Between the Bells

Wall St closed mixed overnight as investors await key inflation data, set to be released on Wednesday. The Dow Jones closed 0.36% lower, the S&P 500 closed flat overnight and the tech-heavy Nasdaq saw a rise of 0.21%.

Over in Europe, markets closed mixed as investors await inflation data to come out from both the US and the UK. The STOXX600 closed flat overnight with travel and leisure stocks falling 0.8%. This was offset by oil and gas stocks which gained 0.6% after OPEC trimmed its 2024 global oil demand growth forecast. Germany’s DAX had a small gain of 0.02%, the French CAC fell 0.25% and over in the UK the FTSE100 rallied over half a percent.

Locally yesterday, the ASX200 rose 0.46% by market close. Gains were led by the information technology and consumer discretionary sectors which rose by 1.93% and 1.91% respectively. This was offset by the materials sector which fell over half a percent by the closing bell.

What to watch today:

• The SPI futures are suggesting that the Australian share market will open flat at the open this morning.
• On the commodities front this morning,
   
  • Oil is up 3.84% to 79 US dollars and 78 cents a barrel following the escalating conflict in the middle east which is threatening tighter global oil supplies. As well as this, OPEC have reduced its 2024 global oil demand forecast to 2.11 million barrels per day from 2.25 million barrels. 
  • Gold is trading 1.71% higher at 2472 US dollars an ounce and iron ore is trading half a percent higher at 101 US dollars and 26 cents a tonne.

Trading Idea:

• Bell Potter maintains a buy rating on Beach Energy (ASX:BPT) and has a 12-month price target of $1.40. The buy rating is maintained by Bell Potter as the capex is now trending lower and production growth will see free cash flow lift from FY26. BPT’s near-term production growth is a key differentiator when compared with domestic peers. With a positive view on Australian east coast gas and LNG markets, and a strong production and earnings growth outlook, the buy rating is maintained.

Wall Street continued its recovery-rally on Friday to close higher across the three key averages as weaker-than-expected initial jobless claims data out on Thursday boosted investor hopes that the U.S. will avoid recession in favour of a soft landing. The Dow jones rose 0.13% on Friday, the S&P500 added 0.47% and the tech-heavy Nasdaq ended the day up 0.51%.

Over in Europe, markets closed higher in the region taking lead from the global market recovery from Monday’s sharp sell-off. The STOXX 600 rose 0.57% on Friday, Germany’s DAX added 0.24%, the French CAC rallied 0.31%, and, in the UK, the FTSE100 ended the day up 0.28%.

Across the Asia markets on Friday the global sea of green extended across Asia’s markets as investors assessed China’s CPI and PPI data and bought back into stocks broadly after the early week mass sell-off. Japan’s Nikkei added 0.56% on Friday, China’s CSI index slid 0.34%, and Hong Kong’s Hang Seng rallied 1.17%.

China’s CPI came in at a rise of 0.5% which well exceeded economists’ forecasts of a 0.3% rise indicating the highest reading since February indicating improved domestic demand in the world’s second largest economy.

While the inflation reading rising is a positive sign, it is just one move in the right direction, and much more is needed to be done to see a proper correction in the economic health of China. This week we also had Chinese trade balance data out that indicated imports exceeded exports which depleted the trade surplus in the country more than economists’ were expecting, and PPI data out on Friday that fell 0.8% from a year ago, indicating a mixed recovery picture in the region.

What to watch today: 

• Locally on Friday the ASX200 ended the day in positive territory, with a modest gain of 1.25%, led by the tech sector rising over 3%, driven by Life360 soaring 18% after upgrading full year revenue guidance and announced global expansion plans.
• QBE Insurance fell almost 2% on Friday following the release of the company’s FY24 results. Despite the company posting a strong gain in earnings, investors were more focused on the small miss in net profit and guidance than analysts’ were expecting.
• On the commodities front this morning, oil is trading 0.15% higher at US$76.98/barrel, gold is down just a slight 0.09% at US$2428/ounce and iron ore is up 0.51% at US$101.26/tonne.
• The Aussie dollar has strengthened over the weekend, with 1 Aussie dollar is buying 65.7 US cents, 96.55 Japanese Yen, 51.34 British Pence and 1 New Zealand dollar and 10 cents.
• Ahead of Monday’s trading session on the ASX the SPI futures are anticipating the market to open the day up 0.76%.

Trading Ideas:

• Bell Potter has increased the 12-month price target on Life360  (ASX:360) from $19/share to $20.50/share and maintain a buy rating on the location tracking software company following the release of the company’s 2Q24 trading update outlining a beat on revenue expectation, a beat in total paying circles and the company upgraded its guidance for both revenue and EBITDA for FY24.
• Trading Central has identified a bullish signal on SRG Global (ASX:SRG) following the formation of a pattern over a period of 74-days which is roughly the same amount of time the share price may rise from the close of $0.88 to the range of $1.01 to $1.03 according to standard principles of technical analysis.

Reporting season if off to a rock start. While only a handful of ASX-listed companies have unveiled their FY24 results, a clear trend of rising costs and a gloomy outlook for the coming year is already emerging. Discover which companies are weathering the storm and which are facing headwinds. 

In this week’s wrap, Grady covers: 

• (0:37): what happened to Transurban this week
• (1:39): why retailers are facing headwinds 
• (2:52): what to expect from Mirvac Group
• (5:24): the most traded stocks & ETFs by Bell Direct clients 
• (5:50): economic data to watch out for. 

 Wall St closed higher overnight after new labour market data boosted investors confidence following a sell-off earlier in the week. The Dow Jones rose 1.76%, the S&P 500 had its best day since 2022, rising 2.3% and the tech-heavy Nasdaq gained 2.87%.

US jobless claims data was released overnight, coming in below its previous result of 250k to 233k, taking some pressure of concerns on the strength of the labour market.

Over in Europe, markets closed mixed as they reacted to the boosted sentiment over in the US. The STOXX600 closed 0.2% higher with sectors staying in mixed territory. Media and chemicals stocks dropped by 0.6%, while travel stocks jumped 1.28% overnight. Germany’s DAX rose 0.37%, while the French CAC fell 0.26% and over in the UK the FTSE100 also fell 0.27%.

Locally yesterday, the ASX200 closed 0.23% lower with half of the sectors closing lower. Losses were led by the real estate and materials sectors which fell 1.89% and 1.82% respectively. This was offset by the financial sector which gained just over 1% by the closing bell.

What to watch today:

• The Australian share market is set to open higher, with the SPI futures suggesting a rise of 1.06% at market open this morning.
• On the commodities front this morning,
   
  • Oil is trading 0.92% higher at 75 US dollars and 92 cents a barrel, following the release of positive US jobs data. 
  • Gold is trading 1.74% higher at 2426 US dollars an ounce and iron ore is trading 1.12% lower at 101 Us dollars and 71 cents a tonne.

Trading Ideas:

• Bell Potter maintains a buy rating on Coronado Global Resources (ASX:CRN) and has a 12-month price target of $1.85. The buy rating is maintained by Bell Potter as CRN’s production and cost profile has reached a turning point, following substantial self-funded investment across its Australian and US operations over the past two years. The company should generate improved free cash flow and shareholder returns going forward, hence the buy rating is maintained.
• Trading Central has identified a bullish signal on AGL Energy (ASX:AGL), indicating that the stock price may rise from the close of $10.75 to the range of $11.23-$11.33, on a pattern formed over 25 days, according to the standard principles of technical analysis.

 Wall Street’s rollercoaster week extended into the midweek session as stocks went from a rally on Tuesday to a sea of red again on Wednesday as investor fears of recession drive investor sentiment in the current market conditions. The Dow Jones fell 0.6% on Wednesday, the S&P500 dropped 0.77% and the tech-heavy Nasdaq ended the day down 1.05%. Super Micro Computer shares tanked 20.1% after the server company missed Q4 earnings estimates, while Shopify soared over 22% after the e-commerce giant beat expectations for Q2.

Over in Europe markets closed higher on Wednesday in the best performance for the region for more than 9-months. The STOXX600 rose 1.56%, Germany’s DAX climbed 1.47%, the French CAC added 1.9% and, in the UK, the FTSE100 ended the session up 1.75%.

Puma shares tumbled over 11% on Wednesday after the sportswear company released Q2 earnings and reduced its EBIT forecast fore the full year.

The Asia markets extended gains in the region on Wednesday as Japan’s Nikkei continued its recovery with a 1.2% rise, while Hong Kong’s Hang Seng added 1.3%, while China’s CSI index ended the day flat.

China’s trade balance data out yesterday indicated a stagnated recovery in the region’s trade for July with imports rising 7.2% in July, while exports rose 7% which missed expectations.

Locally on Wednesday, investors took confidence from Wall Street’s recovery on Tuesday into our local midweek session resulting in the key benchmark ending the day up 0.25% as all but two sectors ended the day in positive territory. Investors are focused on corporate earnings and rate outlook, with subdued trading volumes locally indicating investors sit nervously on the sidelines assessing economic outlook and the rate cut forecasts.

Arcadium Lithium was the best performer on the ASX200 yesterday after the company announced it will suspend or delay a number of its projects in Argentina and Canada amid the persistently depressed lithium spodumene prices.

GQG Partners shares rose 3.3% yesterday after the fund manager reported funds under management increased almost 0.5% MoM to US$156.3bn as of the end of July, implying net inflows of US$13.9bn for the year to date to July 31.

What to watch today:

• Ahead of Thursday’s trading session on the ASX, the SPI futures are anticipating the local market to open the day down 0.43%, taking lead from Wall Street’s turbulence overnight.
• On the commodities front this morning, oil is trading 3.13% higher at US$75.48/barrel, gold is flat at US$2383/ounce, and iron ore is down 1.27% at US$102.86/tonne.
• AU$1.00 is buying US$0.65, 95.51 Japanese Yen, 51.52 British Pence and NZ$1.09.

Trading Idea:

• Bell Potter has decreased the 12-month price target on Neuren Pharmaceuticals (ASX:NEU) from $28 to $25 but maintain a buy rating on the biotech company developing drugs and treatments for key neurodevelopmental disorders, following the release of the company’s Q2 results including Daybue sales rising 11% QoQ to US$84.6m and treatment persistency continuing to track towards 50% long-term. The decrease in the price target by Bell Potter’s analyst was due to the company’s distribution partner, Acadia, decreasing the CY24 sales guidance of Neuren’s Daybue drug to US$340-US$370m from US$370m to US$420m.

Over in the US on Tuesday the steep sell-off of the previous three sessions took a pause with stocks recovering some losses, as investors took a pause from the recession-fear-driven pull-back. The Dow Jones rose 0.76% on Tuesday, the S&P500 rose 1.04% and the tech-heavy Nasdaq ended the day up 1.03%. US investors began the US Market correction last Friday after US jobs data came in weaker-than-expected, which sparked the broad market tumble for 3 sessions amid rising recession fears. The rally on Tuesday has identified key areas of the market that still have growth potential including small-caps and rate-sensitive groups.

Across European markets overnight, markets in the region joined the global market rebound on Tuesday to close mostly higher in Europe. The STOXX 600 rose 0.2% on Tuesday, Germany’s DAX added 0.09%, the French CAC declined 0.27%, and, in the UK, the FTSE100 ended the day up 0.23%.

 In the Asia region on Tuesday, Japan’s Nikkei recovered from its worst session since the Black Monday crash of 1987 on Monday, to close up 10.23% on Tuesday as heavyweight stocks in the region including Softbank Group Corp and Mitsui rose 12.06% and 10.43% respectively. Japan’s markets have been sliding of late since the Bank of Japan raised rates to their highest level since 2008 on July 30, causing the yen to strengthen which placed pressure on equities.

What to watch today: 

• The local market tanked over 3% on Monday before recovering to close 0.41% higher on Tuesday, taking no-lead from Wall Street’s worst session in years on Monday night. Local investors yesterday were more focused on the RBA’s rate decision and key corporate earnings results to provide outlook for FY25.
• The RBA maintained the nation’s cash rate at a 12-year high 4.35% for yet another period as was widely expected as key inflation drivers remain stubbornly sticky including housing inflation, food and non-alcoholic beverages, and clothing and footwear, in addition to services, and wages inflation driving up the nation’s inflation rate to 3.8% in the June quarter.
• RBA governor Michele Bullock said yesterday ‘a rate cut is not on the agenda in the near term’ as inflation remains sticky above the 2-3% target range and that the RBA actually considered a raise for August’s meeting before deciding to hold at the current rate. Ms Bullock also pointed out the impacts of sticky overseas inflation and locally, the need to see demand and supply coming back into better balance.
• On a corporate earnings front, Audinate tanked 36% yesterday after releasing strong FY24 results alongside the outlook for headwinds set to impact earnings in FY25. Investors were more concerned about the outlook of earnings depreciation than the strong results in FY24.
• Coronado Global Resources shares fell 1.3% on Tuesday after the leading coal producer reported 1H NPAT fell 92% on PCP, while EBITDA tumbled 62% YoY and revenue fell 10% on the PCP. CRN retained CY24 guidance on volumes, cost and CAPEX and attributed the performance dip on lower coal prices and lower sales.
• On the commodities front this morning oil is trading 0.5% higher at US$73.03/barrel, gold is down 0.4% at US$2395/ounce and iron ore is up 0.17% at US$104.18/tonne.
• The Aussie dollar is buying 65.15 US cents, 94.93 Japanese Yen, 51.02 British Pence and 1 New Zealand dollar and 10 cents.
• Ahead of the midweek trading session on the ASX the SPI futures are anticipating the ASX to open the day down 0.25%.

Trading Ideas:

• Bell Potter has increased the 12-month price target on Lotus Resources (ASX:LOT) and maintain a speculative buy rating on the uranium-focused miner with projects in Africa following the company’s announcement that it has signed the Mine Development Agreement with the Malawi Government for the restart of the Kayelekera (Kay-el-e-kera) Uranium Mine (KM). Bell Potter’s analyst sees posit

A weaker-than-expected jobs report out in the US on Friday sparked a broad sell-off to end the week on Wall Street as recession fears continue to rise. The Dow Jones fell 1.51% on Friday, the S&P500 lost 1.84% and the tech-heavy Nasdaq tumbled 2.43%. The unemployment rate in the US rose to the highest level since October 2021 in July to a rate of 4.3%, while nonfarm payrolls grew by just 114,000 last month. The bond market was flooded on Friday as investors seek out safe-haven assets, which saw the US 10-year Treasury Yield fall to its lowest level since December.

Second quarter results out of Amazon led to a sell-off in the tech giant after the company missed expectations and issued a disappointing forecast which signals easing growth in the AI and tech space.

Intel also tanked 26% after announcing weak guidance and widespread layoffs.

Over in Europe, the global sell-off on Friday extended into the region with the STOXX 600 ended the day down 2.82% led by financial services and banking stocks falling 5.22% and 4.35% respectively. Germany’s DAX ended Friday’s session down 2.33%, the French CAC fell 1.61% on Friday and, in the UK, the FTSE100 closed out the week with a loss of 1.31%. The fall in the FTSE100 came despite the Bank of England cutting interest rates for the first time since December 2020 on Thursday last week.

Across Asia on Friday, it was a sea of red led by Japan’s Nikkei tumbling 5.81% marking its worst session since March 2020 as Daiwa Securities tumbled 18.85%. Hong Kong’s Hang Seng ended Friday’s session down 2.32%, South Korea’s Kospi index fell 3.65% as inflation data came in higher than expected for July, and China’s CSI index ended the day down 1.02%.

Locally on Friday, the ASX200 fell 2.11% in its worst day since March 2023, retreating from the all-time high reached on Thursday. For the week though the ASX200 notched a slight 0.28% gain as communications services stocks did most of the heavy lifting with a 2.14% rise. Retailers took the biggest hit on Friday as investors assessed weakening economic conditions at home and overseas, with Wesfarmers falling 2.9%, and Premier Investments ending the day down 2.2%. Block Inc was a rare winner on Friday with a rise of 5.1% after the company flagged a new US$3bn share buyback and upgraded its full-year guidance.

What to watch today:

• Ahead of Monday’s session on the ASX the SPI futures are anticipating the market to open Monday’s session down by a large 1.46%.
• On the commodities front this morning oil is trading 3.66% lower at US$73.52/barrel, gold is down 0.12% at US$2442/ounce and iron ore is up 1.14% at US$104/tonne.
• AU$1.00 is buying US$0.65, 96.32 Japanese Yen 50.82 British Pence and NZ$1.09.

Trading Ideas:

• Bell Potter has significantly increased the 12-month price target on Clarity Pharmaceuticals (ASX:CU6) from $4 to $10 and maintain a speculative buy rating on the cancer imaging and therapy treatment development company following the release of a Q4 cashflow statement and quarterly activities report out of the company. Gross cash burn was around $14m, net cash burn was inclusive of $10m in R&D credit was around $4m, and Bell Potter’s analyst estimates the cash runway extends deep into CY26. The company continues to focus on two trials in prostate cancer which continue to show outstanding safety with good indications of efficacy.
• And Trading Central has identified a bearish signal on Mirvac Group (ASX:MGR) following the formation of a pattern over a period of 17-days which is roughly the same amount of time the share price may fall from the close of $2.10 to the range of $1.71 to $1.79 according to standard principles of technical analysis.

And that’s all for this Monday, be sure to look out for FY24 results out of Cettire, AGL Energy and Arcadium Lithium out tomorrow.

Australia’s corporate landscape is facing a perfect storm. Rising costs, fierce competition, and softening economic conditions are putting pressure on companies across the board. The upcoming earnings season will reveal the full extent of these challenges. Discover the key trends and potential investment opportunities in this week’s video.

In this week’s wrap, Sophia covers:

• (0:11): how economic headwinds are impacting corporate profits
• (0:41): why the market’s attention is shifting towards FY25
• (1:32): why sector performance is expected to diverge
• (2:10): how the ASX200 performed this week so far
• (3:13): the most traded stocks & ETFs by Bell Direct clients
• (3:43): economic news to watch out for next week.

Wall St soared overnight as the Federal Reserve kept interest rates unchanged, while hinting at possible cuts in September. The Dow Jones rose 0.24%, the S&P500 had its best day since February, rising 1.58% and the tech-heavy Nasdaq gained 2.64%.

In terms of US stocks, tech giants made a big comeback, led by Nvidia which rallied 12.8% overnight. Other stocks including Apple, Meta Platforms and Amazon also finished Wednesday’s trading session higher.

Over in Europe, markets closed higher after the euro zone inflation rose unexpectedly. The STOXX600 closed 0.79% higher, led by tech stocks which gained 2.62%. Germany’s DAX rose over half a percent, the French CAC closed 0.76% higher and over in the UK the FTSE100 ended 1.13% in the green by the closing bell.

Locally yesterday, the ASX200 closed Wednesday’s trading session 1.75% higher with all sectors finishing in positive territory. Gains led by the information technology and energy sectors which rose 2.52% and 2.47% respectively.

What to watch today:

• The Australian share market is set to open higher, with the SPI futures suggesting a rise of 0.21% by market open this morning.
• On the commodities front this morning,
   
  • Oil is trading up 5.23% at US$78.64/barrel as fears of supply disruptions increase following further tensions in the Middle East. 
  • Gold is trading 1.55% in the green at US$2447/ounce and iron ore is trading 0.32% lower at US$106.25/tonne.

Trading Ideas:

• Bell Potter maintains a speculative buy rating on Frontier Digital Venture (ASX:FDV) and has a 12-month price target of $0.74. The speculative buy rating is maintained by Bell Potter as FDV has several significant growth levers within its portfolio and platforms coming out of a CY23 focused on cash flows and margins. There is a favourable view of FDV’s strategy of targeting underpenetrated emerging markets with marketplace platforms and FDV emerging profitable with a positive EBITDA and operating cash flows has helped maintained Bell Potter’s speculative buy rating.
• And Trading Central has identified a bullish signal in Nickel Industries (ASX:NIC), indicating that the stock price may rise from the close of $0.85 to the range of $1.11-$1.17, on a pattern formed over 51 days, according to the standard principles of technical analysis.

Wall St closed mixed overnight as investors dropped some big name tech stocks before earnings reports are released. The Dow Jones gained half a percent, the S&P500 fell half a percent and the tech-heavy Nasdaq fell 1.28%.

Investors pulled out of some big-name tech stocks overnight including Nvidia which dropped 7%, while Microsoft fell nearly a percent. Other stocks to decline overnight include Amazon, Netiflix and Meta Platforms.

Early tomorrow morning, the US Federal Reserve interest rate decision will be announced which has a consensus and forecast to be maintained at its current rate of 5.5% 

Over in Europe, markets closed higher as earnings seasons reports continue to be released. The STOXX600 rose 0.53% overnight with the majority of sectors closing Tuesday’s trading session in the green. Gains were led by construction and materials stocks which added 1.37%, whilst mining stocks fell 1.22%. Germany’s DAX rose 0.49%, the French CAC gained 0.42% and over in the UK, the FTSE100 fell 0.22% by the closing bell.

Locally yesterday, the ASX200 closed 0.46% lower with most sectors closing in the red. Losses were led by the materials and information technology sectors which fell 1.93% and 0.9% respectively. This was slightly offset by the consumer discretionary sector which rose by 0.22% by the end of the trading session.

What to watch today:

• The Australian share market is set to open higher, with the SPI futures suggesting a rise of 0.37% at market open this morning.
• In terms of economic data today, CPI indicator data will be released at 11:30 this morning with a forecast of 3.9%, with its previous result having been at 4%.
• On the commodities front this morning,
   
  • Oil is trading 0.78% lower at US$75.22/barrel as demand lowers from top consumers such as China. 
  • Gold is trading 1.25% higher at US$2410/ounce and iron ore is trading 0.25% lower at US$106.59/tonne.

Trading Ideas:

• Bell Potter maintains a speculative buy rating on RMA Global (ASX:RMY) and has a 12-month price target of $0.10. The buy rating is maintained by Bell Potter as the key driver for shareholder value in RMY remains the US market, where a decline in interest rates could potentially drive an uplift for house sales and as a result increase activity on RMY’s platform and subscriptions. The recommendation and valuation is based on penetrating the large US market which presents a significant opportunity, hence the speculative buy rating is maintained.
• And Trading Central has identified a bearish signal on Arena REIT (ASX:ARF), indicating that the stock price may fall from the close of $3.77 to the range of $3.49-$3.55, on a pattern formed over 28 days, according to the standard principles of technical analysis.