Between the Bells

Wall St closed higher overnight, gaining back losses sustained in it’s previous session. The Dow Jones jumped 0.39%, the S&P 500 closed 0.96% higher and the tech-heavy Nasdaq rallied 1.30%.

In terms of US shares Lyft posted better-than-expected results in the fourth quarter which lead to a 36% jump for the ride-hailing company. 

Over in Europe, markets closed higher as investors react to the latest earnings reports and inflation data coming out of the UK. The STOXX600 closed half a percent higher, led by tech stocks which added 1% with mining stocks losing half a percent. Germany’s DAX closed 0.38% higher, the French CAC gained 0.68% and over in the UK, the FTSE 100 closed 0.75% higher as UK inflation data held steady at 4% year-on-year in January. 

Locally yesterday, markets closed 0.73% lower with the majority of sectors finishing in the red. Losses were led by the information technology and financial sector which lost 1.32% and 1.21% respectively. This was slightly offset by the industrial sector which saw a gain of 0.26% by market close yesterday.

What to watch today:

• The Australian share market is set to open higher, with the SPI futures suggesting a rise of 0.63% at market open this morning.
• In terms of economic data, January unemployment data will be released this morning with a forecast of 4%, up 0.1% from its previous result.
• On the commodities front this morning,
  • Oil is trading 1.71% lower at 76 US dollars and 59 cents a barrel, gold is trading 0.06% lower at 1990 US dollars an ounce and iron ore is trading flat at 128 US dollars a tonne.

Trading Ideas:

• Bell Potter maintains a buy rating on Seven Group Holdings (ASX:SVW) and has increased its 12-month price target from $38 to $44.30. The buy rating is maintained following good results in the first half of FY24 and SVW being market leaders in their respective industry, with scale, brand and industry expertise underpinning commercial advantages that are hard to replicate by competitors.
• And Trading Central has identified a bearish signal on Waypoint REIT (ASX:WPR), indicating that the stock price may fall from the close of $2.47 to the range of $2.18-$2.24, on a pattern formed over 18 days, according to the standard principles of technical analysis.

Wall St closed lower overnight following the release of hotter-than-expected inflation data for January. The Dow Jones fell 1.35%, the S&P 500 lost 1.37% and the tech-heavy Nasdaq ended the day 1.8% in the red.

The consumer price index rose 0.3% in January from December and increased 3.1% on an annual basis, which was above the 0.2% month-on-month and 2.9% annual rate that economists were expecting.

Over in Europe, markets closed lower in the region following the release of some key corporate earnings results and hotter-than-expected inflation reading out of the US. The STOXX600 fell 1% on Tuesday, Germany’s DAX lost 0.92%, the French CAC closed 0.84% lower and, in the UK, the FTSE100 shed 0.81%.

The local market closed Tuesday’s session 0.15% lower, extending on Monday’s losses as the healthcare sector again weighed on the key index, while utilities, financials and discretionary stocks closed the day in the green. The market losses were slightly offset by investor sentiment rising after Westpac consumer confidence data for February came in at a rise of 6.2%, up from a 1.3% decline in January and well above what economists were expecting of a further 0.8% decline. NAB business confidence data also came in at a rise of 1 point which was in line with economists’ expectations.

What to watch today:

• The Australian share market is set to open lower, with the SPI futures suggesting a fall of 1.64% at the open this morning.
• On the commodities front this morning,
  • Oil is trading over 1% higher at US$77.74 cents a barrel as tensions in the middle east help support oil prices. 
  • Gold is trading down 1.3% to US$1993.60 cents an ounce following stronger-than-expected inflation data coming out of the US. 
  • And iron ore is trading flat at US$128 a tonne. 

Trading Ideas:

• Bell Potter has initiated coverage on MMA Offshore (ASX:MRM) and has recommended a buy with a 12-month price target of $2.55. MMA Offshore is an Australian-marine services business, which delivers vessel, subsea and project logistics expertise to a range of global customers. The buy rating is recommended as the offshore services market is in the midst of a boom cycle following a protracted downturn by the oil price crash in 2014 and the subsequent fall in demand.
• And Bell Potter maintains a buy rating on HealthCo. H&W REIT (ASX:HCW) despite lowering its 12-month price target to $1.70. The buy rating is maintained as HCW appears to be one of the better relative value propositions amongst the REITs sector with it being the only REIT to recognise value uplift at the half.

Wall Street closed mixed on Monday with the Dow Jones rising to a record close, building on the momentum of last week as investors responded to key earnings results and await the release of core inflation data out later this week to determine the broader picture of business and economic stability in the higher interest rate environment. 

European markets started the week in positive territory across the board as investors continue responding to corporate earnings results out in the region. 

The local market started the new trading week with a rollercoaster of a session as the key index rose and fell throughout the day before closing 0.4% lower as investors responded to key trading updates and reporting season results. Tech stocks took lead from the Nasdaq’s strong rally last week while consumer discretionary stocks rose on resilient results out of some big names.

Healthcare giant CSL weighed on the healthcare sector and ASX as a whole yesterday, with its shares falling over 5% on the announcement that the company’s top-line results from the Phase 3 trial evaluating the efficacy and safety of its CSL112 drug in reducing the risk of major adverse cardiovascular events in patients, did not meet its primary efficacy endpoint reduction at day 90, and that the company now has no near-term plans to file for regulatory approval of the drug candidate.

Reporting season ramped up yesterday with JB Hi-Fi rallying 7% during the session after posting results that topped analysts’ expectations. Despite revenue, profit and the company’s interim dividend all declining, investors bought into the tech retailer as the results were not as bad as were expected and reflected the company’s resilience amid the declining consumer spend environment.

Synlait Milk also disappointed investors yesterday, with shares dropping 14% after the company warned investors to brace for a net loss in the range of $17m-$21m for the six-month period ending 31st January mainly due to financing costs and changes in margins.

Rail freight operator, Aurizon, was the talk of the market yesterday after posting strong first half results including revenue up 16%, NPAT growth of 82% to $237m, EPS up 82% and increased its dividend per share by 39% to 9.7ps. Aurizon also reported a 169% rise in free cashflow, attributing the impressive first half results to a solid performance in the Network and Coal businesses and continued revenue and volume growth in Bulk and Containerised freight.

On the economic calendar today, NAB Business Confidence data for January and Westpac Consumer Confidence data for February are released this morning with the expectation of a rise in business confidence but a slide in consumer confidence.

What to watch today:

• Ahead of the local trading session the SPI futures are expecting the ASX to open Tuesday’s session 0.26% higher.
• On the commodities front this morning, oil is flat at US$76.80/barrel, gold is down 0.32% at US$2017/ounce, and iron ore is flat at US$128/tonne.
• AU$1.00 is buying US$0.65, 97.62 Japanese Yen, 51.65 British Pence and NZ$1.07.

Trading Ideas:

• Bell Potter has maintained a buy rating on Propel Funeral Partners (ASX:PFP) and have raised the 12-month price target on the company from $5.90 to $6.20 following the company’s successful raising of ~$90m via a $80m institutional placement and $10m non-underwritten share purchase plan at $5.15/share. Proceeds from the raising are to be used to pay down debt to provide financial flexibility to pursue further growth initiatives, including acquisitions.
• Trading Central has identified a bullish signal on JB Hi-Fi (ASX:JBH) 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 $60.58 to the range of $60.90 to $61.90 according to standard principles of technical analysis.

Wall Street closed mixed on Friday with the S&P500 climbing 0.57% to close above 5000 points for the first time ever on Thursday as investors responded to December’s revised inflation report came in below first reported reading. The Dow Jones fell 0.14% at the closing bell while the tech-heavy Nasdaq ended the day up 1.25%. Over the 5 trading days last week the S&P500 added 1.4% in its 5th straight positive week, the Nasdaq rose 2.3% and the Dow Jones remained flat across the trading week.

The initial December inflation reading of 0.3% growth was downwardly revised on Friday to a 0.2% increase and core inflation results for the U.S. are due out this week.

Strong earnings results are also driving investor confidence in the US as tech mega caps including Nvidia and Alphabet rallied 3.6% and 2% respectively on Friday while Cloudfare soared 19.5% on strong earnings.

Over in Europe, markets closed slightly lower on Friday as investors digested corporate earnings results despite the release of favourable economic data out in the region. The STOXX600 fell just 0.08% on Friday, Germany’s DAX lost 0.22%, the French CAC dropped 0.24%, and in the UK, the FTSE100 ended the day down 0.3%.

Fresh inflation data out of Germany released on Friday indicated inflation fell to 3.1% in January in a positive sign for Europe’s largest economy.

Locally on Friday, the ASX200 rose 0.07% led by the technology sector rallying 1.12% and healthcare stocks adding 1%, while losses among energy and utilities stocks weighed on the key index.

Boral shares jumped 13% on Friday after the leading cement producer delivered very strong first half results including revenue up 9.4% and underlying NPAT soaring 143% over the 6-month period. Strong price realisation and volume recovery were the drivers of the stronger first half results.

Local uranium stocks took a hit on Friday after Canadian uranium miner Cameco announced plans to expand production at its Cigar Lake Mine and McArthur River/Key Lake, to address the growing global demand for the key commodity. Boss Energy fell 12.7% on Friday while Paladin Energy fell just over 7%.

What to watch today:

• Ahead of the local trading session here in Australia to start the new week, the ASX200 is set to open Monday’s session slightly in the red ahead of a big reporting season week locally this week.
• On the commodities front this morning, oil is trading 0.81% higher at US$76.84/barrel, gold is down 0.5% at US$2022.90/ounce, uranium is up 6% at US$106/pound and iron ore is flat at US$128/tonne.
• AU$1.00 is buying US$0.65, 97.29 Japanese Yen, 51.67 British Pence and NZ$1.06.
• On the reporting season calendar today, you can expect to see results released from Aurizon Holdings, Beach Energy, JB Hi-Fi, and James Hardie Industries.

Trading Ideas:

• Bell Potter has maintained a hold rating on REA Group (ASX:REA) and has slightly decreased the 12-month price target from $179 to $174 following the release of first half results including a 22% increase in EPS to 189cps, a 16% increase in dividend to 87cps which fell short of Bell Potter expectations. Despite the strong quarter, Bell Potter believes the current share price of $176.43 has REA Group relatively fully valued.
• And Trading Central has identified a bullish signal on Infratil (ASX:IFT) following the formation of a pattern over a period of 9-days which is roughly the same amount of time the share price may rise from the close of $10.11 to the range of $10.80 to $11/share according to standard principles of technical analysis.

Reporting season has kicked off and 13 companies released their financial results so far, with 6 beating expectations and 7 meeting expectations. In this week’s wrap we highlight the results and investor reactions to some key companies. 

Locally, from Monday to Thursday, the ASX200 fell 0.78%, weighed down by the materials and energy sectors and tracking the heavy losses on global markets.

In this week’s wrap, Grady covers:

• (0:22): how Amcor’s cost controls offset the impact of lower volumes
• (0:56): what's driving performance of REITs like Centuria Industrial
• (1:28): ResMed exceeding expectations across all key metrics
• (2:11): why Champion Iron’s share price fell
• (3:09): investors impressed by Transurban’s results
• (5:42): the most traded stocks & ETFs by Bell Direct clients
• (6:14): economic data to watch next week.

Wall St closed higher overnight with the S&P 500 on the verge of reaching the 5,000 level for the first time ever. The Dow Jones rallied 0.13%, the tech-heavy Nasdaq saw a rise of 0.24% and the S&P 500 saw an increase of 0.06%. 

In terms of US stocks, Disney rallied 11% after beating quarterly earnings estimates and raising its guidance.

Over in Europe, markets closed mixed as investors react to earnings. The STOXX600 closed flat with gains lead by household goods up 1.9% and losses spearheaded by health-care stocks which fell 1.9%. Germany’s DAX closed 0.25% higher, the French CAC also gained 0.71% but over in the UK, the FTSE100 fell 0.44%.

In Asia yesterday, China’s inflation rate came in at a decline of 0.8%, which is double what the forecast was and indicated the economy continues to struggle on the economic growth front, post pandemic.

Locally yesterday, markets closed 0.31% higher, led by the information technology sector which saw a rise of 1.18%. This was offset by the energy sector which lost just over half a percent by market close.

What to watch today:

• The Australian share market is set to open slightly lower, with the SPI futures suggesting a fall of 0.05% at market open this morning.
• On the commodities front this morning,
   
  • Oil is trading up 3.64% to US$76.55 a barrel following Israel’s decision to reject a ceasefire proposal and a decline of 3.15 million barrels in US gasoline inventories last week. 
  • Gold is trading 0.05% lower to US$2033 an ounce and iron ore retreated 0.39% to US$128 a tonne.

Trading Ideas:

• Bell Potter maintains a buy rating on Cettire (ASX:CTT) and has increased its 12-month price target to $4.80. The buy rating is maintained by Bell Potter following the release of positive results in the first half of 2024 which saw sales revenue of $354m and an adjusted EBITDA of $26m.
• And Trading Central has identified a bullish signal on Pilbara Minerals (ASX:PLS), indicating that the stock price may rise form the close of $3.62 to the range of $4.40-$4.55, on a pattern formed over 46 days, according to the standard principles of technical analysis.

Wall St closed higher overnight as investors react to further earnings season results. The S&P 500 rose 0.82%, edging closer to the 5000 level, the Dow Jones gained 0.4% and the tech-heavy Nasdaq rallied nearly 1%.

In terms of US stocks Microsoft and Nvidia added 2% each with Alphabet and Amazon rising by 1% each.

Over in Europe, markets closed lower following uncertainty over the rate cut outlook. The STOXX600 closed 0.3% lower with most sectors finishing the trading session lower. Oil and gas stocks were down 1%, with auto stocks up half a percent. Germany’s DAX fell 0.65%, the French CAC lost 0.36% and over in the UK the FTSE100 ended the trading session 0.65% lower.

Locally yesterday, markets closed 0.45% higher, with gains led by the utilities and real estate sectors of 1.74% and 1.11% respectively. This was slightly offset by the energy sector which retreated 0.95%.

What to watch today: 

• The Australian share market is set to open flat at market open this morning.
• On the commodities front this morning,
  • Oil is trading 1.03% higher at 74 US dollars and 7 cents a barrel as investors continue looking at the situation in the Middle East. 
  • Gold is trading flat at 2035 US dollars and 15 cents an ounce as investors await for further clues regarding monetary policy. 
  • And iron ore is trading 1.53% lower at 128 US dollars and 50 cents a tonne

Trading Ideas:

• Bell Potter maintains a buy rating on Australian Agricultural Co. (ASX:AAC) and has increased its 12-month price target to $2. The buy rating is maintained as cattle prices have rebounded strongly and US meat pricing indicators remain fairly firm. AAC is trading at a 40% discount, despite a 50% rally in the heavy steer indicator and an 87% rally in the EYCI post balance date.
• And Trading Central has identified a bullish signal on Austal Ltd (ASX:ASB), indicating that the stock price may rise from the close of $2.10 to the range of $2.37-$2.45 on a pattern formed over 33 days, according to the standard principles of technical analysis.

Wall St closed recovered some ground in afternoon trade on Tuesday to close the day mixed across the key indices as investors assessed the latest slew of corporate earnings and tried to gain further insight into the rate outlook out of the Fed. The Dow Jones rose 0.1%, the S&P500 fell 0.2% and the tech-heavy Nasdaq ended the day up 0.07%.

Technology stocks continue to outperform this reporting season in the US with Palantir Technologies soaring 19% on Tuesday after posting a revenue beat for Q4 while music streaming platform, Spotify, rose 6% after also topping expectations and posting an increase in premium subscribers.

In Europe overnight, markets rebounded to close higher as a rally for oil and gas stocks led to a positive close across markets in the region. The STOXX600 added 0.7% on Tuesday, Germany’s DAX added 0.76%, the French CAC rose 0.65% and, in the UK, the FTSE100 jumped 0.9%.

The local market extended losses into Tuesday’s session as the tech sector, which wears the full brunt of high interest rates, plunged 1.8% after the RBA did not rule out further monetary policy tightening should inflation remain high.

The RBA held the nation’s cash rate at 4.35% for the month ahead at the latest meeting yesterday as was largely expected but investors were more focused on the commentary and outlook out of the RBA to gauge an idea of when rate cuts may be on the horizon.

Inflation remaining at 4.1% is a good signal that it is easing faster than expected, however, it is still too early to assume inflation is under control. The RBA also outlined that higher interest rates are working to establish a more sustainable balance between aggregate supply and demand, and that the labour market in Australia, despite showing signs of easing, remains tight. Until the RBA sees a trend in inflation drivers coming under control over a material period, the likelihood is that the nation’s cash rate will remain on hold at 4.35%. RBA Governor, Michele Bullock, said she expects the nation’s inflation rate to fall to the target range of 2-3% by 2025.

Against all odds of declining Aussie retail spend, high interest rates and high input costs, the retailers continue to surprise with resilience as investors piled into Nick Scali and Myer on Tuesday. Nick Scali reported NPAT above the guided range for the first half of FY24 despite revenue falling in the high interest rate high cost of living environment. Myer on the other hand reported growth across most metrics and expects a strong NPAT for the first half between $49m and $53m.

What to watch today:

• Ahead of the local trading session here in Australia for Wednesday, the SPI futures are expecting the ASX to open the midweek session up 0.73%.
• On the commodities front this morning, oil is trading 0.6% higher at US$73.23/barrel, gold is up 0.55% at US$2035/ounce, uranium has fallen 5.66% to trade at US$100/pound, and iron ore is flat at US$130.50/tonne.

Trading Ideas:

• Bell Potter has maintained a buy rating on fashion jewellery company Lovisa (ASX:LOV) and raised the 12-month price target on the company from $25/share to $26.50 amid the growth opportunity in China representing the largest incremental market identified in the company’s global store rollout strategy. Since opening the first store in China in December, the Chinese fashion jewellery market alone is estimated at a value of US$13bn or 25x that of Australia which makes the market there highly attractive and a strong growth opportunity.
• And Trading Central has identified a bullish signal on Eagers Automotive (ASX:APE) following the formation of a pattern over a period of 148-days which is roughly the same amount of time the share price will rise from the close of $14.50 to the range of $17.20 to $17.80 according to standard principles of technical analysis.

Wall Street started the week lower across the key indices as treasury yields spiked on investor concerns that the Federal Reserve may not cut interest rates as much as expected and on the back of weak corporate results released dampening investor sentiment.

The Dow Jones fell 0.71%, while the S&P500 lost 0.32% and the tech-heavy Nasdaq ended the day down 0.2%. Fed Chair Jerome Powell reiterated last week at the FOMC policy meeting that a rate cut in March was unlikely, as a fresh batch of strong economic data supported the need to maintain rates higher for longer to ensure inflation doesn’t rebound.

McDonald’s fell 4% on Monday after releasing a mixed result for Q4 including slower sales which the fast-food giant has attributed to rising tensions in the Middle East.

In Europe overnight markets closed slightly lower across the board as investors digested the idea of higher rates for longer both out of the US and across Europe. The STOXX600 fell 0.14% to start the week lower, Germany’s DAX fell 0.08%, the French CAC lost 0.03%, and, in the UK, the FTSE100 dropped 0.04%.

The Asia markets also started the week mixed, where Chinese stocks rebounded from a 5-year low as the People’s Bank of China stimulus came into effect yesterday. Hong Kong’s Hang Seng ended the day flat, Japan’s Nikkei rose 0.54% and China’s CSI climbed 0.65% on Monday.

The local market started the first trading day of the new week almost 1% lower, as materials and utilities stocks weighed on the key index while every sector aside from healthcare ended the day lower.

The sell-off to start the week was mostly attributed to investors profit taking after the ASX soared to a record high close on Friday last week, and as investors await the RBA rate decision announcement today where it is widely expected that Australia’s central bank will maintain the current rate of 4.35% for another month as inflation remains above the target 2-3% range. The latest CPI report released last week indicated Australia’s quarterly inflation is easing faster than expected to a two year low of 4.1% in the 12-months to December.

In M&A news yesterday West Australian gold miner Red 5 announced it is merging with Silver Lake Resources in a deal worth $2.2bn to create a gold mining powerhouse. Under the deal, Red 5 will retain 51.7% of the merged company while Silver Lake will hold the remaining 48.3%. Red 5 shares rallied on the news while Silver Lake Resources fell over 4% on Monday.

What to watch today:

• Ahead of the local trading session here in Australia the SPI futures are expecting the ASX to open Tuesday’s session 0.3% lower on the back of global market turbulence overnight.
• On the commodities front this morning, oil is trading 1.03% higher at US$72.99/barrel, gold is down 0.66% at US$2025/ounce and iron ore is down 2.25% at US$130.50/tonne.
• AU$1.00 is buying US$0.65, 96.41 Japanese Yen, 51.95 British Pence and NZ$1.07.

Trading Ideas:

• Bell Potter has increased the rating on LGI Limited (ASX:LGI) from a hold to a buy and raised the price target from $2.32 to $2.55 following the company announcing a long-term gas management agreement with Bingo Industries and its related entity, Dial A Dump, covering Bingo’s Eastern Creek Landfill site in Western Sydney. The initial term of the agreement is 15-years with two options for 5-year extensions. Bell Potter believes the contract further validates LGI’s position as an industry leader in biogas recovery.
• And Bell Potter has increased the rating on Inghams (ASX:ING) from a hold to a buy and raised the price target from $3.95 to $4.90 following emerging tailwinds for the leading poultry producer in Australia including grain and soymeal price declines, increased production and pricing of poultry having peaked.

Wall St closed higher on Friday following the release of quarterly results from Meta which topped expectations. The Dow Jones closed 0.35% higher, the S&P 500 ended the day up, just over one percent and the tech-heavy Nasdaq rallied 1.74%. 

US unemployment data was released on Friday, with it staying steady at its previous result of 3.7%, 0.1% lower than the consensus of 3.8%.

The US 10-year treasury yield jumped 4.02% after the US government announced that 353,000 jobs were added to the US economy.

Over in Europe, markets closed mix as investors react to a surprisingly strong US jobs report. The STOXX 600 closed flat with auto stocks leading gains at 1.1% whilst oil and gas stocks fell 1.4%. Germany’s DAX closed 0.35% in the green, the French CAC rose 0.05% and over in the UK the FTSE100 ended the day 0.09% in the red. 

Locally on Friday, markets closed 1.47% higher to end the trading week, led by strong results from the real estate and information technology sectors which saw rises of 3.27% and 3.13% respectively. This was slightly offset by the utilities sector which lost 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 0.7% at the open this morning.
• On the commodities front this morning,
  • Oil is trading 2.09% lower to 72 US dollars and 28 cents a barrel as uncertainty in China’s economic recovery adds to the downward pressure.
  • Gold is trading down 0.75% to 2039 US dollars an ounce after strong US jobs data dampens bets an early rate cut.
  • And iron ore is trading up 0.38% to 133 US dollars and 50 cents a tonne. 

Trading Ideas:

• Bell Potter maintains a buy rating on Nufarm (ASX:NUF) and has slightly increased its 12-month price target to $6.35. Bell Potter maintains its buy rating as Nufarm is trading at a discount to its global peer group, despite delivering stronger revenue growth rates and having exposure to high growth ESG friendly revenues in biofuels and sustainable omega-3 oils.
• And Trading Central has identified a bullish signal in Helloworld Travel (ASX:HLO), indicating that the stock price may rise from the close of $2.51 to the range of $2.69-$2.73, on a pattern formed over 44 days, according to the standard principles of technical analysis.