open about 1% lower this morning. 
• The oil price lifted more than 1%, currently around US$93 a barrel. The gold price is also benefitting, up 0.35%. While the seaborne iron ore price was down 1.9% to US$141 a tonne. 
• Reporting season wise, we’ll hear from mining company Alumina (ASX:ALU), Costa Group Holdings (ASX:CGC), Cochlear (ASX:COH), lottery company Jumbo Interactive (ASX:JIN), as well as Coles (ASX:COL). Bell Potter expects Coles to deliver NPAT of $538.4m, while consensus is expecting $506m. 
• Companies going ex-dividend today include Amcor (ASX:AMC), IPH Limited (ASX:IPH), Tabcorp (ASX:TAH) and Wesfarmers (ASX:WES).

 Trading Ideas:

• Citi have maintained its BUY rating on Zip (ASX:Z1P) with a price target of $3.65, after the BNPL provider gave an interim update on its half-year 2022 results yesterday morning. Zip reported its Cash Earnings Before Tax, Depreciation and Amortization (EBTDA) is expected to be a loss of $108.1m. This was materially lower than Citi’s expectation of a $38m loss. So keep watch of Zip as the company is set to release its results in full this Thursday. 
• Finally, Trading Central has a bearish signal on Super Retail Group (ASX:SUL), indicating that the stock price may fall from the close of $11.63 to the range of $10.60 - $11 in the next 17 days according to standard principals of technical analysis.

On Friday the local market fell just over 1%. All industry sectors closed in the red, with utilities and healthcare falling the most. 

On the ASX200 leader board, Magellan Financial Group (ASX:MFG) gained over 18%, after reporting a profit and dividend increase. MFG’s half-year earnings beat market forecasts with NPAT of $251.6 million, up 24% from this time last year, and an interim dividend $1.10, which is a 13% increase. Meanwhile, QBE Insurance (ASX:QBE) declined the most on Friday, after reporting full-year 2021 results that fell short of market expectations. 

The most traded stocks by Bell Direct clients included BHP Group (ASX:BHP), Commonwealth Bank of Australia (ASX:CBA) and Macquarie Group (ASX:MQG), as well as Amcor (AXS:AMC), Lake Resources (ASX:LKE) and Fortescue Metals (ASX:FMG). 

US equities were lower as the Russia and Ukraine conflict continues to put investors on edge. On Friday the Wall Street Journal reported that the US expect an attack from Russia in a few days. Friday was also a volatile day for the US market with many stocks, indexes and ETFs set to expire. 

What to watch today:

• Following Wall Street, the SPI futures are suggesting the ASX200 will open 0.7% lower at the open this morning. 
• The price of oil is lower, as escalating violence in Ukraine heightened concerns over supply disruptions from a possible war with Russia, offsetting prospects of Iranian oil returning to global markets. 
• The gold price is steady at US$1,897 an ounce, while the seaborne iron ore price is lower at US$141 a tonne. 
• Companies reporting their earnings results today include: a2 Milk (ASX:A2M), AMA Group (ASX:AMA) and Pilbara Minerals (ASX:PLS). Bell Potter expect PLS to report NPAT of $137 million. They currently have a Neutral – High Risk rating on the stock. 
• Santos (ASX:STO) and Vicinity Centres (ASX:VCX) are set to go ex-dividend today. 
• In economic news, the Manufacturing and services flash PMI will be released this morning. This is a forward-looking estimate of the final PMI for February, which will be released next week. 

Trading Ideas: 

• Bell Potter maintain their BUY rating on Nickel Mines (ASX:NIC), and have decreased their price target from $1.89 to $1.83. NIC last closed at $1.36 implying 34.6% share price growth in a year. 
• Trading Central have identified a bullish signal in Global Lithium Resources (ASX:GL1), indicating that the stock price may rise from the close of $1.50, to the range of $2 to $2.10, over 20 days, according to the standard principles of technical analysis.

The Aussie share market advanced over 1% this week (Mon-Thu), with CSL's (ASX:CSL) strong report helping the healthcare sector rally more than 7%. 

In this week’s wrap, Sophia covers:

• (0:46) Sims' (ASX:SGM) share price up over 20% after strong results
• (1:20) Gold companies performing well as the gold price lifts 
• (2:00) Why other major mining stocks fell
• (5:19) Three company results which beat broker expectations 
• (6:14) The reporting results to watch next week
• (6:50) The latest unemployment rate release

The ASX200 advanced 1.1% yesterday, powered by strong earnings results from companies like CSL (ASX:CSL), Treasury Wine Estates (ASX:TWE) and Vicinity Centres (ASX:VCX). The gains managed to offset losses from major resource stocks, following falls in both iron ore and oil prices. 

Sectors wise, the healthcare sector led the way, supported by CSL’s strong gain, while the materials and energy sectors posted small losses.  

Liontown Resources (ASX:LTR) jumped an impressive 18% yesterday, after it was announced that the company would supply Tesla with more than 100,000 tonnes of lithium spodumene concentrate a year. That’s LTR’s second major contract in two months. And six of the other best performers were companies that reported results. Meanwhile, Netwealth (ASX:NWL) came under pressure yesterday. Its share price fell nearly 10% after its results release disappointed the market. The biggest surprise was its higher-than-expected costs on new staff and technology.

The three most traded stocks by Bell Direct clients yesterday were CSL (ASX:CSL), BHP Group (ASX:BHP) and Senex Energy (ASX:SXY).

Moving to the US, the market was mixed, the S&P500 managed to close slightly higher, while the Dow Jones and Nasdaq both closed slightly lower. During the session, the minutes from the Fed’s January meeting were released, which to investors relief, didn’t indicate that the Fed would move any faster than already expected in hiking interest rates.

Following the mixed session on Wall Street, the futures are suggesting the Aussie share market will open slightly higher this morning. 

What to watch today:

• In commodities, the gold price managed to gain 1% as the Russia-Ukraine tensions remain high. The oil price was trading higher, but is now trading down over 1% to US$90 a barrel. The lithium price is trading up 1.3% and the platinum price is also up 3.6%. While the seaborne iron ore price is trading 1.8% lower to US$142 a tonne. 
• Economic news wise, the unemployment rate for January will be released today. As a reminder, the unemployment rate came in at 4.2% in December, which was the lowest rate in more than 13 years. And the RBA recently stated that the unemployment rate could fall to 3.75% by the end of 2023, which would be the lowest rate since 1974. So keep watch today at 11:30am AEDT. 
• Reporting season: Today we’ll hear from companies including Wesfarmers (ASX:WES), Telstra (ASX:TLS), Whitehaven Coal (ASX:WHC), Magellan Financial Group (ASX:MFG), Newcrest Mining (ASX:NCM) and Goodman Group (ASX:GMG). 
• GrainCorp (ASX:GNC) is holding its AGM today, while GPT Group (ASX:GPT) is set to go ex-dividend today.

Trading Ideas: 

• Bell Potter have maintained its HOLD rating on Fortescue Metals (ASX:FMG) and have increased their price target to $19.09 (previously $18.33). Bell Potter stated that FMG’s result yesterday was in-line or marginally below its expectations. And despite the cut to its interim dividend, it’s important to recognise that it was in fact FMG’s second highest ever. Bell Potter also noted that the key to closing the gap for them to upgrade FMG to a BUY remains with Fortescue Future Industries. While FFI is critical to helping FMG achieve its objective of decarbonisation by 2030, its value accretion and optionality added to the core business cannot be quantified. 
• Trading Central has a bullish signal on Scentre Group (ASX:SCG), indicating that the stock price may rise from the close of $3.15 to the range of $3.53 - $3.63 in the next 30 days according to standard principals of technical analysis.

The ASX200 closed slightly lower yesterday, as the energy sector lost over 3%, even with the price of oil improving again yesterday. However, energy has been performing very well, so yesterday’s fall may be due to investors taking profits. A few sectors still rose, including tech, real estate, consumer staples and discretionary, communication and industrials.

Sims (ASX:SGM) shares jumped 13.7% off the back of fantastic earnings report. Sales revenue was up 73.9%. Statutory EBIT up 334.9% and underlying EBIT up 541.3%, from the prior corresponding period. Seek (ASX:SEK) also advanced after reporting its earnings. Revenue was up 59% to $517.2 million and NPAT was up 32% to $88.1 million. Dexus (ASX:DXS) also gained after its earnings report.

The most traded stocks by Bell Direct clients yesterday were major banks Westpac (ASX:WBC) and National Australia Bank (ASX:NAB).

European and US equities both closed higher, as Russia and Ukraine tensions started to de-escalate. Russia announced it had begun returning some troops to deployment bases. In New York, the Dow jumped 400 points, closing 1.2% higher after a 3-day losing streak. The S&P500 gained 1.6% and the Nasdaq gained 2.5%.

What to watch today:

• The SPI futures are suggesting a 0.93% rise at the open this morning.
• Oil has fallen from its recent peaks. After reaching over 7-year highs on Tuesday, oil is currently trading 3.8% lower at US$91.84 a barrel.
• The gold price has fallen after sitting at its best levels in 8-months. Gold is 1% lower at US$1,851.68 an ounce.
• The seaborne iron ore price is 1.3% lower at US$144 a tonne.
• In economic news, yesterday the RBA released its meeting minutes. There were no new surprises here. The RBA reiterated that they’ll be patient with any interest rate change. And that wages are to grow at the same pace as inflation. With this in mind, yesterday Commonwealth Bank brought forward its tip for the first rate rise of the year. CBA previously said August, however, now expect a potential hike in June, where we may see a 15-basis point lift.
• CSL (ASX:CSL) is reporting today, and we’ll be bringing you a full report on CSL later today.
• Commonwealth Bank (ASX:CBA) and Insurance Australia (ASX:IAG) are set to go ex-dividend today.

Trading Ideas:

• Bell Potter maintain their BUY rating on Money3 Corporation (ASX:MNY), and have increased their price target from $4.35 to $4.60, after the company reported a sold half year result. MNY last closed at $3.12, implying 47.4% share price growth in a year.
• Trading Central have identified a bullish signal in Woolworths (ASX:WOW), indicating that the stock price may rise from the close of $34.29 to the range of $35.80 to $36.20, over 26 days, according to the standard principles of technical analysis.

Yesterday, the Aussie share market managed to claw back some of its losses from Friday, gaining 0.37%. Leading the gains were oil and gold stocks, following escalating fears of a Russian invasion of Ukraine. 

Looking at the sector performances, only six out of 11 sectors closed higher. The energy sector gained the most, up over 3%, while the healthcare sector declined 1.4%.  

Gold miners dominated the leaderboard, including Regis Resources (ASX:RRL), Evolution Mining (ASX:EVN), and Northern Star Resources (ASX:NST). The best performing stock on the ASX200 was Beach Energy (ASX:BPT), up an impressive 9.4%, after the company reported a solid first-half result, which included a 26% increase in EBITDA to $513 million. Meanwhile, the worst performing stocks were NOVONIX (ASX:NVX), Imugene (ASX:IMU) and Liontown Resources (ASX:LTR), all falling over 7%. 

The most traded stock by Bell Direct clients yesterday was JB Hi-Fi (ASX:JBH). The company released strong half-results yesterday, and announced a $250m share buyback, which sent its share price up 5.4%. Bell Potter maintain their HOLD rating on the stock but have increased its price target to $51.85, from $49.60.

In the US, all three benchmarks closed lower, as investors evaluate concerns about the Fed’s next plan for interest rate hikes, as well as the tensions between Russia and Ukraine. And earnings results are expected to ramp up again this week, with Nvidia, Walmart, Shopify and more scheduled to report.

Following the negative session on Wall Street, the futures are suggesting the Aussie share market will open 0.9% lower this morning. 

What to watch today:

• In economic news, the RBA will release its meeting minutes for February. The RBA is currently relatively dovish on rate hikes as local inflation is not as out of control as in the other major economies. 
• Reporting season: It’s a big week of results and today, the biggest company on the ASX, BHP Group (ASX:BHP) will release its half-year results. Stay tuned for our separate video where we’ll take you through the highlights. Some other companies reporting today include Ansell (ASX:ANN), Dexus (ASX:DXS), Sims (ASX:SGM), Adore Beauty (ASX:ABY), Elmo Software (ASX:ELO) and Seek (ASX:SEK).
• Computershare (ASX:CPU) is set to go ex-dividend today. 
• In commodities, the oil price hit 7-year highs, boosted by Russia and Ukraine’s tensions. The oil price is currently trading at about US$95 a barrel. And in a similar tale, the gold price also gained and is trading about 0.6% higher to US$1,872 an ounce. The lithium, palladium and silver price are all trading higher, while the seaborne iron ore price is trading 0.5% lower to US$150 a tonne. 

Trading Ideas:

• Bell Potter have maintained its BUY recommendation on Mineral Resources (ASX:MIN) and have increased its price target by a modest 20% to $61.35. Bell Potter believe MIN’s recent financial results were significantly impacted by the large decline in realised iron ore prices, however highlighted that the business made strong progress in the quarter towards its strategic goals, including expanding its iron ore export capacity, evolving its iron ore business to a low-cost base that will make it resilient to low iron ore price environments, and lastly, MIN’s ability to capture the downstream margins in its lithium business. As for other broker’s ratings on MIN, Macquarie have an Outperform rating with a $70 price target, while Ord Minnett have a SELL rating and $45 price target. 
• Trading Central has a bullish signal on Westgold Resources (ASX:WGX). This signal indicates that the stock price may rise from the close of $2.03 to the range of $2.29 -$2.35 in the next 40 days, according to standard principles of technical analysis. 

Despite US inflation data reaching a 40-year high, Australian shares gained for the second consecutive week. However, on Friday the ASX200 dropped 1%, with all but the materials sectors in the red. US consumer inflation for January rose 7.5%, far above the expected figure. The S&P US 2-year and 10-year treasury bond indices fell 0.5% and 1% in response. Goldman Sachs economists have increased their forecast for the Fed to hike interest rates 7 times this year, up from 5. On Friday, the RBA Governor Phillip Lowe said that if US inflation forced the Fed to raise rates faster than expected, markets are at risk of an “abrupt adjustment”. 

On Friday’s ASX200 leaderboard, Unibail-Rodamco-Westfield (ASX:URW) made the most gains, closing 6.5% higher, after announcing a sale and joint centre to a French shopping centre, agreeing to sell 45% of Westfield in Paris. URW also reported its full-year 2021 results, which saw “tenant sales approaching pre-COVID levels” and its portfolio was valued at €54.5 billion as of the 31st December. Meanwhile the worst performer was language testing and student placement company IDP Education (ASX:IEL), after reporting its earnings. However, Goldman Sachs were pleased with the company’s half year results and have retained their BUY rating. 

The most traded stocks by Bell Direct clients on Friday included CSL (ASX:CSL), AVZ Minerals (ASX:AVZ), Macquarie Group (ASX:MQG) and Westpac (ASX:WBC). 

US equities closed lower, as worries of an imminent Russian invasion of Ukraine add onto the list of concerns about interest rates and inflation. The S&P500 closed 1.9% lower after the White House asked all US citizens to leave Ukraine. The Dow lost 1.4% and the Nasdaq dropped 2.8%.

What to watch today:

• Following Wall Street, the SPI futures are suggesting the ASX200 will fall 0.46% at the open this morning. 
• In commodities, Russia is one of the world’s largest energy producers and the warning for US citizens to leave Ukraine has seen the price of oil rise 3.6%, trading at US$93 a barrel. However, oil prices have been rising before the warnings, most likely due to a statement from the International Energy Agency that oil market supplies are already tight. Gold is trading almost 2% higher at US$1,862.60 an ounce, while the seaborne iron ore price is lower at US$150.87 a tonne. 
• Reporting season is in full swing this week, with many companies set to report their earnings results. A few reporting today include Boral (ASX:BLD) and JB Hi-Fi (ASX:JBH). Bell Potter expect Boral to report NPAT of $137.6 million and JB Hi-Fi to report NPAT of $287.9 million. 
• Suncorp (ASX:SUN) is set to go ex-dividend today. 

Trading Ideas:

• Bell Potter have maintained their BUY rating on DGL Group (ASX:DGL) and have increased their price target from $3 to $3.50, after the company delivered half-year results well ahead of expectations. They reported first-half normalised EBITDA of $23.0 million up 139% on the prior corresponding period, significantly exceeding Bell Potter’s $17.9 million. 
• Trading Central have identified a bullish signal in Focus Minerals (ASX:FML) indicating that the stock price may rise from the close of $0.28 to the range of $0.34 to $0.36 over 25 days, according to the standard principles of technical analysis. 

The Aussie share market rallied this week, lifting 2.36% (Mon-Thu). However, as US inflation came in at a 40-year high on Thursday evening, Aussie investors will feel the pressure on Friday.
 
 In this week’s wrap, Sophia covers: 

• (0:40) Why travel stocks are back in vogue
• (1:04) Nanosonics (ASX:NAN) falling 7% after a sales agreement revision
• (2:18) Opportunities in the hydrogen market
• (5:10) How we’re tracking so far this reporting season
• (6:28) Three economic news releases to watch 

Yesterday, the Aussie share market charged over 1% higher to 7,268 points. That marks a two-week high for the benchmark ASX200 index. The lift follows CBA’s strong half-year results, which also helped the other major banks post decent gains. Looking at the sector performances, the tech sector outperformed, up 4.2%, after it took a solid lead from Wall Street, while both the materials sector and energy sector posted losses, partly due to the fall we saw in the iron ore price. 

Computershare (ASX:CPU) lifted 11.2% after the company released a strong half-year and guidance upgrade. Imugene (ASX:IMU) also gained, after its company director acquired 15 million shares, displaying his confidence in the company. Meanwhile, Mineral Resources (ASX:MIN) dropped nearly 9% after following its mixed results that recognised a loss in both revenue and statutory profit.

The most traded stock by Bell Direct clients yesterday was Fortescue Metals (ASX:FMG). Its share price fell 3.6% following the rapid decline in the iron ore price as Chinese officials step up their efforts to control the iron ore price. Also highly traded was Lake Resources (ASX:LKE), Commonwealth Bank (ASX:CBA) and CSL (ASX:CSL). 

In the US, all three benchmarks closed in the green, with the Nasdaq jumping as investors continued to buy the January tech dip. Tech stocks like Shopify, Etsy, Meta and Zoom all rose. And investors are now preparing for Thursday’s consumer price index report, which will give an update on the inflation picture. The result could push the Federal Reserve closer to considering its single-largest rate hike in more than two decades.

Today, following the positive session over on Wall Street, the futures are suggesting the Aussie share market will open 0.31% higher this morning. 

What to watch today:

• National Australia Bank (ASX:NAB) is one to watch today when it releases its first quarter update. Bell Potter analysts are forecasting around $1.59 billion in cash earnings and 49 cents cash earnings per share.
• AGL Energy (ASX:AGL) is set to release its half-year 2022 results. It is widely expected that the energy company’s results will disappoint the market, after the company faced a very tough half. The analysts at Morgans are expecting AGL’s first-half earnings to sink to $97 million. 
• Also reporting results today is ASX (ASX:ASX), AMP (ASX:AMP), Downer EDI (ASX:DOW), Mirvac Group (ASX:MGR), Cimic Group (ASX:CIM) and Unibail-Rodamco-Westfield (ASX:URW). 
• Virgin Money UK (ASX:VUK) is set to go ex-dividend today. 
• In commodities, the oil price remained stable at US$90 a barrel. The gold price gained 0.26% on a softer dollar and yields, while the seaborne iron ore price is trading 0.8% lower to US$147 a tonne. 

Trading Ideas:

• After its results yesterday, Bell Potter have upgraded its rating on Commonwealth Bank (ASX:CBA) from a HOLD to a BUY, and have maintained its price target at $108. While Citi has a SELL rating and $97 price target and Macquarie has a Underperform rating and $88.50 price target on the stock. 
• Trading Central has a bearish signal on Mineral Resources (ASX:MIN). This signal indicates that the stock price may fall from the close of $52.72 to the range of $41 -$44 in the next 9 days, according to standard principles of technical analysis. 

Yesterday the ASX200 closed in the green. The materials sector made strong gains as iron ore in the spot market rose. Meanwhile tech shares declined the most, as Australia’s 10-year bond yield exceeded 2.1%, reaching the highest level since the beginning of 2019. This saw a sell-off in tech stocks, which tend to be more sensitive to interest rates.

On the ASX200, travel stocks gained for a second session. Webjet (ASX:WEB), Flight Centre (ASX:FLT) and Corporate Travel Management (ASX:CTD) all made the leaderboard. Casino owner Skycity Entertainment (ASX:SKC) and Star Entertainment (ASX:SGR) also made the top 10, boosted by confidence for tourism.

The most traded stock yesterday by Bell Direct clients was A2B Australia (ASX:A2B), which is home to brands such as 13cabs, Cabcharge and EFT Solutions. Its share price gained over 12% yesterday, after the departure of chief executive Andrew Skelton. The company also launched a strategic review of operations.

European markets closed mixed as investors await US inflation data, out later this week, while US equities gained. The Dow closed up 1.06%, the S&P500 up 0.84 and the Nasdaq up 1.28%.

The ASX200 is set open higher. The SPI futures are suggesting a 0.27% rise at the open this morning.

What to watch today:

• In economic news, yesterday NAB’s business confidence Index for January was released, with confidence bouncing back to 3 index points, from -12 points in December. Today, Westpac’s Consumer Confidence Index for February will be released at 10:30am AEDT.
• The oil price has fallen to US$89.64 a barrel, as attention was turned to the Iran nuclear talks that are set to resume today.
• Gold is higher, trading at US$1,826 an ounce, as the dollar rebounded ahead of US inflation data later in the week.
• The seaborne iron ore price is trading at US$148.83 a tonne.
• Commonwealth Bank (ASX:CBA) reported its half-year results this morning, delivering strong financial and operational performance. Statutory NPAT increased by 26% and CBA declared a $1.75 fully franked interim dividend, up 17% from this time last year. Look out for our full report on CBA later today.
• Other companies reporting their earnings results today include Centuria Capital Group (ASX:CNI), Dexus (ASX:DXS), Mineral Resources (ASX:MIN) and Northern Star Resources (ASX:NST).
• ResMed (ASX:RMD) is set to go ex-dividend today, which may see its share price fall as investors take their profits.

Trading Ideas:

• Bell Potter and Macquarie have different views on global mining-tech company Imdex (ASX:IMD), after the company reporting its earnings this week. Half-year revenue is up 35% to $167.8 million and NPAT is up more than 80% at $24.4 million. And Imdex declared a fully franked interim dividend of 1.5 cps. Following the report, Bell Potter have downgraded IMD from a BUY to a HOLD, maintaining a $3 price target. On another note, Macquarie retain their Outperform rating on IMD and have increased their price target from $2.90 to $3.30. IMD’s revenue and earnings beat Macquarie’s expectations by 13%.
• Trading Central have identified a bullish signal in Mincor Resources (ASX:MCR), indicating that the stock price my rise from the $1.71 to the range of $2.06 - $2.14, within 18 days, according to the standard principles of technical analysis.