Between the Bells

Wall St closed lower overnight as the slow start to October continues as Middle Eastern tensions continue and investors await for unemployment data later on tonight. The Dow Jones fell 0.44%, the S&P500 dropped 0.17% and the tech heavy Nasdaq lost 0.04%.

Over in Europe, markets closed lower with the STOXX600 closing 1% lower. All major sectors closed in the red with construction and materials stocks leading losses down 2%. Germany’s DAX fell 0.78%, the French CAC dropped 1.32% and over in the UK the FTSE100 lost 0.1%.

Locally yesterday, the ASX200 rose by 0.09% with half of the major sectors ending in the green. Gains were led by the real estate sector which gained 1.65% with this being offset by the utilities sector which dropped by 0.41% by the closing bell.

What to watch today:

• The Australian share market is set to open lower with the SPI futures suggesting a fall of 0.33% at market open this morning.
• On the commodities front this morning,
  • Oil is trading 5.54% higher at 73 US dollars and 98 cents a barrel following rising geopolitical tensions in the Middle East
  • Gold is trading 0.18% lower at 2655 US dollars an ounce and iron ore is trading 0.51% higher at 109 US dollars and 29 cents a tonne.

Trading Ideas:

• Bell Potter maintains a buy rating on Cedar Woods Properties (ASX:CWP) and has a current share price of $5.60. The 12-month price target of $7.15, indicates a 27.7% growth target in a year, hence the buy rating is maintained.
• And Trading Central has identified a bullish signal on TPG Telecom (ASX:TPG), indicating that the stock price may rise from the close of $5.04 to the range of $5.31-$5.39, on a pattern formed over 17 days, according to the standard principles of technical analysis.

Wall St closed slightly higher overnight as the escalating tensions in the Middle East impacted markets. The Dow Jones added 0.09%, the S&P 500 rose just 0.01% and the tech-heavy Nasdaq gained 0.08%.

Iran’s attack on Israel has impacted investor enthusiasm on Wall St for the new trading month and quarter, with trader uncertainty set to continue following Israel starting ground operations in Lebanon.

Over in Europe, markets closed mixed, following in a similar trend to the US. The STOXX600 remained flat overnight with losses led by the utilities sector falling 1.8%, while oil and gas stocks jumped 1.5% following supply concerns in the Middle East. Germany’s DAX fell 0.25%, the French CAC gained 0.05% and over in the UK the FTSE 100 rose 0.17%.

Locally yesterday, the ASX200 closed 0.13% lower with the majority of sectors closing in the red. Losses were led by the consumer discretionary and information technology sector which fell by 1.73% and 1.58% respectively. This was offset by the energy sector which rose by 2.35% yesterday.

What to watch today:

• The Australian share market is set to open slightly higher, with the SPI futures suggesting a rise of 0.04% at market open this morning.
• On the commodities front this morning,
   
  • Oil is trading 1.71% higher at 71 US dollars and 2 cents a barrel following supply disruptions in the Middle East. 
  • Gold is trading 0.07% lower at 2658 US dollars an ounce and iron ore is trading a massive 15.89% higher at 108 US dollars and 74 cents a tonne as China relaxed rules for homebuyers and moved to lower mortgage rates to support the property market, showing there is a potential rebound in demand for construction materials.

Trading Ideas:

• Bell Potter has initiated coverage on Codan Limited (ASX: CDA) with a hold rating and has a 12-month price target of $16.90. Codan is an Australian technology company that develops and manufactures innovative, mission critical communications and detection technology. CDA’s primary customers include defence, government departments, major corporates, small scale miners and individual consumers. With a current price target of $16.33 the hold rating is recommended.
• And Trading Central has identified a bearish signal in EVT Limited (ASX:EVT), indicating that the stock price may fall from the close of $10.53 to the range of $8.80-$9.20, on a pattern formed over 15 days, according to the standard principles of technical analysis.

 In the US on Tuesday, Wall Street retreated from record territory as investors assess the potential impacts of escalating tensions in the Middle East. The Dow Jones fell 0.41%, the S&P500 lost 0.93% and the tech-heavy Nasdaq ended the day down 1.53%.

Energy stocks rallied on Wall St though on Tuesday as the price of West Texas Intermediate crude spiked after Israel Defence forces said Iran was firing missiles at the country.

The European markets ended Tuesday’s trading session mostly lower on escalating tensions in the Middle East, despite the release of favourable fresh Eurozone inflation data coming in at a decline of 0.1% for September which was lower than August’s reading of a 0.1% increase. On a yearly basis, the Eurozone inflation rate eased to 1.8% from 2.2% in August, in-line with market forecasts. The STOXX 600 fell 0.4%, Germany’s DAX lost 0.58%, the French CAC fell 0.81%, and in the UK, the FTSE100 ended the day up 0.48%.

Across the Asia region on Tuesday, markets closed mostly higher led by Hong Kong’s Hang Seng rising 2.43%, while Japan’s Nikkei added 1.93%, but South Korea’s Kospi Index fell 2.13% on Tuesday.

The local market started the trading month of October mixed with a record close on Monday before sliding 0.74% on Tuesday as Australian retail sales data came in hotter than economists’ were expecting, providing further evidence that inflation remains sticky, and the RBA shouldn’t consider cutting rates just yet. Materials stocks slid 2.3% while healthcare stocks rallied 1.12%. Retail sales rose 0.7% MoM in August which exceeded market forecasts of a 0.4% rise and was a rise for a 5th straight month.

Sigma Healthcare soared 23% on Tuesday after the pharmacy operator offered to make court-enforceable undertakings to satisfy the ACCC concerns over the company’s proposed merger with Chemist Warehouse.

Qantas shares fell 3.4% yesterday on news that Qatar Airways has moved to purchase of a 25% stake in Qantas rival, Virgin.

And REA Group rallied 5% yesterday after the leading real estate business confirmed it would abandon its takeover bid for Rightmove after the UK-based company rejected REA’s fourth bid in a number of weeks.
 
 What to watch today:

• Ahead of the midweek trading session here in Australia the SPI futures are anticipating the ASX to open the day up just 0.02%.
• On the commodities front this morning, oil is trading almost 3% higher at US$70.18/barrel on supply fears out of the Middle East as tensions in the region escalate, while gold is up 1.04% at US$2662/ounce and iron ore is up 0.91% at US$93.83/tonne.
• The Aussie dollar is buying US$0.69, 99.07 Japanese Yen, 51.84 British Pence and NZ$1.10.

Trading Ideas:

• Bell Potter has maintained a hold rating on WiseTech Global (ASX:WTC) and raised the 12-month price target on the leading logistics software company from $115/share to $132.50/share post the release of the company’s FY24 result in August and news last month of DSV’s acquisition of Schenker (where DSV is a global rollout customer of WiseTech Global but Schenker is not. Bell Potter believes the stock looks expensive on an FY25 PE ratio and EV/EBITDA of 120x and 67x respectively hence the hold rating is maintained and the price target is raised based on the strong growth outlook.
• And Trading Central has identified a bullish signal on Autosports Group (ASX:ASG) following the formation of a pattern over a period of 69-days which is roughly the same amount of time the share price may rise from the close of $2.22 to the range of $2.28 to $2.32 per share according to standard principles of technical analysis.

Wall St opened the week with gains to close out a winning month across the major averages with the Dow adding 1.8% in September while the S&P 500 gained 2% and the Nasdaq added 2.7% over the September month of trading. The Dow Jones rose 0.04% to a fresh record high, while the S&P500 added 0.4% and the Nasdaq ended the day up 0.4%. The rally on Monday followed Fed Chair Jerome Powell’s press conference indicating the rate cuts will continue but likely not as aggressively as the US economy shows signs of resilience against easing inflation. Stellantis shares dropped 12.52% on Monday in the U.S. after the Jeep and RAM manufacturer lowered earnings guidance amid a worsening U.S. economy outlook. GM and Ford shares also fell on Monday.

In Europe overnight it was a sea of red across the region for the last trading day of September in a pullback from the records set in the region on Friday. The STOXX 600 lost 0.95%, Germany’s DAX fell 0.76%, the French CAC lost 2% and, in the UK, the FTSE100 ended the day down 1.01%.

Across the Asia region on Monday China’s record rally continued with stocks rallying to their best day in 16-years following stimulus measure announcements out of Beijing last week.

The Aussie market scaled 0.7% higher to a fresh record close on Monday as 9 of the 11 sectors ended the day higher led by energy stocks rallying on the rising price of oil amid fresh attacks from Israel on Lebanon.

Iron ore miners also felt some relief on Monday on the rising price of iron ore following a material stimulus package announced out of China last week to help reignite economic growth post pandemic. China’s manufacturing activity contracted sharply in September though amid subdued demand in the region while production expanded for an 11th straight month in September in China, but new orders fell.

Liontown Resources rallied on Monday after the lithium miner completed its first shipment of lithium spodumene concentrate to China and spot sales starting from its flagship mine in WA.

What to watch today:

• Ahead of Tuesday’s trading session on the ASX, the SPI futures are anticipating the local market will commence the first trading session of October down 0.4%.
• On the commodities front this morning, oil is up 0.2% at US$68.30/barrel, gold is down almost 1% at US$2634/ounce and iron ore is up 0.5% at US$92.98/tonne.
• The Aussie dollar has strengthened again overnight to buy US$0.69, 99.33 Japanese Yen, 51.65 British Pence and NZ$1.09.

Trading Ideas:

• Bell Potter has decreased the 12-month price target on Synlait Milk (ASX:SM1) from 47cps to 42.5cps and maintain a hold rating on the milk processing company following the release of the company’s FY24 results including adjusted EBITDA consistent with expectations and previous guidance. Sales rose 2% in FY24, and no guidance was issued. Bell Potter maintains a hold rating on the company as the outlook remains uncertain for Synlait Milk given its reliance on retaining milk supply post FY26 and convincing farmers to withdraw cessation notices.
• And Trading Central has identified a bullish signal on KMD Brands (ASX:KMD) following the formation of a pattern over a period of 20-days which is roughly the same amount of time the share price may rise from the close of 47cps to the range of 57 cents to 59 cents according to standard principles of technical analysis.

It was a mixed session to end the week on Wall St on Friday with the Dow Jones rallying 0.33% to a fresh record high while the S&P500 lost 0.13% and the Nasdaq ended the day down 0.4%. Encouraging inflation data boosted investor appetite for stocks on the Dow Jones industrials index. August’s personal consumption expenditures price index, which is the Fed’s preferred measure of inflation, increased 0.1% in the month which met economists’ expectations on a monthly basis, but the index rose 2.2% YoY which fell short of economists’ forecasts of 2.3%. While inflation remains under control the Fed can focus on a sustained rate cut outlook to stabilise the US economy.

Across the European region on Friday, markets closed in record territory as investors welcomed China’s new stimulus announcement and investors assessed key economic data. The STOXX 600 rose 0.52% to a record high while Germany’s DAX added 1.22%, the French CAC rose 0.64% and, in the UK, the FTSE100 ended the day up 0.43%. France and Spain both reported preliminary inflation data that showed a drastic drop in inflation in the regions which was welcomed by investors on Friday.

Across the Asia markets on Friday, markets rallied led by China’s CSI index posting its best week in almost 16 years with a rise of 15.7% for the week, on the back of China launching a large-scale stimulus package in a bid to reignite economic activity in the world’s second largest economy. Hong Kong’s Hang Seng rose 3.55% on Friday and 12.75% over the week and Japan’s Nikkei rose 2.32% after headline inflation eased to 2.2% from 2.6% in August.

Locally on Friday the ASX200 rose 0.1% to yet another fresh record high as a sharp rally for materials stocks offset losses among health care and real estate stocks. Mineral Resources led the winners on Friday with a near 14% boost, while Star Entertainment Group fell over 44% in the aftermath of the company released final FY24 results.

De Grey Mining rallied 3.4% on Friday after denying a media report that the gold miner had received a takeover offer from Canada’s Agnico Eagle.

Vulcan Energy Resource rose 5.8% on Friday after the company bought 100% of shares in geothermal wells operator, Geo GmbH.

What to watch today:

• Ahead of Monday’s trading session the SPI futures are anticipating the ASX to open the day up 0.27% tracking the Dow’s record on Wall St on Friday.
• On the commodities front this morning oil is trading 0.75% higher at US$68.18/barrel, gold is down 0.53% at US$2658.40/ounce and iron ore is up 0.48% at US$92.98/tonne.
• The Aussie dollar has further strengthened against the greenback to buy US$0.69, 98.40 Japanese Yen, 51.61 British Pence and NZ$1.09.

Trading Ideas:

• Bell Potter has increased the 12-month price target on Brickworks (ASX:BKW) from $29.50 to $31.00 and have downgraded the rating on the industrial conglomerate from a buy to a hold following the release of a robust FY24 result including EBIT down 8% but this beat Bell Potter expectations by 11%, core net debt increasing to $682m and outlook for FY25 remaining subdued on a building products front.
• And Trading Central has identified a bullish signal on Acrow (ASX:ACF) following the formation of a pattern over a period of 23-days which is roughly the same amount of time the share price may rise from the close of $1.07 to the range of $1.10 to $1.12 according to standard principles of technical analysis.

The Aussie market experienced investors grapple with rate hike decisions, economic uncertainties, and surprising corporate news this week. The RBA maintained its cash rate at 4.35%, while the Federal Reserve faces increasing pressure to avoid a recession. Amidst this backdrop, luxury fashion platform Cettire (ASX:CTT) delivered impressive financial results, defying economic headwinds. 

In this week’s wrap, Grady covers: 

• (0:24): the RBA’s decision to hold the cash rate despite inflationary pressures
• (1:56): how the US economy has reacted to the Fed’s rate hike strategy
• (2:35): Cettire’s strong financial results 
• (4:32): how the ASX200 performed this week so far 
• (5:18): the most traded stocks & ETFs by Bell Direct clients 
• (5:48): economic news items to watch out for. 

Wall St closed lower overnight as the Dow Jones ended a 4-day winning streak losing 0.7%. The S&P500 dropped 0.19% and the tech-heavy Nasdaq gained just 0.04%. In terms of US stocks, both General Motors and Ford fell more than 4% following downgrades from Morgan Stanley.

Over in Europe, markets fell as the China-fuelled rally lost momentum. The STOXX600 closed 0.11% with half of the major sectors ending the trading day in the red. Germany’s DAX dropped 0.41%, the French CAC lost half a percent and over in the UK the FTSE100 ended Wednesday’s trading session 0.17% lower.

Locally yesterday, the ASX200 fell 0.13% with the majority of sectors closing in the red. Losses were led by the financial and consumer staples sectors which fell 1.87% and 1.86% respectively. This was offset by the materials sector which rose by 2.42% yesterday.

Monthly inflation data was also released yesterday coming it at 2.7%, which was below its previous result of 3.5% and the forecast of 3.1%.

What to watch today:

• The Australian share market is set to open higher, with the SPI futures suggesting a rise of 0.21% at market open this morning.
• On the commodities front this morning,
   
  • Oil is trading 2.58% lower at 69 US dollars and 71 cents a barrel, following concerns of supply disruptions in Libya after an agreement to appoint a central bank governor was made. 
  • Gold is trading slightly lower, down 0.03% at 2657 US dollars an ounce and iron ore is trading 0.31% higher at 91 US dollars and 88 cents a tonne.

Trading Ideas:

• Bell Potter has initiated coverage on Netwealth Group (ASX:NWL) with a hold rating. Netwealth Group provides integrated wealth management products to financial intermediaries and their clients. Through its web-based platform, NWL offers end-customers and array of Wrap and Superannuation based portfolio and investment management tools, enabling a transparent and efficient way to buy & sell, monitor and administer assets.
• Trading Central has identified a bearish signal Transurban Group (ASX:TCL), indicating that the stock price may fall from the close of $13.21 to the range of $12.40-$12.55 on a pattern formed over 26 days, according to the standard principles of technical analysis.

Wall Street’s record rally run continued from Monday with the S&P500 up 0.25% to a fresh record, while the Dow Jones added 0.2% to a record close and the Nasdaq added 0.56%, led by AI market darling Nvidia rallying 4%. Investors shook off recent worrying economic data including US manufacturing PMI data hitting the lowest level in 15-months for August, and consumer confidence falling to 98.7 points for September, to extend the recent equity rally on the back of the Fed’s 50 basis point rate cut announcement late last week.

In Europe overnight markets closed higher in the region led by stocks exposed to China following Beijing’s announcement of a range of policy measures easing in a bid to stimulate the economy.  The STOXX600 rose 0.6%, while Germany’s DAX added 0.8%, the French CAC rose 1.28% and, in the UK, the FTSE100 ended the day up 0.28%.

The local market fell 0.13% on Tuesday, extending the weekly decline after the RBA held interest rates higher for longer. Rate sensitive tech stocks came under pressure on Tuesday as a higher interest rate environment makes debt levels more costly, thus blowing out the profitability runway for high growth companies.

The RBA held Australia’s cash rate at 4.35% for the next period as was widely expected with commentary out of Australia’s central bank signalling the most recent projections for inflation in Australia indicate that it will be some time yet before inflation substantially hits the target 2-3% range. Without inflation taming to the target 2-3%, the RBA’s elevated rate of 4.35% will continue to hurt earnings for companies with higher input costs and subdued demand due to a high cost of living environment for all Australians.

The RBA’s rate decision boosted the Aussie dollar to a 2024 record high against the greenback of 68.84 US cents.

What to watch today:

• Ahead of the midweek trading session locally, the SPI futures are anticipating the ASX to open the day up 0.37% tracking Wall Street’s rally overnight.
• On the commodities front this morning, oil is trading 1.76% higher at 71 US dollars and 61cents a barrel, gold is up 1.18% at 2657 US dollars an ounce and iron ore is down 0.36% at 91 US dollars and 60 cents a tonne.

Trading Idea:

• Bell Potter maintains a buy rating on Light & Wonder (ASX:LNW) and has a 12-month price target of $161. Bell Potter’s valuation implies a 19.7% share price growth of the current share price of $134.53, hence the buy rating is maintained.

Wall St shook off the mixed closed to last week with a record finish on Monday as the S&P500 rose 0.28% to a record high 5,718.57 points while the Dow Jones added 0.15% to another record 42,124.65 and the Nasdaq ended the day up 0.14%. Investors overlooked the latest US economic data in the form of a 15-month low for manufacturing PMI activity in the US for August to welcome the Fed’s rate cut outlook. Investors will now look forward to the latest weekly jobless claims data out later this week.

European markets also started the week in positive territory investors assessed fresh business activity data out in the region. The STOXX600 rose 0.4%, Germany’s DAX rose 0.68%, the French CAC added 0.1% and, in the UK, the FTSE100 ended the day up 0.36%.

Across the Asia region on Monday in mostly positive territory as investors assessed monetary policy decisions out of China and Japan last week with both central banks maintaining rates steady for the next period. China’s CSI index rose 0.37%, Hong Kong’s Hang Seng fell 0.2%, The Taiwan 

Weighted Index added 0.57% and Japan’s Nikkei was closed for a holiday.

Locally to start the week, the ASX200 fell 0.7% at the closing bell on Monday to snap a 7-day winning streak as a sharp sell off in the big supermarkets weighed on the consumer staples sector while real estate and discretionary stocks also fell 1.6% and 1.32% respectively.
 Woolworths and Coles, the big supermarket giants, fell 3.4% and 3.3% respectively on Monday after the ACCC said the companies were misleading shoppers with claims they were dropping prices when they were actually increasing them. Both supermarket giants could be facing tens of millions of dollars in penalties.

Iron ore miners were once again under pressure yesterday amid a decline in the price of the key commodity on the back of renewed concerns about demand out of China as the world’s second largest economy continues its sluggish post pandemic recovery.

Boss Energy soared over 8% on Monday in the wake of a megadeal by Microsoft to restore life to a major US nuclear plant. The deal will see Microsoft buy 100% of its power for 20-years, which drove the price of uranium and subsequently, Boss Energy on Monday as Boss Energy’s 30% stake in the 

Alta Mesa uranium mine in south Texas now becomes more valuable in the global ramp up of nuclear power.

All eyes today will be on the RBA as the latest rate decision will be announced this afternoon with the market expecting Australia’s central bank to maintain the current cash rate at 4.35%.

What to watch today:

• Ahead of Tuesday’s trading session locally the SPI futures are anticipating the ASX to open the new trading day down 0.11% taking no lead from Wall Street’s rally overnight.
• On the commodities front this morning oil is trading almost half a % lower at US$70.67/barrel, gold is up 0.23% at US$2627.6/ounce and iron ore is down 0.11% at US$91.93/tonne.
• AU$1.00 is buying US$0.68, 98.23 Japanese Yen, 51.27 British Pence and NZ$1.09.

Trading Ideas:

• Bell Potter has increased the rating on Imdex (ASX:IMD) from a sell to a hold and raised the 12-month price target on the company from $1.90 to $2.05 after the analyst reviewed the investment thesis behind the company to adopt a balanced near-term view on exploration activity and demand growth for the company’s products which are end-to-end mining product technology solutions. With anticipated demand for Imdex products set to grow over the next 6-9 months.
• And Trading Central has identified a bearish signal on Monadelphous Group (ASX:MND) following the formation of a pattern over a period of 46-days which is roughly the same amount of time the share price may fall from the close of $12.33 to the range of $10.40 to $10.80 according to standard principles of technical analysis.

 Wall Street closed mixed on Friday with the Dow Jones rising to yet another record high, ending the day up 0.09% to 42,063 points while the S&P500 and Nasdaq each retreated 0.19% and 0.36% respectively. Investors fear the Fed is needing to cut rates aggressively to avoid a recession as inflation is coming down faster than expected.

Over in Europe, markets closed lower on Friday following a slew of central bank decisions in the region including the Bank of England holding rates steady for the month ahead despite the Fed cutting rates. The STOXX 600 fell 1.45% on Friday while Germany’s DAX lost 1.5%, the French CAC fell 1.51% and, in the UK, the FTSE100 ended the day down 1.2%.

Across the Asia markets on Friday, it was sea of green at the close after the Bank of Japan kept its benchmark interest rate steady at around 0.25% for the next period. Japan’s Nikkei rose 2.8%, China’s CSI index added 0.16%, Hong Kong’s Hang Seng rose 1.27% and South Korea’s Kospi Index ended the day up 0.5%.

Locally on Friday the ASX200 rose to yet another record close, ending the day up 0.2% at 8209.50 points, tracking global optimism on the back of the Fed’s 50bps rate cut announced earlier last week. Consumer discretionary stocks led the charge on Friday with a 1.12% gain while tech stocks rose 0.56% and utilities stocks ended the day up 0.41%. For the week the ASX200 rose 1.35%.
 Department store giant Myer fell more than 10% on Friday after reporting a slump in profit and sales for FY24 with results including total profit after tax falling 26% to $52.6m and the company’s dividend was cut to 5cps.

Telix Pharmaceuticals on the other hand rocketed over 7% on Friday after the cancer imaging and therapy producer announced Cardinal Health as its US commercial distributor for Zircaix, the company’s kidney imaging agent which is currently in FDA submission stages for approval.

What to watch today:

• Ahead of the first trading session of the new week the SPI futures are expecting the ASX to open the day down 0.82%.
• On the commodities front this morning, oil is trading 0.16% higher at US$71.13/barrel, gold is flat at US$2621.53/ounce and iron ore is down 0.11% at US$91.93/tonne.
• The Aussie dollar has strengthened to buy US$0.68 cents, 97.89 Japanese Yen, 51.3 British Pence and NZ$1.09.

Trading Ideas:

• Bell Potter has initiated coverage of Coles Group (ASX:COL) with a buy rating and 12-month price target of $21.55 as the analyst sees Coles as providing an attractive earnings growth profile through to FY27 on an underlying basis with high levels of cash generation supporting growth in dividends.
• And Trading Central has identified a bullish signal on Lindsay Australia (ASX:LAU) following the formation of a pattern over a period of 41-days which is roughly the same amount of time the share price may rise from the close of 94cps to the range of $1.03 to $1.05 according to standard principles of technical analysis.