Between the Bells

Wall Street ended Friday’s session in positive territory across the key indices with the S&P500 closing at the highest level for the year, after favourable economic data enhanced signals of a soft landing in the U.S. over a recession. The S&P500 rose 0.41%, the tech-heavy Nasdaq added 0.45%, and the Dow Jones lifted 0.36% on Friday, and for the week the key indices each posted gains under 1% to end a 6th straight winning streak higher.

November jobs data out late last week indicated the US economy added 199,000 jobs for the month which beat economists’ expectations, while the November unemployment rate dipped to 3.7% from 3.9% in October; which also topped expectations of a hold at 3.9%. This data indicates the US economy remains resilient and robust against inflation easing in the higher interest rate environment. Consumer sentiment and inflation expectations also showed positive signs in that sentiment hit the highest level since July in the latest reading while inflation expectations continue to ease.

Over in Europe, markets also closed higher on Friday as investors in the region responded to favourable jobs data out of the U.S. and welcomed the resilience in jobs as a sign that the world’s largest economy could avoid recession. The STOXX600 rose 0.7% as travel and leisure stocks rose 1.5%, while Germany’s DAX added 0.78%, the French CAC rose 1.32% and, in the UK, the FTSE100 lifted just over half a percent.

Locally on Friday, the ASX200 rose 0.3% boosted by the energy sector recovering from recent lows to close the day 1.04% higher, while technology and utilities stocks were the only two sectors to end Friday’s session in the red.

The story of the session on Friday drove Santos to a 6.2% rise after the energy giant hit headlines for a proposed merger with fellow energy giant Woodside to create a $52bn energy powerhouse.

What to watch today:

• Ahead of the local trading session here in Australia the SPI futures are expecting the local market to open Monday’s trading session 0.22% higher to start the new trading week in the green and extend the Santa rally we have seen this month so far.
• On the commodities front this morning, oil has recovered to trade 2.73% higher at US$71.23/barrel, gold is down 1.18% at US$2004/ounce and iron ore is up 1.87% at US$136/tonne.
• AU$1.00 is buying US$0.66, 95.35 Japanese Yen, 52.43 British Pence and NZ$1.07.

Trading Ideas:

• Bell Potter maintains a speculative buy rating on Chalice Mining (ASX:CHN) and a 12-month price target of $5.40 following the release of recent results from the ongoing drill programs at its 100%-owned Gonneville Nickel Copper PGE project in WA, with the results showing extensions of high-grade zones to the north-west of the deposit. Chalice also announced that all key approvals have been received to allow commencement of the next phase of exploration drilling across the full >30km strike length of the interpreted Julimar Complex.
• And Trading Central has identified a bullish signal on Sonic Healthcare (ASX:SHL) following the formation of a pattern over a period 53-days which is roughly the same amount of time the share price may rise from the close of $31.10 to the range of $32.70 to $33.10 according to standard principles of technical analysis.

The ASX200 advanced 1.42% this week (Mon - Thurs), with real estate and information technology in the lead. The rally came after the RBA announced it's holding the cash rate at 4.35%. Most industry sectors posted strong gains, apart from energy and utilities.
As the festive season and new year approach, let's consider Bell Potter's latest outlook and stock picks, across three industry sectors - fast moving consumer goods or FMCG, technology and real estate.
In this week’s wrap, Sophia covers:

• (0:30) buying opportunities in the FMCG industry
• (1:36) Bell Potter's recommendations in the tech sector for 2024
• (2:44) real estate stocks to consider
• (4:52) the best & worst performing stocks on the ASX200
• (5:48) the most traded stocks by Bell Direct clients this week
• (6:28) economic data to watch out for next week.

Wall St closed in the green overnight as investors await jobs data results, set to be released on Friday. The S&P 500 rose for the first time in four days, up 0.80%, the Dow Jones, finished the day 0.17% higher and the tech-heavy Nasdaq rose 1.37%.

Over in Europe, markets closed lower as the STOXX600 fell 0.3% with the majority of the sectors ending Thursday’s session in the red with retail stocks leading losses, down 1.1%. Germany’s DAX lost 0.26%, the French CAC lost 0.1% and over in the UK, the FTSE100 closed slightly lower by 0.02%. Airline group Air France-KLM closed 3.1% lower, with JPMorgan analysts cutting the stock to underweight from overweight.

Locally yesterday, the ASX200 closed 0.07% lower with losses lead by the consumer discretionary and health sectors which lost 0.53% and 0.46% respectively. This was slightly offset by the utilities sector which gained 0.84% by market close yesterday.

What to watch today:

• The Australian share market it set to open lower, with the SPI futures suggesting a fall of 0.13% at market open this morning.
• In terms economic data today, US unemployment rate data will be released tonight at 11:30pm with the consensus and forecast holding at 3.9%, the same as its previous result.
• On the commodities front this morning,
  • Oil is trading 0.60% higher at 69 US dollars and 80 cents a barrel, gold is up 0.21% to 2029 US dollars an ounce and iron ore is trading 1.14% higher at 133 US dollars and 50 cents a tonne.

Trading Ideas:

• Bell Potter maintains a buy rating on Perpetual Ltd (ASX:PPT) and has an unchanged 12-month price target of $27.09. Bell Potter have been highlighting the undervaluation of Perpetual for a while and only recently, Washington H. Soul Pattinson have made a non-binding indicative proposal to acquiree PPT in scrip. This would acquire 100% of Perpetual, with Perpetual Asset Management being demerged and returned to PPT shareholders. Bell Potter would be surprised if further bids for Perpetual did not appear.
• And Trading Central has identified a bullish signal on Australian Clinical Labs (ASX:ACL), indicating that the stock price may rise from the close of $2.77 to the range of $3.00-$3.06, on a pattern formed over 27 days, according to the standard principles of technical analysis.

US markets declined as investors assess data indicating falling inflation, while awaiting the latest employment report. The Dow Jones fell for the third consecutive session, down 74 points or 0.2%, while the S&P500 and the Nasdaq fell 0.4% and 0.5% respectively. 

European markets closed higher, rebounding from mixed trade earlier in the week. Germany’s DAX extended gains to a record high. The STOXX 600 rose 0.6% by the close, with mining stocks turnaround sharply. 

What to watch today:

• The Australian share market is set to open lower this morning, with the SPI futures suggesting a drop of 0.39% at the open. 
• In commodities, 
  • The price of oil has fallen, currently trading more than 4% lower at US$69 per barrel at the time of recording. It’s the lowest level since early July, due to demand worries and increased supply. The US Energy Information Administration reported that gasoline inventories in the US were up by 5.4 million barrels in the week ending December 1st, which is the largest increase in nine weeks and well above forecast of 1 million. This implies weaker demand and has seen the price of crude oil sharply drop, so keep watch of energy producers today such as Santos (ASX:STO) or Beach Energy (ASX:BPT). In addition, concerns on the economic outlook of China also appear to be weighing heavily on crude prices. 
  • Meanwhile, gold and iron ore prices are in the green. 
• In economic data today, Balance of Trade data for October will be out today. Australia’s trade surplus on goods declined to a 30-month low in September, as exports fell while imports surged. October’s data will be out at 11:30am this morning AEDT. 

Trading Ideas:

• Bell Potter maintains a Buy rating on Aeris Resources (ASX:AIS), a multi-mine copper-gold production and exploration company. The company has undertaken a fully underwritten $30 million equity raising, via a $13.9 million institutional placement, and a $16.1 million pro-rata, accelerated non-renounceable entitlement offer, which will result in the issue of 273 million new shares at an offer price of $0.11. Washington Soul Pattinson is a major shareholder who are supportive of the raise. Bell Potter have lowered their price target from $0.30 to $0.23, and at the current share price of $0.11, this implies 109% share price growth in a year. 
• And Bell Potter have lowered their rating on Neuren Pharmaceuticals (ASX:NEU) from a Buy to a Hold, with no changes to their forecast or price target. Neuren is a drug development company and Bell Potter say that the clear upcoming catalyst is the Phase 2 trial for PMS. Their price target remains unchanged at $17.50 and at the current share price of $16.05, this implies 9% share price growth in a year. 

Wall St closed mixed overnight as favourable economic data coming out of the US, shows further signs of inflation cooling, with job openings data declining 6.6% in October, indicating that the US labour market is cooling. The Dow Jones and the S&P 500 both lost 0.2% and 0.06% respectively, meanwhile the tech-heavy Nasdaq gained 0.31% overnight.

In Europe overnight, markets were mixed in the region as investors digested some key economic data and took a breather to assess valuations given the recent stock market rallies both in the European region and on global markets. UK households appear to have delayed Christmas spending this year as retail sales data in the region showed very muted growth of 2.7% in November which is much lower than the 4.2% growth recorded in November 2022, in a sign higher cost of living pressures are beginning to bite in the UK. The STOXX600 rose 0.4% on Tuesday, Germany’s DAX rose 0.78%, the French CAC added 0.74% and, in the UK, the FTSE100 fell 0.31%.

Locally yesterday, the ASX200 closed 0.89% lower with the energy and material sectors losing 2.05% and 1.81% each respectively. This was slightly offset by the utilities sector which saw a rise of 0.55% 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 0.42% at market open this morning
• In terms of economic data, yesterday the RBA announced the nations cash rate will be maintained at 4.35% in its last meeting for 2023.
• On the commodities front this morning, oil is down just 0.07% at 72 US dollars and 92 cents a barrel, gold is down 0.57% at 2018 US dollars an ounce and iron ore is down 1.13% at 131 US dollars and 50 cents a tonne.

Trading Ideas:

• Bell Potter maintains a buy rating on Cyclopharm and has kept its 12-month price target steady at $4.25. The buy rating is maintained as Cyclopharm’s initial roll out of Technegas in the US is proceeding with Duke University signing a contract to use their product. Duke University is a tier 1 academic hospital, attached to the University’s medical school and further announcements regarding subsequent contract signings for the use of Technegas are expected in the short term. 
• And Trading Central has identified a bullish signal in Sonic Healthcare, indicating that the stock price may rise from the close of $29.37 to the range of $31.20-$31.70, over a period of 44 days, according to the standard principles of technical analysis.

Wall Street opened the new trading week lower, retreating from the rally experienced on the NYSE over the last five weeks. The Dow Jones fell 0.11%, the S&P500 dropped 0.54%, and the Nasdaq took the biggest hit, falling 0.84%. The sectors that have carried Wall Street over the last 11 months took the biggest hit on Monday as investors digest the high valuations of big-name companies especially in the technology sector.

Alaska Air fell 14.2% on Monday after it agreed to acquire rival airline, Hawaiian Airlines for US$1.9bn in a bid to expand Alaska Air’s presence to the West Coast of the US.

Spotify shares rose 8.8% on Monday after the music streaming giant announced it would lay off 17% of its workforce, which equates to around 1500 jobs in a bit to cost cut in the high-cost environment.

Over in Europe, markets closed mostly lower on to start the week as the big miners weighed on markets in the region, while gold miners bucked the trend with a rally on the back of the precious commodity hitting a record high US$2100/ounce. Analysts are predicting the price of gold will remain resilient into 2024 on outlook of a weaker USD, geopolitical uncertainty and the prospect of interest rate cuts on the horizon. The STOXX600 fell 0.1% on Monday, Germany’s DAX rose 0.04%, the French CAC fell 0.2% and, in the UK, the FTSE100 lost 0.22%.

Locally yesterday, the ASX200 kicked off the new trading week on a very positive note with the key index ending the session up 0.73% buoyed by interest-rate sensitive sectors, with the tech sector rising 1.9%, while real estate added 1.55%. On the other end of the market, the utilities sector fell 2.52% while energy stocks lost 1.26% on the sliding price of oil.

Chalice mining recovered 11.47% on Monday despite no price sensitive news out of the copper-nickel miner yesterday. Star Entertainment Group gained 6.86% on Monday while the lithium miners came under pressure yesterday with Sayona Mining falling 9.68%, Core Lithium shedding 5.56% and Pilbara Minerals ending the day down 2.22%.

What to watch today:

• Ahead of the local session here in Australia the SPI futures are expecting the ASX to open Tuesday’s session down 0.53%, taking lead from Wall Street overnight.
• Taking a look at commodities this morning, oil continues to decline despite OPEC+ announcing production cuts of 2.2 million barrels per day in a bid to stabilise the price of oil, which is trading 1.07% lower at US$73.28/barrel. Gold is down 2% this morning at US$2029/ounce and iron ore is up 0.4% at US$133/tonne.
• On the economic calendar today the highly anticipated RBA interest rate decision is announced today with the expectation of the interest rate to be maintained at the current 4.35%.
• Stocks trading ex-dividend today include Fisher & Paykel Healthcare Corporation and Dalrymple Bay Infrastructure. If you’ve been thinking about these stocks, it might be worth considering buying in today as stocks trading ex-dividend, generally trade lower on the ex-dividend date.

Trading Ideas:

• And Bell Potter has maintained a speculative buy rating on Deep Yellow (ASX:DYL) and a 12-month price target of $1.81 after the uranium miner added an additional approximately 1.5 years of production to the Tumas project, with the expanded indicated and inferred resources. Looking into CY24, some key catalysts include a Final Investment Decision on Tumas, refreshed capital and operating costs for Tumas, and Mulga Rock updated definitive feasibility study.
• And Bell Potter has slightly increased the price target on Genusplus Group (ASX:GNP) from $1.40 to $1.50 and maintain a buy rating on the mining services provider following the Genusplus and its JV partner ACCOINA being awarded a $1.4bn design and construction contract for the HumeLink East project by Transgrid.

Wall St rallied on Friday to close the week off strongly. The Dow Jones ended the trading week in the green up 0.82% with the S&P 500 and the tech-heavy Nasdaq both rising by 0.59% and 0.55% respectively.

Europe closed higher on Friday following a global rally in stocks and bonds. The STOXX600 ended the trading session up 1%, with mining stocks leading gains, up 4.2% after China’s manufacturing sector recording an unexpected expansion. Germany’s DAX rose 1.12%, the French CAC gained 0.48% and over in the UK, the FTSE100 ended the trading day just over 1% in the green.

Locally on Friday, the ASX200 closed 0.20% lower to end the trading week. Losses were led by the information technology and consumer staples sectors which lost 1.08% and 0.84% respectively. This was slightly offset by the energy sector which rose 0.12% on Friday.

What to watch today:

• The Australian market is set to open higher, with the SPI futures suggesting a rise of 0.92% at the open this morning.
• On the commodities front today,
  • Oil is down 2.49% to US$74.07/barrel as Saudi Arabia is expected to extend its voluntary cut of 1 million barrels a day. 
  • Gold is up 1.78% to US$2071.96/ounce and iron ore is down 0.75% to US$132.50/tonne. 

Trading Ideas:

• Bell Potter maintains a buy rating on Develop Global (ASX:DVP) and has kept its 12-month price target steady at $4.30. The buy rating is maintained following the forthcoming restart of Woodlawn operations coinciding with growing revenue generation in the company’s underground mining services business. DVP was also awarded a $46 million underground development contract by the Mt Marion joint venture to establish and develop an exploration decline at the Mt Marion lithium mine in Western Australia.
• And Trading Central has identified a bearish signal in Omni Bridgeway (ASX:OBL), indicating that the stock price may fall from the close of $1.47 to the range of $0.92-$1.02 on a pattern formed over 24 days, according to the standard principles of technical analysis.

The final month of 2023 is here and it’s time to look back at how some of the key ASX sectors performed this year so far. Some sectors like staples and discretionary stocks have surprised the market for respective reasons, while healthcare has underperformed which opens some investment opportunities heading into 2024.

Key strategic moves from companies included capital structure restructuring and inventory reduction which helped boost the share prices of some retailers, while a slowing growth outlook is hurting some key tech names as we motor towards 2024.

In this week’s wrap, Grady covers:

• (0:44) Why the technology sector soared in 2023.
• (2:15) Headwinds facing some consumer staples stocks.
• (3:22) Discretionary stocks that surprised the market in 2023.
• (4:34) Financials pulling back late this year.
• (4:52) Energy and geopolitical tensions & output fluctuations.
• (6:51) The most traded stocks by Bell Direct clients this week.
• (7:22) RBA rate decision & US jobs data out next week.

Read the transcript here.

Wall Street closed mixed overnight with the Dow Jones rallying to a new high for the year, ending the session up 1.47%. The S&P 500 rose 0.38%, but the tech-heavy Nasdaq fell 0.23% overnight as investors took some profits in Big Tech stocks that led the November comeback rally. In terms of US stocks, Salesforce jumped 8.6% on the back of better-than-expected earnings and revenue in the fiscal third quarter.

Over in Europe, markets closed higher to end the best month since January. The STOXX600 closed 0.5% higher, Germany’s DAX ended the trading day up 0.30%, the French CAC closed 0.59% higher and over in the UK the FTSE 100 rose 0.41%.

Locally yesterday, the ASX200 closed Thursday 0.74% higher led by gains in the industrial and information technology sectors of 1.43% and 1.29% respectively. This was slightly offset by the utilities sector which ended Thursday’s session 0.95% in the red.

What to watch today:

• The Australian share market is set to open lower, with the SPI futures suggesting a fall of 0.27% at the open this morning on the back of Wall Street’s mixed session overnight.
• On the commodities front this morning,
  • Oil is down 2.71% to US$75.73 a barrel with Brazil announcing a plan to increase its output to 3.8 million barrels a day, raising concerns of oversupply. 
  • Gold is down 0.45% to US$2,035 an ounce. 
  • Iron ore is down 0.74% to US$133.50 a tonne.

Trading Ideas: 

• Bell Potter maintains a buy rating on DroneShield (ASX:DRO) and has increased the 12-month price target on the defence technology company to $0.50. The buy rating is maintained by Bell Potter as DroneShield has significantly increased the scale of their operations, and revenue forecasts have increased by 21%, 27% and 25% in CY24, CY25 and CY26, leading to the analyst maintaining a buy rating on the company.
• And Trading Central has identified a bullish signal in Regis Resources (ASX:RRL), indicating that the stock price may rise from the close of $1.95 to the range of $2.16-$2.22 on a pattern formed over 77 days, according to the standard principles of technical analysis.

US equities closed near the flat line, with the Dow Jones just 0.04% higher, while the S&P 500 was 0.09% lower and the Nasdaq down 0.16% lower.

European major benchmarks closed higher, as regional markets regained momentum. The STOXX 600 closed 0.43% higher, with auto stocks up the most. Germany’s DAX maintained gains following German inflation figures being released during afternoon trading, slowing to 2.3% in November. The DAX is now at its highest level since the beginning of August. France’s CAC also closed in the green, while the FTSE 100 closed lower.

What to watch today:

• The Australian market is set to open slightly higher, with the SPI futures suggesting a 0.1% rise at the open this morning.
• In commodities,
  • Crude oil has jumped 1.65%, nearing US$78 per barrel, ahead of the OPEC+ meeting today, where the group will set its production policy for 2024. OPEC+ are considering new oil production cuts of as much as 1 million barrels a day.
  • Meanwhile, the price of gold has rallied, hitting its highest levels in nearly seven months, off the back of a sharp decline in the US dollar. So, keep watch of ASX- listed gold miners.
  • And iron ore is lower, trading at US$133.50 per tonne.
• In economic data, private sector credit data and building permit data will be out today. We’ll also be awaiting eurozone inflation for October out tonight.
• And there’s a list of companies holding their AGMs today. These include Imugene (ASX:IMU), Lake Resources (ASX:LKE), Liontown Resources (ASX:LTR) and Sayona Mining (ASX:SYA).
• And stocks going ex-dividend today include Aristocrat Leisure (ASX:ALL) and Technology One (ASX:TNE).

Trading Ideas:

• Bell Potter maintains a Buy rating on EROAD (ASX:ERD) and have increased their price target by 6% to $0.95. At the stock’s current share price of $0.76, this implies 25% share price growth in a year.
• And Trading Central have identified a bullish signal on Magellan Financial Group (ASX:MFG), indicating that the stock price may rise from the close of $7.43 to the range of $8.40 to $8.60 over 38 days, according to the standard principles of technical analysis.