Between the Bells

Wall Street was closed on Wednesday for the Juneteenth holiday which is the National Independence Day celebrated on the 19th of June every year. Investors will be eagerly awaiting the opening of trade in the US on Thursday though to see if Nvidia, and the Nasdaq and S&P500 as a whole are able to maintain their respective record runs.

In Europe overnight, markets in the region closed slightly lower aside from the FTSE100 after UK inflation data came in at 2% for May which is inline with the Bank of England’s target. The STOXX600 fell 0.18% on Wednesday, Germany’s DAX fell 0.1% and the French CAC fell 0.77%. UK inflation for May hitting the BOE’s target rate of 2% ahead of Thursday’s policy rate decision is timely despite economists’ expecting the BOE to maintain the current rate of 5.25% for the month ahead before cutting in August.

Across the Asia markets on Wednesday, it was a sea of green as energy stocks boosted markets to a positive close. Hong Kong’s Hang Seng rose 2% on Wednesday, and Taiwan’s weighted index topped a record over 23,000 for the first time. Japan’s trade data for May also out yesterday showed exports grew 13.5% YoY while imports grew 9.5%, with exports topping economists’ expectations while imports fell slightly short.

What to watch today:

• Locally on Wednesday, the ASX200 pulled back in afternoon trade to close 0.1% lower as a sell-off in industrials and telecom stocks offset gains among energy and consumer staples companies.
• A nuclear power plant promise from Federal Opposition leader Peter Dutton as part of his election push boosted uranium miners yesterday with Paladin ending the day up 1.11%, Boss Energy climbing 2.2% and Deep Yellow adding 4.21%.
• Mortgage insurer, Helia, tanked 20.85% yesterday on news that CBA, Helia’s biggest client, will potentially put its contract up for tender. This fall in share price saw Helia lose almost a fifth of its market value yesterday.
• Ahead of Thursday’s session on the ASX, the SPI futures are expecting the local market to open the day down 0.23%, extending on the midweek losses.
• On the commodities front this morning, oil is trading down 0.28% at US$81.34/barrel, gold is up 0.08% at US$2330.28/ounce and iron ore is up just 0.06% at US$107.11/tonne.
• 1 Aussie dollar is buying 67 US cents, 105.40 Japanese Yen, 52.43 British Pence and 1 New Zealand dollar and 9 cents.

Trading Ideas:

• Bell Potter has maintained a buy rating on Beach Energy (ASX:BPT) and slightly decreased the 12-month price target on the energy exploration and development company following the release of the company’s strategic review including further cost reductions, more disciplined capital management and growth focus on three core producing energy hubs.
• Trading Central has identified a bullish signal on OM Holdings (ASX:OMH) following the formation of a pattern over a period of 27-days which is roughly the same amount of time the share price may rise from the close of $0.46 to the range of $0.62 to $0.66 according to standard principles of technical analysis.

Wall Street started the new trading week in record territory for the Nasdaq and S&P500 driven by market optimism around the AI movement and ahead of the Fed officials’ speeches later this week which could shine light on the rate cut outlook. The S&P500 ended the day up 0.77% at a record high 5473.23 points, while the Nasdaq soared to a close up 0.95% at 17,857.02 and the Dow added 0.5% to close at 38,778 snapping a four-session losing streak.

European markets closely mostly higher on Monday despite instability on a political front across a number of regions and against a clouded economic backdrop leaving investors questioning the direction of rate and inflation outlook across Europe. The STOXX600 rose 0.12% on Monday, while France’s CAC returned to positive territory ending the day up 0.9% after mixed reactions to the possibility of a political victory for the country’s far-right national party in the country’s upcoming election. In Germany the DAX rose 0.37% on Monday and, in the UK, the FTSE100 ended the down just 0.06%.

The Asia region it was all eyes on China yesterday with a slew of economic data painting a mixed economic picture out of the world’s second-largest economy’s recovery post-pandemic. China’s CSI index fell 0.15% on Monday, while Japan’s Nikkei tumbled 1.83% on a slide in energy stocks, and South Korea’s Kospi index fell 0.52% at the closing bell.

Locally on Monday, the ASX200 started the new trading week down 0.31% as a sell-off in tech and energy stocks weighed on the key index. Disappointing economic data out of China weighed on investor sentiment around the big miners yesterday while investors also fled tech stocks around concerns over the outlook of interest rates which will be announced by the RBA later this afternoon.

ANZ-Indeed data out yesterday showed Australian job advertisements fell 2.1% in May which at first glance appears supportive of a slight loosening of the country’s tight labour market, however, this slight decline keeps the job ads data 20% above pre-pandemic levels indicating the labour market remains tight, especially following the nation’s unemployment rate falling to 4% in data out last week.

What to watch today:

• Gold miners rallied yesterday on a rise in the price of the precious commodity as investors hold high hopes that the Fed will cut rates soon.
• Shares in wagering giant Tabcorp rallied on Monday after the company announced former AFL CEO, Gillon McLachlan will step in as Tab’s new Chief Executive from early August.
• On the commodities front this morning, oil is trading 2.61% higher at US$80.48/barrel, gold is down just over half a percent at US$2320/ounce and iron ore is up just 0.2% at US$107.33/tonne.
   
  • Iron ore prices have jumped overnight after China’s crude steel demand jumped 8.1% in May from April indicating recovering demand in the world’s second largest economy which is a much-needed boost to the outlook for exports from Australia’s biggest iron ore miners. While this was a key step forward for the country’s post-pandemic recovery, China’s new home price data also out yesterday indicated new home prices fell at the fastest pace in more than 9 years in May, painting a further dire picture of the economy’s struggling property sector.
• Taking a look at the Aussie dollar, 1 AUD is buying 66 US cents, 104.31 Japanese Yen, 52.05 British Pence and 1 New Zealand dollar and 8 cents.
• The highly anticipated RBA rate announcement will be handed down this afternoon where it is widely expected Australia’s central bank will maintain the current cash rate of 4.35% for the next period, however, we are likely to see investors and markets react to commentary out of the RBA that indicates the rate outlook and a timeline to cuts.
• Ahead of the local trading session here in Australia the SPI futures are expecting the ASX to open the day up 0.38% tracking Wall Street’s rall

It was a big week on Wall Street last week with the Nasdaq pushing to a fifth straight record close on Friday while the S&P 500 dipped just 0.04% at the closing bell and the Dow fell 0.15% on Friday. Consumer sentiment in the U.S. fell to 65.6 points in June which was below the expectations of 71.5 points and indicates consumers are concerned about economic conditions amid the high interest rate environment. For the week, the Nasdaq and S&P500 rose 3.2% and 1.6% respectively on the back of cooling inflation indicators in the form of weaker CPI and PPI than economists were expecting.

Over in Europe on Friday the same positive sentiment couldn’t be shared as markets in the region closed lower amid government speculations especially out of France. The STOXX600 fell 0.95% on Friday while Germany’s DAX lost 1.44%, the French CAC fell 2.66% and, in the UK, the FTSE100 ended the day down 0.21%.

Asia markets closed mixed on Friday led by Japan’s Nikkei closing 0.24% higher after the bank of Japan kept its benchmark interest rate steady at 0% to 0.1% for the month ahead but signalled it is considering the reduction of its purchase of Japanese government bonds.

What to watch today:

• Locally on Friday the ASX200 closed 0.33% as every sector aside from consumer discretionary and healthcare closed in the red which pushed the local market to a 1.25% decline for the week. A widespread decline in commodity prices weighed on the miners late last week while the key index as a whole had its worst week since mid-April last week amid a widespread sell-off across the board in equities.
• Resouro Strategic Metals renewed investor appetite for rare earths miners through a very successful debut on the ASX on Friday as shares in the Brazilian rare earths project miner soared 37% on debut.
• On the commodities front this morning, oil is trading 0.07% higher at US$78.51/barrel, gold is down 0.06% at US$2330/ounce, iron ore is up 0.2% at US$107.33/tonne and uranium is up 0.76% at US$86.65/pound.
• 1 Aussie dollar is buying 66 US cents, 104.12 Japanese Yen, 52.21 British Pence and 1 New Zealand dollar and 8 cents.
• Ahead of the first trading session of the new week here in Australia the SPI futures are anticipating the ASX to open the day down 0.22% ahead of the RBA’s rate decision out tomorrow where it is widely expected that the RBA maintain the current cash rate of 4.35% as key inflation drivers including services, wages and housing inflation remain stubbornly high.

Trading Ideas:

• Bell Potter increased the 12-month price target on Wisetech Global (ASX:WTC) from $92.75 per share to $100 per share and maintain a hold rating on the leading global logistics software company following a recent update on the company’s six CargoWise product development priorities and the larger market opportunities in the Landside logistics and Customs markets.
• Trading Central has identified a bullish signal on Super Retail Group (ASX:SUL) following the formation of a pattern over a period of 21-days which is roughly the same amount of time the share price may rise from the close of $13.38 to the range of $14.10 to $14.30 according to standard principles of technical analysis.

French election jitters threaten to rattle markets, while US tech giants advance. In this week’s wrap, discover how inflation data, global events and hot ASX sectors are shaping the investment landscape this week. 

In this week’s wrap, Sophia covers: 

• (0:11) key US economic data moving markets  
• (0:28) concerns surrounding the French election 
• (1:36) what to expect from the Bank of Japan’s meeting 
• (1:50) this week’s corporate news roundup
• (2:29) the ASX200 top performers 
• (3:43) the most traded stocks by Bell Direct clients 
• (4:10) next week’s economic calendar.  

US markets advanced overnight after the Fed chairman Jerome Powell stated that policymakers want to see more progress on inflation ahead of a decision to lower rates. US May CPI data also showed inflation continuing to cool, which lifted the market’s expectations that the Federal Reserve will pivo to rate cuts as early as September.

It was a strong session on Wall Street with the S&P500 gained 0.85%, closing above 5,400 for the first time. The Nasdaq also hit an all-time high, up 1.53%, while the Dow Jones was the outlier, closing down slightly by 0.09%.

What to watch today:

• Following US markets, the SPI futures are suggesting the Australian market will rise 0.67% at the open this morning.
• In economic data, Westpac’s consumer confidence data for June is out at 11:30am today and the unemployment rate for May is out at 12:30pm AEST, forecast to rise to 4.2%.
• In commodities,
  • Oil is up 0.65% to US$78.40 per barrel, due up an unexpected increase in US crude stocks. So keep watch of ASX listed energy producers today.
  • Gold is also in the green at US$2,322.76 per ounce.
  • And iron ore is down more than 1% at US$106.27 per tonne, the lowest in two months, due to pessimistic demand expectations for China.

Trading Ideas:

• Trading Central have identified a bullish signal in Regis Healthcare (ASX:REG) indicating that the stock price may rise from the close of $4.09 to the range of $4.37 to $4.47 over 43 days, according to the standard principles of technical analysis.
• Meanwhile Trading Central is bearish on South32 (ASX:S32), indicating that the stock price may fall from the close of $3.64.

Wall St closed mixed on Tuesday as the Nasdaq closed at fresh highs and investors await for important inflation data. The Dow Jones fell 0.31%, the S&P500 closed 0.27% higher and the tech-heavy Nasdaq ended the trading session 0.88% higher as Apple gained 7%, now trading at an all-time high. 

Over in Europe, markets closed lower as the focus turns towards the Federal Reserve’s next meeting and important inflation data coming out of the US. The STOXX 600 fell 0.9% with all major sectors ending the trading session in the red with losses led by banks which fell 2.17%. Germany’s DAX lost 0.68%, the French CAC fell 1.33% and over in the UK the FTSE100 closed Tuesday’s trading session nearly 1% lower.

Locally yesterday, the ASX200 fell 1.33% with all but one major sector ending in the red. Losses were led by the materials and real estate sectors which fell 2.58% and 2.35% respectively. This was offset by the consumer discretionary sector which rose 0.11% yesterday.

What to watch today:

• The Australian share market is set to open lower, with the SPI futures suggesting a fall of 0.46% at market open this morning.
• In terms of economic data, important US inflation data will be released later on tonight for core inflation month on month with a consensus and forecast of 0.3%.
• On the commodities front this morning,
   
  • Oil is trading 0.38% higher at 78 US dollars and 3 cents a barrel, gold is trading 0.29% higher at 2316 US dollars an ounce and iron ore is trading 1% lower at 107 US dollars and 38 cents a tonne.

Trading Ideas:

• Bell Potter maintains a buy rating on Electro Optic Systems (ASX:EOS), despite downgrading its 12-month price target to $2.10. The buy rating is maintained by Bell Potter as it is estimated that EOS will generate $70.3m in revenue for CY24 and assuming an EBITDA margin of around 29%, this implies an underlying EBITDA of $20.4m. The $2.10 price target remains a greater than 15% premium to the current share price, hence the buy rating is maintained.
• Trading Central has identified a bearish signal on Stockland Corp (ASX:SGP), indicating that the stock price may fall from the close of $4.47 to the range of $4.04-$4.12, on a pattern formed over 12 days, according to the standard principles of technical analysis.

Wall St closed higher overnight as investors await the Federal Reserve’s interest rate decision. The Dow Jones rose 0.18%, the S&P500 rallied 0.26% and the tech-heavy Nasdaq ended the trading session 0.35% in the green.

Over in Europe, markets closed lower as traders react to initial results from the EU Parliament elections. The STOXX600 closed 0.27% lower with losses led by food and beverage stocks which fell 1.27%. Germany’s DAX fell 0.34%, the French CAC lost 1.35% and over in the UK the FTSE 100 ended Monday’s trading session 0.2% in the red.

Locally, the ASX200 was closed yesterday for the King’s birthday public holiday, however on Friday the ASX200 rose nearly half a percent higher with all but one major sectors trading higher. Gains were led by the consumer discretionary and the materials sectors which rose 1.19% and 0.76% respectively.

What to watch today:

• The Australian share market is set to open lower, with the SPI futures predicting a fall of 0.42% at market open this morning.
• On the commodities front this morning,
  • Oil is trading 3.57% higher at 78 US dollars and 23 cents a barrel, with the significant rise fuelled by expectations of increased summer fuel demand.
  • Gold is trading 0.78% higher at 2310 US dollars an ounce as traders awaits the upcoming monetary policy decision.
  • And iron ore is trading 0.02% lower at 108 US dollars and 48 cents a tonne.

Trading Idea:

• Trading Central has identified a bullish signal on Adairs Limited (ASX:ADH), indicating that the stock price may rise from the close of $1.74 to the range of $2.50-$2.65 on a pattern formed over 52 days, according to the standard principles of technical analysis.

Global markets posted gains in May, particularly in the US with the S&P500 and Nasdaq rising significantly. However, signs of a US economic slowdown, including cooling inflation and lower growth, suggest a potential rate cut by the Federal Reserve as early as July. Europe is also expected to cut rates due to moderate inflation. 

China showed economic weakness with declining manufacturing activity. Oil prices fell while copper remained stable but is expected to rise. The US's performance is crucial for the global economic outlook, and investors should maintain a diversified and adaptable portfolio.

In this week’s wrap: Sophia covers:

• (0:11) how global markets performed in May
• (1:57) trends in the commodity market
• (2:29) the global economic outlook
• (3:43) the most trades stocks & ETFs by Bell Direct clients
• (4:14) economic data to watch next week.

A rally for the major tech stocks and optimistic rate cut outlook boosted the New York Stock Exchange to a green close overnight with the S&P 500 and Nasdaq advanced 1.2% and 1.96% respectively to post fresh record closes, while the Dow Jones ended the session up 0.25%. JOLTs Job Openings data for April, also released overnight, added to the improved investor sentiment as the reading came in at a decline to 8.059m jobs in April from 8.355m jobs in March which indicates further easing of the tight labour market in the US.

Tech darling Nvidia rose 5% to reach a fresh record high and a US$3tn market cap on Wednesday after the chipmaking giant unveiled new chips to start the week.

In Europe overnight markets reversed Tuesday’s losses to close higher on Wednesday ahead of the European Central Bank’s rate decision out on Thursday. The STOXX600 rose 0.84% driven by a rally for tech stocks, while mining stocks again weighed on gains with a fall of 0.5%. Germany’s DAX rose 0.93% on Wednesday, the French CAC added 0.87%, and, in the UK, the FTSE100 gained 0.18% at the closing bell.

Markets across Asia closed mixed on Wednesday as India’s Nifty 50 Index rebounded from Tuesday’s tumble to close 1.98% higher, while Japan’s Nikkei fell 0.89% and Hong Kong’s Hang Seng was little unchanged with a 0.06% decline at close.

What to watch today:

• Locally the midweek session ended 0.41% higher as broad market gains offset weakness among commodity prices and mining stocks overnight on Tuesday. The local rally also took lead from Wall street’s gains on Tuesday and Australia’s GDP data indicating softer economic growth than economists’ anticipated in the first quarter.
• Treasury Wine Estates rose 6.1% on Wednesday after the company reaffirmed FY24 guidance ahead of its USA investor presentation.
• Medibank shares dipped 1.2% on Wednesday after Australia’s privacy watchdog, the AIC, announced it will take legal action against the healthcare insurer for failing to safely and securely protect the medical details of 9.7m Australians during a cyberattack experienced in 2022, with fines from the watchdog potentially topping $21.5tn.
• The Australian economy grew at a rate of just 0.1% in Q1 which was fell below economists’ forecasts and the last quarters’ reading of 0.2% growth, indicating inflationary pressures are continuing to eat away at Australia’s economic stability and expansion. The 0.1% expansion reported in Q1 was the softest growth rate in 6 quarters and driven by subdued domestic demand, and fixed investment falling further.
• Investors will likely react to the release of Australia’s trade balance data out today at 11:30am Eastern time with the expectation of a slight rise in Australia’s trade surplus from March’s $5.024bn to $5.50bn indicating a rebound in exports compared to imports where exports have been declining since November.
• Ahead of Thursday’s trading session the SPI futures are expecting the ASX to open the second last trading session of the week up 0.54% tracking Wall Street’s record-closing rally overnight.
• On the commodities front this morning, oil has recovered some ground to trade 1.4% higher at US$74.28/barrel, gold is up 1.14% at US$2355/ounce and iron ore is down 2.19% at US$107.69/tonne.
• 1 Aussie dollar is buying 66 US cents, 103.77 Japanese yen, 51.97 British pence and 1 New Zealand dollar and 7 cents.

Trading Idea:

• Bell Potter has increased the rating on Infomedia (ASX:IFM) from a hold to a buy and have increased the 12-month price target on the leading provider of software solutions to the automotive industry after the company presented twice last week indicating this financial year is tracking to plan and the outlook is perhaps better than Bell Potter expected.

Wall Street closed higher on Tuesday across the key indices amid a decline in treasury yields and ahead of key jobs data out on Friday. The Dow Jones rose 0.36%, the S&P500 added 0.15% and the tech-heavy Nasdaq climbed 0.17% on Tuesday. Investors are eagerly awaiting the release of key nonfarm payrolls data out on Friday for the month of May with hopes of an ease in the number of people currently employed in the US to support the Fed’s interest rate cut outlook, but not a major decline as that would spark recession fears.

In Europe overnight, markets closed lower across the region as investors await the European Central Bank’s rate decision out on Thursday to see if the inflation print for the region that came in hotter-than-expected last Friday, deters the ECB from cutting rates as is widely expected. The STOXX600 fell 0.5% as mining stocks weighed on the bourse, while Germany’s DAX fell 1.09%, the French CAC lost 0.75% and, in the UK, the FTSE100 ended the day down 0.37%.

Across the Asia markets on Tuesday, India’s stock market tumbled 5% as the country continued voting for its 2024 election, while Hong Kong’s Hang Seng rose 0.12% on Tuesday, South Korea’s Kospi index shed 0.76% and Japan’s Nikkei ended the day down 0.22%.

Weakened commodity prices and a mixed session in the US on Monday caused the ASX to reverse Monday’s gains to post a 0.31% decline on Tuesday. A sharp slide energy stocks weighed on the local bourse following the 3.75% drop in the price of oil on Tuesday as the markets digested OPEC+’s further production cut announcement, while financials stocks closed 0.23% higher to offset some of the heavy losses.

A positive crop outlook forecast from the Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES) fuelled a rally for some agriculture stocks yesterday including GrainCorp which climbed 4.8%. The report detailed national winter crop production is set to increase to 51.3m tonnes which is a 9% increase on the last financial year.

Gold miners also climbed again on Tuesday amid a rise in the price of the precious commodity driven by rate cut outlook in the US.

What to watch today:

• All eyes locally will be on the release of Australia’s GDP growth rate data for Q1 which is released today at 11:30am with economists expecting a second consecutive reading of 0.2% growth, which would reflect softer economic growth. Australia’s trade balance data for April is also out on Thursday with the forecast of the country’s trade surplus to improve slightly to $5.5bn from $5.024bn in March.
• On the commodities front this morning oil is trading a further 1.78% lower at US$72.89/barrel, gold is down just over 1% at US$2326.86/ounce and iron ore is down a steep 6.31% at US$110.10/tonne.
• The Aussie dollar has slightly weakened overnight to buy 66 US cents, 102.88 Japanese Yen, 51.98 British Pence and 1 New Zealand dollar and 8 cents.
• Ahead of the midweek trading session here in Australia the SPI futures are anticipating the ASX to open the day down just 0.06%.

Trading Ideas:

• Bell Potter has maintained a buy rating on GrainCorp (ASX:GNC) and raised the 12-month price target from $9.50 to $9.90 following the release of the ABARE June east crop forecast report surprising to the upside. The ABARE forecast implies another strong cropping outcome for GrainCorp in FY25 with the initial June forecast implying the fifth largest crop on record.
• Bell Potter has maintained a hold rating on Synlait Milk (ASX:SM1) and decreased the 12-month price target from $0.66 to $0.47 after the milk processing company released a further FY24 update downgrading FY24 EBITDA expectations to the lower end of guidance reflecting lower ingredients values and inventory impairments.