Between the Bells

The ASX200 extended its poor performance yesterday, falling about 1%. This dragged the market to a four-month low. Rising bond yields and a fall in the iron ore price put pressure on all sectors, with tech stocks taking the biggest hit. 

The market was mixed in the US. The Dow Jones managed to add 90 points, the S&P500 slightly rose 0.16%, while the tech heavy Nasdaq came under pressure, falling 0.24%, following the volatile 10-year Treasury yield. The House on Wednesday passed a bill to suspend the US debt ceiling as the US heads towards a first-ever default with no clear solution in sight.

Following the mixed session on Wall Street, the futures are suggesting the Aussie share market will open 0.32% higher this morning.

What to watch today:

• In economic news, building permits will be released today. Consensus expects total dwellings approved in Australia to decline 5%, after the 8.6% drop in the prior month. 
• Companies that are paying their latest dividends include Bendigo and Australia Bank (ASX:BEN), CSL (ASX:CSL), Fortescue Metals Group (ASX:FMG), Newcrest Mining (ASX:NCM) and Ramsay Health Care (ASX:RHC). Separately, Westgold Resources (ASX:WGX) goes ex-dividend today. 
• The most traded stocks by Bell Direct clients yesterday included Mineral Resources (ASX:MIN). Its shares fell 5.6% yesterday following the decline in the iron ore price, which is driven by power outages in China and lingering concerns over Evergrande’s default. Other highly traded stocks included ANZ (ASX:ANZ), Tabcorp (ASX:TAH), Regis Resources (ASX:RRL) and Brambles (ASX:BXB).
• The oil price edged lower on Wednesday to about US$75 a barrel. This comes as US crude inventories rose more than expected, despite OPEC planning to maintain its deliberate approach to adding supply to the market despite strong worldwide demand. 
• The uranium price rose 5%, while on the flip side, the lithium price fell 5%. Meanwhile, the gold price fell following the dollar rising and due to the growing confidence that the Fed will soon begin winding down its economic support measures.

Trading ideas:

• Bell Potter has rated iron ore exploration and development company Genmin (ASX:GEN) as a Speculative BUY, with a price target of $0.44. GEN closed yesterday at $0.17, which implies about 159% share price growth.
• Bullish charting signals have been identified in Insurance Australia Group (ASX:IAG), Resolute Mining (ASX:RSG) and Perseus Mining (ASX:PRU) according to Trading Central.

The US 10-year bond yield continued to climb overnight, hitting 1.5%, its highest level since June. As a result, an interest rate sell off was reignited. 

The Aussie share market is set to open lower, with the futures suggesting a fall of 1.1%. 

What to watch today: 

• Keep an eye on retail stocks, after data released yesterday saw retail sales in August fell 1.7%. In addition, the Federal Government announced it will stop the $750 per week payments, once the country reaches 80% double dose vaccinations. 
• Also keep a look out for long-term potential buying opportunities in clean energy and lithium stocks, as the NSW Government has committed to reducing emissions by 50% by 2030. 
• The oil price fell 0.2% overnight to US$75.29, nearing October 2018 levels, amid restricted supply. Meanwhile, the coal price rose to a brand new record high overnight, taking its monthly gain to 20%. This is again amid tighter supply as China cut back on coal production in a bid to be carbon neutral by 2060. 
• There are over 40 listed stocks and ETFs going ex-dividend today, transferring dividend rights to shareholders, which often causes shares to fall amid profit taking. Companies going ex-dividend today include: TPG Telcom (ASX:TPG), Centuria Industrial REIT (ASX:CIP), and Charter Hall (ASX:CLW), as well as ETFs including the ASX200 ETF (ASX:STW) and fixed income ETFs Australian Bond (ASX:BOND) and Australian Government Bond (ASX:GOVT). 

Trading Ideas: 

• Bell Potter have increased its price target on oil producer Beach Energy, (ASX:BPT) from $1.60 to $1.62, implying 19% share price growth in a year. Yesterday BPT upgraded its production by 13%, and Bell Potter believes the company has a strong, fully funded energy production growth outlook, while production growth is diversified across five energy basins and four separate gas markets, including global LNG trade. 
• Bullish charting signals have been seen in Aeris Resources (ASX:AIS), Gale Pacific (ASX:GAP), and Ambertech (ASX:AMO), according to Trading Central

The Aussie share market is set to open lower, with the futures suggesting a fall of 0.6%.

What to watch today:

• The oil price rose for the fifth day, up 1.5% overnight to US$75.45, its highest level since July, amid supply concerns. Oil stocks will be on watch today.
• The iron ore price in China rebounded 7.2% to US$119.31, supporting New York listed BHP and Rio Tinto, which rose 1% overnight. Expect ASX listed versions and other iron ore stocks to do well today.
• Lithium stocks will also be on the radar today after Ford announced it’s going to spend $11.4 billion on creating two new lithium-ion battery plants, that will produce electric vehicles and batteries. The plants are to be built in Kentucky and Tennessee. Ford is building the twin lithium battery plants though a joint venture with South-Korean based SK Innovation.
• In corporate news, Beach Energy (ASX:BPT) provided an investor update, announcing it will increase production to 28 million barrels of oil equivalent by financial year 2024. That’s a 13% compound annual growth rate. In addition, Beach Energy affirmed it’s on track to cut its carbon emissions by 25% from 2018 to 2025, with plans to be net zero emissions by 2050
• In economic news, retail sales data for August is set to be released today at 11.30am. Sales fell 2.7% and are expected to fall again. Keep an eye on retailers, especially those impacted by import bottlenecks like Accent (ASX:AX1).

Trading Ideas:

• UBS has a BUY rating on fertilizer business Incitect Pivot (ASX:IPL) and has increased IPL’s price target to $2.15.
• Bullish charting signals have been seen in Carnarvon (ASX:CVN), Kalium Lakes (ASX:KLL), and Starpharma (ASX:SPL) according to Trading Central

The SPI futures are suggesting a flat start to the week for the Aussie share market. On Friday, the ASX200 fell 0.4% and lost 0.8% on the week, falling for the 3rd straight week.  

What to watch today:

• Watch iron ore stocks amid worry of China’s Evergrande, retail stocks amid supply-chain issues, and financial stocks given end of quarter profit taking. 
• The oil price rose 3% to US$74.43, to an eight week high. The gold price rose slightly, while the iron ore price slowly bounced off its low, trading at US$120, after falling below US$100 last week. However, iron ore last traded lower on Friday. As a result of this, New York listed BHP and Rio Tinto closed in the red. 
• In corporate news, Synlait Milk (ASX:SM1) forecasts a return to robust profitability. The company says it will return to pre-pandemic levels of profitability by the end of its 2023 financial year. SMI, the milk powder producer, reported a loss of $20 million for its financial year ended July 31, due to disruptions brought on by the pandemic and from its key customer A2 Milk. However, for this current year results will be bolstered as production is ramping up for the new multinational customer and normal business conditions should return. 
• Companies going ex-dividend today include Imdex (ASX:IMD) and Gold Road Resources (ASX:GOR). 
• In economic news, retail sales data will be released on Tuesday and building permit data will be released on Thursday. 

Trading Ideas: 

• Citi expects Accent’s (ASX:AX1) shares to fall amid supply chain disruptions. This is partially due to Nike downgrading its 2022 outlook, as freight and supply issues mean the company can’t keep up with strong demand. Citi believe shares in the shoe store giant, Accent with fall to $2.14, however it is expected to maintain a dividend yield of 3.7%. 
• Bullish charting signals have been seen in Exopharm (ASX:EX1), Orthocell (ASX:OCC) and Catapula Group (ASX:CAT), according to Trading Central.

US and Aussie equities fell for the third straight week, rebounding slightly over the last few sessions, as China's biggest property developer coughed up its repayments. Additionally, US and Australian central banks have affirmed economic stimulus will be tapered next year.

In this week’s wrap, Jessica covers:
- (0:42) What’s in store for interest rates
- (2:02) AusNet Services (ASX:AST) rising 30% amid takeover fight
- (2:25) Travel stocks reaping the benefits of increased vaccination rates & borders reopening
- (2:52) Why iron ore stocks are rebounding
- (6:07) Five stocks that Bell Direct clients are seeing value in

Watch the Weekly Wrap in video here.

In overseas markets, the Bank of England and the US Fed kept monetary policy unchanged. European stocks closed higher, with the STOXX 600 index closing 0.9% higher. And all three major US indices closed in the green. 

Following the broad gains in European and US markets, the SPI futures are suggesting the ASX200 will open 0.11% higher. 

What to watch today:

• Companies going ex-dividend today include Atlas Arteria (ASX:ALX), Bank South Pacific (ASX:BFL) and Sigma Healthcare (ASX:SIG). 
• The most traded stocks yesterday by both Bell Direct and our advised clients. They were BHP (ASX:BHP) and Fortescue Metals (ASX:FMG), after the iron ore price rebounded. The aftermath of Chinese developer Evergrande securing a deal to avoid default caused a spike in iron ore demand.  
• The iron ore price pushed above US$100, after this week hitting its 2021 year low. The bulk commodity increased 16.8% yesterday. The iron ore price is now trading 0.2% lower at the time of recording. Global steel output also declined. 
• The gold price has plunged more than 1% to US$1,745 an ounce, and the oil price gained 1.4% to US$73.30 a barrel, at its highest level since the beginning of August, boosted by growing fuel demand.  

Trading ideas:

• Bell Potter have upgraded their rating on Premier Investments (ASX:PMV) from a HOLD to a BUY, and have increased their 12-month price target to $31.25 (previously $26.10). The investment company delivered strong full year 2021 results, despite the impact of the lockdowns. PMV closed at $27.63 yesterday, implying 13.1% share price growth in a year. 
• Bullish charting signals have been identified in PointsBet Holdings (ASX:PBH), Charter Hall Group (ASX:CHC) and Omni Bridgeway (ASX:OBL), according to Trading Central. 

Evergrande Group, China’s second biggest property developer, managed to rack up staggering debts of more than $432 billion dollars, on the brink of collapse. However, at the very last minute managed to ink a deal to keep it afloat. News of this deal helped the iron ore price surge and Aussie materials stocks make steep gains, lifting the broader market by 0.32%. 

In the US, all three benchmarks closed in the green. This comes after the Fed announced it was not ready to remove stimulus yet. While no specific timeline was provided as to when it may begin moderating its purchases, in the Fed’s post-meeting statement, they noted “if progress continues broadly as expected, the Committee judges that a moderation in the pace of asset purchases may soon be warranted.”

Following a strong night of trade on Wall Street, the futures are suggesting the Aussie share market will open 0.19% higher this morning.

What to watch today:

• In economic news, the Manufacturing PMI Flash data and the Services PMI Flash data will be released today at 9am AEST.
• Companies ex-dividend today include Eagers Automotive (ASX:APE), NRW Holdings (ASX:NWH), Cochlear (ASX:COH) and Genesis Energy (ASX:GNE).
• Suncorp Group (ASX:SUN) holds its AGM today and Brickworks (ASX:BKW) are set to report today.
• The most traded stocks by Bell Direct clients yesterday included Zip (ASX:Z1P). Its shares lifted 4.3% yesterday to $6.51 following investors responding positively to the company’s strategic US$50 million investment in India-based BNPL operator ZestMoney. ZestMoney was founded in 2015 and is now one of the largest and fastest growing BNPL platforms in India. Another highly traded stock yesterday by Bell Direct clients was Fortescue Metals (ASX:FMG). Its shares lifted 4.2% yesterday, bouncing off 14-month lows following the news that China’s embattled real estate developer Evergrande will meet its bond interest payments due today. 
• The oil price climbed more than 2%, following a greater than expected drawdown of US supplies. The gold price fell after the Fed signalled a sooner than expected interest rate hike, while the palladium price lifted over 6%. 

Trading ideas:

• Bell Potter has maintained its BUY recommendation on iron ore company Fortescue Metals Group (ASX:FMG), however have decreased its price target to $20.87 (previously $22.52). At its current share price value of $15.37, this implies about 36% share price growth.
• Bullish charting signals have been identified in De Grey Mining (ASX:DEG), Aussie Broadband (ASX:ABB) & REA Group (ASX:REA), according to Trading Central.

The Aussie share market is set to open lower, with the futures suggesting a fall of 0.2%. 

The market is down 1.8% this week so far. Miners are down the most, while utilities and staples are up the most. 

What to watch today: 

• Investors are favouring utilities, staples and healthcare, amid uncertainty in the market. The market may stay this way until the outcome from the US Central Bank’s meeting on Wednesday, until investors have further clarity on China’s property sector demise, and until the roadmap out of lockdown becomes clearer. 
• The iron ore price has fallen heavily, below US$100 for the first time in a year. However, overnight iron ore slightly rose 0.1% to US$93.03. BHP investors in New York took this as a sign to buy the dip. In the US, BHP shares rose almost 1%. 
• The oil rice is steady at US$70.70, holding its highest level since August, while the gold price is slightly lower. 
• In economic news, yesterday the RBA meeting minutes reaffirmed the RBA’s confidence that the Australian economic should see strong growth resume next year. Today, the RBA Governor and Deputy will appear at the House of Representatives at 10:15am AEST. And the RBA Assistant Governor of the Financial System will also give a speech on the housing market and financial stability at noon AEST. 
• In corporate news, AGL Energy (ASX:AGL) is set to hold its AGM. 
• Widgie Nickel (ASX:WIN) and X2M Connect (ASX:X2M) are new listings on the ASX. 
• Abri (ASX:ABC) goes ex-dividend today and Hawkstone Mining (ASX:HWK) goes ex-bonus entitlement. 

Trading Ideas: 

• Citi has upgraded Champion Iron (ASX:CIA) from a HOLD to a BUY, however has slashed its 12-month price target from $7.25 to $6.40. Citi acknowledges near-term risk to iron ore price, forecasting iron ore to sit at US$125 in CY22 and hit US$80 in CY23. However, China’s lead indicators are stabilising and have turned up off recent lows. Citi says steel prices are being driven more by state imposed production cuts, than weakness in underlying demand. 
• Bullish charting signals have been seen in Whitehaven Coal (ASX:WHC), Sydney Airport (ASX:SYD) and Alkane Resources (ASX:ALK), according to Trading Central

Investors are bracing for the US Central Bank meeting on Wednesday, with concerns the Fed will scale back stimulus. 

There is worry China’s economy has reached its debt ceiling, as China’s biggest property developer is not able to pay its repayments. This is impacting Asian bank stocks and commodities. 

The Aussie share market is set to open lower, with the futures suggesting a fall of 1.4%, following yesterday’s 2.1% drop. The market is 4% away from its August all time high. 

What to watch today: 

• The US will open its border to fully vaccinated foreigners, and analysts expect the most upside in financials and industrials. 
• The iron ore price in China fell 8.8% to US$92.98. BHP and Rio Tinto listed in New York fell 2.9% as a result. 
• Copper fell to a one-month low, while gold rose slightly, and the oil price fell 2%, however is recouping its losses and now trading at US$70.70, its highest level since August. 
• In economic news, the RBA is set to release its meeting minutes at 11:30am AEST. The RBA announced earlier this month that stimulus will stop mid- February next year in line with the economic reopening. 
• In corporate news, Sigma Healthcare (ASX:SIG) and Kathmandu (ASX:KMD) are due to make announcements today. 
• Qube (ASX:QUB) goes ex-dividend today. 

Trading Idea:

• Citi upgraded Baby Bunting Group (ASX:BBN) to a BUY, rising its 12 month price target from $5.90 to $5.98. 
• Charter Hall (ASX:CLW) is a Citi BUY, given it’s set to buy ALE Property Group (ASX:LEP) for $1.68 billion. Citi cut its 12-month price target for CLW from $5.68 to $5.59. 
• Pentant (ASX:5GG), Emvision Medical Devices (ASX:EMV) and Meridian Energy (ASX:MEZ) are all giving off bullish charting signals, according to Trading Central. 

All eyes this week are on the US Federal Reserve, who will meet on Wednesday. The Fed are expected to hint when its $120 billion per month bond buying will slow down. This has been critical in supporting the US economy and stock market. 

Ahead of the meeting, investors exercised caution, locking in profits and selling stocks, which dragged the Dow Jones to a two month low. Mining and tech stocks down the most, while energy stocks saw the biggest gains, as the oil price slicked up. Healthcare stocks also finished higher. 

This morning the Aussie share market is set to follow the US, with the futures suggesting a fall of 0.92%. 

What to watch today: 

• The iron ore price fell on Friday, and has now risen 3.5% to US$123, as it attempts to rebound. Watch BHP (ASX:BHP) and Fortescue Metals (ASX:FMG). 
• The lithium price rose 2%, while the oil price is now lower, rising 3% on the week to US$71.73, its highest level since July. 
• The coal price hit another record high, amid restricted supply and skyrocketing demand from China and India for electricity. 
• Corporate results from the US begin to come through as the end of the quarter approaches. 
• Sydney Airport (ASX:SYD) reported August 2021 traffic numbers, with total passenger traffic of 51,000 passengers, down 99% on the corresponding period in 2019. 
• Sigma Healthcare (ASX:SIG) and Kathmandu (ASX:KMD) are due to report tomorrow. 
• Also this week: AGL Energy (ASX:AGL) set to hold its AGM on Wednesday. On Thursday, Brickworks (ASX:BKW) is set to report, and Suncorp (ASX:SUN) is set to hold its AGM. 
• In economic news, the RBA meeting minutes will be released on Tuesday. And the services sector reading will be released on Thursday. Given restrictions, the sector is not expected to recover until November. 
• Companies going ex-dividend today include Duratec (ASX:DUR) and Fenix Resources (ASX:FEX). 

Trading Idea: 

• Gold Road Resources (ASX:GOR) was reiterated as a Bell Potter BUY, with a $1.75 target, implying 31% share price growth in a year. 
• Bullish charting signals have been identified in ALS (ASX:ALQ), Lovisa (ASX:LOV) and Imicor (ASX:IMR) according to Trading Central.