Between the Bells

US equities closed mixed overnight. The Dow Jones slid over 100 points or 0.3% to close the first trading session for June, while the S&P500 and the Nasdaq closed in the green, up 0.1% and 0.56% respectively. Weighing on the Dow was the release of weak manufacturing data in the US, which saw a pullback in banks, industrials and shares dependent on economic growth. 

The local market started the new trading month in positive territory yesterday, after a red run last week as the financial and utilities stocks boosted the market to a green close. Tech and communications services stocks weighed on the market gains, with the rate sensitive tech sector ending Monday’s session down 0.7%. Our local rally on Monday followed momentum from Wall Street on Friday, as the US core personal expenditure data, which is the Fed’s preferred measure of inflation, increased just 0.2% for April, the slowest rate this year, indicating inflationary pressures in the world’s largest economy are beginning to ease.

What to watch today:

• The Australian market is set to open lower this morning, with the SPI futures suggesting a 0.15% fall at the open. 
• In commodities, 
  • The iron ore price hit a six-week low however the big iron ore miners in Australia posted notable gains on Monday, seemingly unaffected by the drop in the price of their major commodity. BHP, Fortescue and Champion Iron all posted gains yesterday. 
  • The drop in the iron ore price was due to ongoing weakness in China’s housing market as indicated by the release of new-home sales economic data. Despite weakness in China’s property sector, the world’s second largest economy reported expansion in its manufacturing sector as activity in the manufacturing space increased at its fastest rate in almost 2-years for May, in a positive sign of slow economic recovery post-pandemic in the region.
  • Energy stocks also rallied in the aftermath of the OPEC+ meeting, where the global oil regulator further cut production outputs in an attempt to bolster the price of oil.
  • This morning, oil is trading 3.88% lower at US$74 per barrel as markets digested OPEC+’s latest move, while gold is up more than 1% at US$2,350 an ounce and iron ore is down 0.1% at US$117.52 per tonne.
  • And the Australian dollar is buying US$0.67, 104.27 Japanese Yen, 52.16 British Pence, and NZ$1.08.

Trading Ideas:

• Bell Potter maintains a Speculative Buy rating on AMA Group (ASX:AMA), the largest accident repair group in Australia with approximately 127 vehicle repair shops. Bell Potter’s key focus for the company this half has been the refinancing of AMA’s senior debt facility which matures in October this year. They have lowered their valuation from $0.12 to $0.08, and at the company’s current price of $0.04, this implies 86% share price growth in a year. 
• And Trading Central has identified a bullish signal in BHP Group (ASX:BHP), indicating that the stock price may rise from the close of $44.81 to the range of $48.30 to $49.10 over 8 days according to the standard principles of technical analysis. 

Wall St closed higher on Friday as the Dow Jones posted its best day in 2024. The Dow gained 1.52%, the S&P500 rose 0.8% whilst the tech-heavy Nasdaq fell 0.01% to end the trading week.

Over in Europe, markets closed higher to end the month as investors await a rate decision from the European Central Bank. The STOXX600 closed the week 0.28% higher with most sectors closing the week off in the green with utilities jumping over 1% whilst tech fell 1.48%. Germany’s DAX remained flat on Friday, the French CAC gained 0.18% and over in the UK the FTSE100 rose over half a percent.

On the economic data front, Euro Zone inflation rose 2.6% in May, 0.1% higher than the analysts prediction of 2.5%.

Locally on Friday, the ASX200 rose nearly one percent with all but one major sector ending the trading session in the green. Gains were led by the consumer staples and energy sectors which rose 1.91% and 1.77% respectively. This was slightly offset by the real estate sector which fell 0.21% 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 0.49% at market open this morning.
• On the commodities front this morning,
   
  • Oil is trading 0.94% lower at 77 US dollars and 18 cents a barrel as US stockpiles rose by 2 million barrels last week, despite forecasts for a 400,000-barrel draw, indicating week demand. 
  • Gold is trading 0.72% lower at 2327 US dollars an ounce and iron ore is trading 0.09% lower at 117 US dollars and 52 cents a tonne.

Trading Ideas:

• Bell Potter has upgraded its rating of Brickworks (ASX:BKW) to a buy and has a 12-month price target of $29.50. The buy rating is maintained by Bell Potter as it is their opinion that the biggest driver of value in the BKW valuation is the company’s 26% shareholding in Washington H. Soul. Pattinson which is estimated to be around 50% of the current enterprise value of the business. Bell Potter’s market valuation on SOL shows a 3.6% discount, hence the rating has been upgraded to a buy.
• Trading Central has identified a bullish signal on NRW Holdings (ASX:NWH), indicating the stock price may rise from the close of $3.08 to the range of $3.28-$3.34, on a pattern formed over 25 days, according to the standard principles of technical analysis.

Grady sits down with Bell Potter analyst, Regan Burrows following his exciting trip to Namibia in West Africa to explore the very mining sites he covers in his research including Paladin Energy and Boss Energy. Watch the video as Regan unveils all the latest mining insights he uncovered whilst on this once in a lifetime experience.

In this week’s wrap, Grady covers:

• (2:18) why Paladin Energy has been downgraded
• (3:30) uranium being the standout commodity of 2024
• (4:53) Boss Energy being Bell Potter’s key pick
• (8:15) Australia and the global commodity cycle
• (11:29) the most traded stocks & ETFs by Bell Direct clients
• (11:59) economic data to watch next week.

Wall St closed lower overnight as traders start to look ahead to the release of key US inflation data. The Dow Jones fell 0.86%, the S&P 500 closed 0.6% lower and the tech-heavy Nasdaq dropped over 1%. In terms of economic data, GDP growth data quarter on quarter was released, coming in at 1.3%, 0.3% lower than the forecast of 1.6%.

In terms of US stocks, Salesforce had its worst session since 2004, dropping 19.7% after missing revenue expectations for the fiscal quarter and providing a week outlook.

Over in Europe, markets closed higher overnight despite gloomy global sentiment. The STOXX600 ended the trading day 0.63% higher with most sectors closing in the green including telecom stocks which rose 1.6%. Germany’s Dax rallied 0.13%, the French CAC closed over half a percent higher and over in the UK the FTSE100 ended Thursdays trading session 0.59% in the green.

Locally yesterday, the ASX200 ended the day falling nearly half a percent, led by the materials and utilities sectors which fell 1.86% and 1.43% respectively. This was offset by the consumer discretionary sector which gained 0.74% by the closing bell yesterday.

What to watch today:

• The Australian share market is set to open higher, with the SPI futures suggesting a rise of 0.65% by market open this morning.
• In terms of economic data,
   
  • US core inflation data month on month for April is to be released on Friday with a consensus of 0.3%, the same as its previous period.
• On the commodities from this morning,
   
  • Oil is trading 1.74% lower at 77 US dollars and 85 cents a barrel as markets assessed fresh data ahead of the OPEC+ meeting this weekend.
  • Gold is trading 0.21% higher at 2343 US dollars an ounce and iron ore is trading 0.05% higher at 117 US dollars and 74 cents a tonne.

Trading Idea:

• Bell Potter maintains a speculative buy rating on HighCom Limited (ASX:HCL) and has an unchanged valuation of $0.35. The speculative buy rating is maintained by Bell Potter as HCL expects FY24 revenue to be between $46m-$48m, which would imply second half of 2024 revenue of $31.1m-$33.1m which would be a significant improvement on the first half of 2024 result, hence the speculative buy rating is maintained.

Wall St closed lower overnight following pressure from rising Treasury Yields outweighed a rally by AI company Nvidia. The Dow Jones closed over 1% lower, the S&P500 fell 0.74% and the tech-heavy Nasdaq ended Wednesday’s trading session 0.58% in the red.

In terms of US stocks, Nvidia rose 0.8%, having risen every single trading session since its earnings report last Wednesday.

Over in Europe, markets closed lower with the STOXX600 having its worst session since mid-April, falling over 1%. All sectors ended the trading day negative with losses led by mining stocks down 2.12%. Germany’s DAX closed 1.1% lower, the French CAC dropped 1.5% and over in the UK the FTSE100 ended 0.86% in the red.

Locally yesterday, the ASX200 closed 1.3% lower with all major sectors ending the day in the red. Losses were led by the consumer staples and industrial sectors which fell 2.08% and 1.87% respectively.

What to watch today:

• The Australian share market is set to open lower, with the SPI futures suggesting a fall of 0.68% at market open this morning.
• On the commodities front this morning,
   
  • Oil is trading 1.38% lower at US$79.17/barrel due to concerns over weak US gasoline demand. 
  • Gold is trading 0.93% lower at US$2337/ounce as investors continue to reduce bets on US Fed rate cuts this year.
  • And iron ore is trading flat at US$117.68/tonne.

Trading Ideas:

• Trading Central has identified a bearish signal on NAB (ASX:NAB), indicating that the stock price may fall from the close of $33.65 to the range of $31.10-$31.60 on a pattern formed over 70 days, according to the standard principles of technical analysis.
• And Trading Central has also identified a bearish signal on Steadfast Group (ASX:SDF), indicating that the stock price may fall from the close $5.46 to the range of $4.99-$5.09 on a pattern formed over 65 days, according to the standard principles of technical analysis.

The US Market is closed overnight for the Memorial Day holiday and will resume trading on Tuesday US time; however, it is expected the rally will continue from last week as investors shrugged off inflation concerns on Friday in favour of market optimism from Nvidia’s latest stellar results indicating earnings inflation over the next quarter. The futures market is trading higher across the key indices on Monday.

Over in Europe on Monday, it was a quiet day for markets as the UK market was also closed for the late May bank holiday. Elsewhere in Europe, markets closed slightly higher to start the new trading week as investors continue searching for clues as to when the European Central Bank may cut interest rates. The STOXX600 rose 0.28%, while Germany’s DAX and the French CAC each added 0.4% on Monday.

The Asia markets also closed higher on Monday to start a data-heavy trading week in positive territory. China’s industrial profits rose 4.3% year-on-year from January to April which boosted markets on Monday in a sign the world’s second largest economy is making small yet material steps in the right economic recovery direction. China’s CSI index rose 0.95% on the back of this data release, while Hong Kong’s Hang Seng rallied 1.2% and South Korea’s Kospi Index climbed 1.32%.

The local market started the week in positive territory closing Monday’s session up 0.8%, overcoming last week’s inflation-driven sell-off, led by the real estate stocks rising 1.6% and telecoms stocks rallying 1.3%. The sell-off last week was driven by hotter-than-expected inflation driver data released in the US which pushed back investor hopes of rate cuts. Energy stocks came under pressure on Monday as the price of oil dipped to a near three-month low amid demand concerns out of the world’s largest oil demand market, the US.

Neuren Pharmaceuticals soared over 15% yesterday after the company resumed trading following a halt on the release of Phase 2 trial results showing significant improvement in Pitt Hopkins syndrome including key aspects of communication, social interaction, cognition, and motor abilities.

Lendlease was another stand out on the local bourse yesterday rising almost 10% after the company revealed a strategic review to its global strategy, while online luxury fashion platform Cettire also soared over 10% after ‘categorically rejecting’ allegations that customers purchased counterfeit products from its site.

What to watch today:

• Ahead of Tuesday’s trading session here in Australia, the SPI futures are expecting the ASX to open the day up 0.2% or 16 points to extend the rally of this week into another trading day.
• On the commodities front this morning oil is trading 1.08% higher at US$78.56/barrel, gold is up 0.84% at US$2353.01/ounce, and iron ore is up 0.11% at US$117.66/tonne.
• 1 Aussie dollar is buying 67 US cents, 104.40 Japanese Yen, 52.09 British Pence and 1 New Zealand dollar and 8 cents.

Trading Ideas:

• Bell Potter has maintained a buy rating on Neuren Pharmaceuticals (ASX:NEU) and has raised the 12-month price target from $26.50 to $28.00 on the neuro-developmental targeted pharmaceuticals developer following the release of the company’s Phase 2 trials results showing a second positive read out for its drug candidate NNZ-2591 in Pitt Hopkins Syndrome. Bell Potter sees the value in the company’s second drug candidate represents a similar, if not larger market opportunity than Rett Syndrome which Neuren’s Daybue drug is on the market treating at present.
• Trading Central has identified a bearish signal on Hub24 (ASX:HUB) 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 $41.53 to the range of $38.10 to $38.80 according to standard principles of technical analysis.

Wall Street closed higher on Friday to overcome the inflation-driven sell-off on Thursday as investors welcomed Nvidia’s latest results as a positive sign of earnings growth inflation especially in the AI sector. The Nasdaq ended Friday’s session up 1.1% at a record high of 16,920.79 points, the Dow Jones ended the day up 0.01%, and the S&P500 rose 0.7%. For the week was a mixed result across the key indices with the Dow falling 2.33%, while the S&P500 rose just 0.03%, and the Nasdaq advanced 1.41%. Nvidia’s shares climbed 2.6% on Friday to top US$1000 for the first time, as investors celebrated its stellar Q1 results including eps of $6.12/share on revenues of US$26bn, which beat analysts’ expectations, and issued guidance for Q2 of US$28bn which also came in ahead of expectations. The results boosted investor sentiment and offset any market concerns of delayed interest rate cuts out of the Fed on Friday, following the release of hotter-than-expected services and manufacturing data for May in the US released on Thursday.

Over in Europe, markets closed lower as sentiment in the region around rate cuts remains a concern. The STOXX600 fell 0.17% on Friday, Germany’s DAX closed flat, the French CAC fell 0.09%, and, in the UK, the FTSE100 ended the day down 0.26%. The Bank of England’s rate cute outlook was thrown into doubt last week after hotter-than-expected inflation data was released in the region.

Across the Asia markets on Friday, stocks fell as investors digested the latest inflation reading out of Japan and assessed rate cut outlook concerns both locally and in the U.S. Hong Kong’s Hang Seng fell 1.71%, China’s CSI 300 lost 1.11%, and Japan’s Nikkei ended the day down 1.17%. Japan’s core inflation eased to 2.2% from 2.6% in March, while the headline inflation rate slowed to 2.5% down from 2.7%.

Locally on Friday, the ASX200 fell 1.1% as Wall Street’s tumble on Thursday reignited local investor concerns of a prolonged rate cut outlook, which sent rate-sensitive sectors sliding on Friday including technology, retail and banking stocks. Australian government bonds rose on Friday as investors turned to safe-haven investments on uncertain rate cut outlook.

Investors took profits from the big banks on Friday with CBA falling 2%, NAB sliding 1.5%, ANZ losing 0.95% and Westpac ending the day down 1.15%.

Regional Express is expanding its competitive share of Australia’s domestic market as the airline announced on Friday that it is launching flights from Perth to Melbourne starting next month. Investors sold out of the airline’s shares over concerns its domestic expansion will hurt its regional network dominance.

What to watch today:

• Ahead of the first trading session of the new trading week, the SPI futures are anticipating the ASX to open up 0.61% following Wall Street’s rally on Friday.
• On the commodities front this morning, oil is down 0.06% at US$77.75/barrel, gold is up just 0.03% at US$2334/ounce, iron ore is up 0.11% at US$117.66/tonne and uranium is down 0.11% at US$91.65/pound.
• AU$1.00 dollar is buying US$0.66, 104.09 Japanese Yen, 52.04 British Pence and NZ$1.08.

Trading Ideas:

• Bell Potter has downgraded the rating on Paladin Energy (ASX:PDN) from a buy to a hold and have decreased the 12-month price target on the uranium miner from $16.50 to $15.70 after Bell Potter’s resources analyst visited the company’s Langer Heinrich Mine in Namibia. The team were surprised by the quality of the site and regional infrastructure competency however are cautious about operation costs which seem to be the biggest downside risk at this point. Bell Potter also noted that the upcoming November election in the region carries key risks around the potential for an introduction of a government free-carry interest and/or an increase in mining taxes in the region.
• And Trading Central has identified a bearish signal on TPG Tele

Embark on a journey of discovery with Dr. Alan as he unveils the cutting-edge breakthroughs of Clarity Pharma, a pioneering force in the relentless fight against cancer through next-generation radiopharmaceuticals. In this instalment of our From the helm series, Bell Direct’s Grady Wulff speaks to Clarity Pharmaceuticals (ASX:CU6) Executive Chairman, Dr Alan Taylor.

Clarity Pharmaceuticals specialises in the development of Targeted Copper Theragnostic for the imaging and treatment of selected cancers. Clarity Pharma has an extensive program of clinical development for imaging and cancer therapy with a series of important data readouts over the next few years. 

In this video Dr. Alan discusses:

• (1:27) An overview of the company, including their 7 clinical trials
• (3:35) The promising results from their SECuRE trial
• (11:55) Why the radiopharmaceutical market is booming
• (14:47) Why Clarity Pharma could be an investment opportunity

Wall St closed lower overnight as the minutes from the Federal Reserve’s May meeting raised investor concerns of persistent inflation, displaying the central bank may not cut rates anytime soon. The Dow Jones fell over half a percent, the S&P500 lowered 0.27% and the tech-heavy Nasdaq ended the trading session down 0.18%.

Over in Europe, markets followed Wall St, ending Wednesdays trading session lower. The STOXX600 fell 0.37% with all sectors ending in the red. Losses were led with autos stocks which dropped 1.3% and oil and gas stocks declining 1.2%. Germany’s DAX lost 0.25%, the French CAC closed 0.61% lower and over in the UK the FTSE100 fell 0.55%.

Locally yesterday, the ASX200 ended Wednesday’s trading session marginally lower, down 0.05%. Losses were led by the communication services and consumer discretionary sectors which fell 2.54% and 1.37% respectively. This was offset by the utilities sector which rallied 0.9% yesterday.

What to watch today:

• The Australian share market is set to open lower, with the SPI futures suggesting a fall of 0.94% at market open this morning.
• On the commodities front this morning,
   
  • Oil is trading 1.79% lower at US$77.25/barrel following a surprise rise in US crude stockpiles of 1.825 million barrels last week. 
  • Gold is trading 1.77% lower at US$2378/ounce and iron ore is trading 0.28% higher at US$117.57/tonne.

Trading Ideas:

• Bell Potter maintains a buy rating on MedAdvisor (ASX:MDR) and has increased its 12-month price target to $0.49. The buy rating is maintained by Bell Potter following the release of a positive trading update including revenue levels of $120m-$123m, implying 22% to 26% growth on the prior corresponding period and an EBITDA of $6.8m-$7.6m following a loss of $3m in its prior corresponding period. This has increased revenue forecasts in FY24/25/26, hence the buy rating is maintained.
• And Trading Central has identified a bullish signal on Computhershare (ASX:CPU), indicating that the stock price may rise from the close of $26.97 to the range of $34.25-$36, on a pattern formed over 478 days, according to the standard principles of technical analysis.

Wall Street ticked higher at the closing bell on Tuesday as investors anticipate the release of AI giant Nvidia to gauge how far the tech-rally and valuations can grow. The Dow Jones rose 0.17% on Tuesday, the Nasdaq added 0.22% to set a 10th all-time high this year, and the S&P500 ended the day up 0.25% to also set its 24th record close of 2024. Nvidia shares rose 0.6% prior to the release of its results which are due out on Wednesday, US time, with analysts expecting the semiconductor and AI giant to post another strong batch of results.

In Europe overnight, markets closed lower in the region ahead of the release of some key economic data later in the week including the UK inflation reading where it is widely expected to show a sharp decline in the headline inflation rate. The STOXX600 fell 0.21% on Tuesday, Germany’s DAX lost 0.22%, the French CAC fell 0.67%, and, in the UK, the FTSE100 ended the day down just 0.09%.

Across the Asia markets on Tuesday, it was a sea of red led by Hong Kong’s Hang Seng falling 2% amid declining materials and industrials stocks.

The local market overturned a recent rally to close 0.15% lower on Tuesday as communications services and materials stocks weighed on the key index, with heavy losses partially offset by a strong rally for tech stocks which took lead from the Nasdaq rising on Wall St on Monday.

Guidance and corporate updates have been dominating the market in recent sessions with building products giant James Hardie Industries tumbling 15% on Tuesday after missing guidance expectations in an update, while Sonic Healthcare weighed on the healthcare sector after its corporate update outlined currency exchange headwinds will lead to lower-than-expected profits for FY24.

Embattled casino operator Star Entertainment Group fell 8% on Tuesday after soaring on Monday amid investor concerns that rumoured takeover candidate, Hard Rock Hotels, has denied interest in acquiring the company.

Telstra shares fell 2.7% on Tuesday after the telco giant announced a series of cost cutting measures including the culling of up to 2800 jobs equating to 9% of its workforce and further expansion into AI.

The ASX is nearing record territory which has many investors questioning just how high the market can go, which is a similar concern over in the US as the Dow Jones reached a record high on Friday, however, with the recent earnings season indicating inflation on earnings, the rally still has some steam left as valuations continue rising.

What to watch today:

• Ahead of the midweek trading session in Australia, the SPI futures are anticipating the ASX to open the day up with a modest rise of 0.27%.
• On the commodities front this morning, oil is trading almost 1% lower at US$78.53/barrel, gold is down 0.3% at US$2419.5/ounce and iron ore is up 0.19% at US$117.24/tonne.
• AU$1.00 is buying US$0.67, 104.07 Japanese Yen, 52.81 British Pence and NZ$1.09.

Trading Ideas:

• Bell Potter has maintained a buy rating on Technology One (ASX:TNE) and increased the 12-month price target on the leading SaaS provider from $18.50 to $19.00 following the release of the company’s 1H24 results including revenue excluding interest growing 15% to $241m which beat BPe by 1% and profit before tax rose 17%. Technology One also surprised by issuing full year guidance of 12-16% profit before tax growth which topped typical historical guidance of 10-15%.
• And Trading Central has identified a bullish signal on BHP Group (ASX:BHP) following the formation of a pattern over a period of 43-days which is roughly the same amount of time the share price may rise from the close of $46.04 to the range of $49.40 to $50.10 according to standard principles of technical analysis.