Between the Bells

Wall Street resumed the November rally on Tuesday with stocks closing Tuesday’s session higher as comments from a Federal Reserve official boosted investor hopes that the central bank may not need to raise the interest rate any further. The Dow Jones rose 0.24%, the S&P500 added 0.1% and the tech-heavy Nasdaq rose 0.3%.

US GDP Growth Rate for Q3 is out tonight and will give an indication of just how the US economy is coping during the high interest rate environment, with consensus expecting annualised growth of 5%, following a rise of 4.9% in the last reading, which provides further indication of a soft landing in the US over a recession.

In Europe, markets closed mostly lower on Tuesday following the release of key economic data in the region. The STOXX600 ended Tuesday’s session in the red, while Germany’s DAX rose 0.16%, the French CAC fell 0.21% and, in the UK, the FTSE100 ended Tuesday’s session down 0.07%. Consumer sentiment data was released in Germany and France overnight indicating German consumers are slowly increasing their willingness to buy in recession-hit Germany however income expectations in the region have declined, while in France, the French consumer remains sluggish on outlook as indicated by consumer confidence data.

Locally on Tuesday, the gold miners and real estate stocks boosted the ASX to a positive finish on Tuesday, with the key index ending the day up 0.4%. The energy sector weighed on the market yesterday as oil retreated for a third straight day amid delays to the upcoming OPEC+ meeting where it is expected the group of oil producing leaders will initiate further output cuts to stabilise oil prices.

For the month so far, the ASX is tracking 2.8% higher buoyed by the real estate sector as investors begin to reconsider investments in the REIT space after a heavy sell-off in this rate sensitive sector throughout the first half of 2023.

The retailers took a hit on Tuesday after Australian retail sales data for October showed a decline of 0.2% which wasn’t unexpected as Aussies saved money prior to the Black Friday and Cyber Monday sales periods. Economists were expecting a slight pullback in sales to a rise of 0.1% for October, however the result coming in at a 0.2% decline indicates just how hard Aussies are doing it in the high cost of living environment. We are expecting a rise in November sales though as Aussies snapped up bargains during the promotional sales weekend.

What to watch today:

• Ahead of the local trading session here in Australia the SPI futures are expecting the ASX to open the midweek trading session up 0.28%.
• On the commodities front this morning, oil is trading 2.57% higher at US$76.78/barrel, gold is up 1.36% at US$2041/ounce and iron ore is down 0.74% at US$134.50/tonne.
• AU$1.00 is buying US$0.66, 98.16 Japanese Yen, 52.34 British Pence and NZ$1.08.

Trading Ideas:

• Bell Potter has increased the rating on IDP Education (ASX:IEL) from a hold to a buy and increased the price target from $26.70 to $27 following the release of recent student visa data from key source markets including India, China, Vietnam, Australia, Nigeria and Thailand into key destination countries of Australia, the UK and Canada. While 1H24 is typically seasonally weaker in Australia, levels came in slightly above pre-pandemic levels and the Northern Hemisphere data was encouraging particularly for Canada which is a key market IDP operates in.
• And Trading Central has identified a bullish signal on Northern Star Resources (ASX:NST) following the formation of a pattern over a period of 40-days which is roughly the same amount of time the share price may rise from the close of $12.14 to the range of $14.20 to $14.70 according to standard principles of technical analysis.

Wall St closed lower to open the new trading week in the red. The Dow Jones ended Monday’s session down 0.16%, the S&P 500 closed 0.2% lower and the tech-heavy Nasdaq fell 0.07%.

In terms of US stocks, e-commerce shares jumped on Cyber Monday with Amazon and Shopify jumping 1.1% and 4.5% respectively.

Over in Europe, markets closed lower overnight with the STOXX600 closing down 0.3% as oil and gas stocks traded flat, while travel stocks fell 0.8%. Germany’s DAX fell 0.39% while the French CAC and the UK’s FTSE100 both ended the day 0.37% in the red.

Locally yesterday, the ASX200 closed 0.75% lower with all but the information technology sector finishing in the session in negative territory. Losses were led by the consumers discretionary and real estate sectors which lost 1.26% and 1.34% respectively.

What to watch locally today:

• The Australian share market is set to open higher, with the SPI futures suggesting a rise of 0.16% at market open this morning.
• On the commodities front this morning,
  • Oil is trading down 0.87% to 74 US dollars and 88 cents a barrel with focus on the upcoming OPEC+ meeting where Saudi Arabia and Russia are expected to prolong voluntary supply cuts until at least the first quarter of 2024.
  • Gold is up just over half a percent to 2013 US dollars and 29 cents an ounce and iron ore is down 0.37% to 135 US dollars and 50 cents a tonne.

Trading Ideas:

• Bell Potter maintains a buy rating on Smartpay Holdings (ASX:SMP) despite lowering its price target to $1.75. The price target was reduced as the underlying EBITDA in the first half of 2024 fell modestly below the forecast. However, the buy rating is still maintained as the positive view on SMP is underpinned by system growth in digital payments and early expansion in the Australian market.
• And Trading Central has identified a bullish signal on Ramelius Resources (ASX:RMS), indicating that the stock price may rise from the close of $1.58 to the range of $1.74-$1.78 on a pattern formed over 15 days, according to the standard principles of technical analysis.

Wall Street rose for a fourth straight week last week across the three key indices despite a mixed session on Friday. The Dow Jones rose 0.33%, and the S&P500 added 0.06%, but the tech-heavy Nasdaq fell 0.11%. Chip maker Nvidia weighed on the Nasdaq on Friday as shares in the company fell 1.7% after Reuters reported Nvidia told its Chinese clients that it will delay a new artificial intelligence chip designed to comply with U.S. export restrictions, until next year. Declining bond yields are a driving factor behind the four week Wall Street rally as investors come to terms with the idea that the equity market in the US can handle interest rates between 4-5%.

Black Friday and cyber Monday sales periods kicked off over the weekend in the US which sent shares in Walmart, Amazon and target higher on Friday.

Over in Europe, markets in the region also closed higher on Friday as fresh economic data in the region boosted investor sentiment that inflation is continuing to cool.  Final German GDP figures for Q3 released on Friday confirmed contraction of 0.1% which is down 0.8% on the PCP. The STOXX600 rose 0.4% higher on Friday while Germany’s DAX added 0.22%, the French CAC rose 0.2% and, in the UK, the FTSE100 ended the day up 0.06%.

Locally on Friday, the ASX200 rose 0.17%, driven by the utilities and energy sectors adding 1.55% and 1.27% respectively. Trading was lacklustre on Friday as Wall Street was closed on Thursday for the Thanksgiving day holiday. The energy sector rally was boosted on Friday by a rebound in the price of oil, while tech stocks weighed on the key index.

In company news, Select Harvest tanked 10.5% after the agricultural company reported net losses deepened to $115m in FY23 from $4.8m in FY22 which led to the company’s final dividend being scrapped. Whitehaven Coal on the other hand rose 3.4% after the company’s $1bn  Winchester South coking coal mine was given a recommendation to proceed from the Queensland government’s Coordinator General.

What to watch today:

• Ahead of the local trading session here in Australia, the SPI futures are expecting the local market to open the new trading week up 0.21%.
• On the commodities front this morning, oil has retreated again to trade 1.22% lower at US$76.16/barrel, gold is up half a percent at US$2001.60/ounce, iron ore is flat at US$136/tonne and uranium is up 8.45% at US$80.25/pound.
• AU$1.00 is buying US$0.66, 98.32 Japanese Yen, 52.23 British Pence and NZ$1.08.

Trading Ideas:

• Bell Potter has maintained a buy rating on Clinuvel Pharmaceuticals (ASX:CUV) and a 12-month price target of $24 following the release of an update out of the pharmaceutical company’s competitor. Clinuvel currently has a monopoly position over the market for the treatment of EPP through the distribution of the drug Scenesse which is currently the only globally approved treatment for EPP. The most advanced competitor is Mitsubishi Tanabe which has recently initiated a Phase 3 trial which pushes back the potential approval until CY27 at the earliest, which indicates Clinuvel has monopoly over the market for at least another 3-4 years.
• And Bell Potter has increased the rating on Boss Energy (ASX:BOE) from a speculative hold to a speculative buy rating and maintain a $5.53/share 12-month price target on the uranium miner as the analyst sees an opportunity to buy the dip given the recent pullback in the share price and some key tailwinds mounting in the uranium market. Upcoming catalysts for Boss Energy include the signing of an offtake agreement ahead of first production in December or January, commencement of production with first drummed material in late January to early February 2024, and further momentum in uranium markets as more countries continue including nuclear power as a key part of their green energy transition strategies.

As we head into the Black Friday and Cyber Monday sales for 2023, this promotional period is arguably the most important for ASX-listed retailers. Firstly, they are able to heavily discount old stock to reduce inventory levels. Secondly, retailers gauge investor propensity for retail spend ahead of the busy holiday season, which is especially important as cost-of-living pressures continue to bite.

While some retailers remain resilient despite slowing consumer spend, others have shifted focus in the slow sales environment to invest in AI for customer experience enhancement and to gain market share. We explore what the Black Friday and Cyber Monday sales will reveal for retailers as we close out 2023 and more!

In this week’s wrap, Grady covers:

• (0:30) Why retail inventory levels are a key driver for investors,
• (0:45) Black Friday & Cyber Monday will reveal consumer sentiment,
• (1:28) Australia’s resilient retail spend as a key driver of inflation,
• (2:28) Lovisa (ASX:LOV) remaining a key retail pick for Bell Potter, why?
• (3:32) The best performing stocks on the ASX200 this week,
• (4:42) The most traded stocks by Bell Direct clients this week, and
• (5:16) Key economic data to watch next week.

Read the transcript here

Wall St was closed overnight due to the Thanksgiving day holiday. 

Over in Europe, markets closed in the green with the STOXX600 ending the day 0.3% higher, led by oil and gas stocks rising 1.4%. Germany’s DAX closed 0.23% higher, the French CAC ended the trading day up 0.24% and over in the UK the FTSE100 closed Thursday’s session 0.19% in the green.

The ASX extended its losing streak into Thursday’s session closing the day down 0.62%, taking no lead from Wall Street’s rally on Wednesday, as the materials and energy sectors weighed on the key index due to the sliding price of oil and iron ore. Oil’s decline was on the back of OPEC+ delaying its upcoming meeting where it was set to discuss further output cuts to stabilise the price of oil, which naturally caused a sell-off in oil producing stocks yesterday including Woodside and Santos.

Origin Energy emerged from a trading halt yesterday to rally 1.2% after the company said it would extend its shareholders vote on the takeover offer to next month instead of today, following the investment group led by Brookfield announcing a revised takeover offer. The revised offer follows Australian Super which is a majority shareholder in Origin at 17.5%, saying it would vote no to the Brookfield led original offer on the grounds of value. The new offer is for a plan B option if majority of Origin’s shareholders do not vote in favour of the original offer of $9.43/share. 

The plan B offer is effectively a lower offer that the investment group will ‘come in and control the company’ for a lower price under an Alternative Transaction offer where shareholders will receive a cash consideration of up to $9.08 per share including dividends. It is a very interesting time for Origin Energy shareholders and the company’s takeover fate will be revealed on December 4th when the Scheme Meeting has been postponed to.

Looking at economic data, Australia’s manufacturing PMI index decreased in November to 47.7 points from 48.2 points in October in a sign of the economic slowdown and confirming that the Australian economy is experiencing a soft landing as a result of interest rate rises to date.

What to watch locally today:

• The Australian share market is set to open higher, with the SPI futures suggesting a rise of 0.2% at the open this morning.
• On the commodity front this morning, 
  • Oil is trading down 1.09% to US$76.26/barrel after signs of strong supply from non-OPEC countries, which has been weighing down oil prices.
  • Gold is trading 0.15% higher to US$1992.62/ounce and iron ore is down 1.09% to US$136/tonne.

Trading Ideas:

• Bell Potter maintains a buy rating on Propel Funeral Partners (ASX:PFP) with a 12-month price target of $5.70. The buy rating is maintained as it is expected that organic volume growth will return in the 2nd quarter of 2024 and mid-long term growth to be further supported by ageing baby boomers as the older cohorts reach average life expectancy.
• And Trading Central has identified a bearish signal on Pengana Private Equity (ASX:PCG) , indicating that the stock price may fall from the close of $1.58 to the range of $1.23-$1.25 on a pattern formed over 8 days, according to the standard principles of technical analysis.

Wall St’s November rally reignited on Wednesday with the key indices closing the session higher ahead of the Thanksgiving Day holiday as a decline in bond yields boosted investor sentiment on an equities front, alongside investors remaining optimistic that the US cash rate will be maintained at the Fed’s December meeting. The Dow Jones rose 0.5%, the S&P500 added 0.4% and the tech-heavy Nasdaq rallied 0.5%.

Over in Europe, markets closed mostly higher on Wednesday as investors digested the latest FOMC meeting minutes out in the U.S. alongside several fiscal announcements out of the U.K.

The STOXX600 rose 0.3% buoyed by travel and leisure stocks while oil and gas stocks fell 1.7%. Germany’s DAX rose 0.36% on Wednesday, the French CAC added 0.43%, and, in the U.K., the FTSE100 fell 0.17%.

U.K. finance minister Jeremy Hunt announced a tax cut impacting 27 million workers in addition to new and changes to existing measures including benefits programs, raising the minimum wage, investing in AI, business tax breaks and more. Despite these favourable measures, the U.K.’s FTSE100 closed lower on Wednesday.

Locally on Wednesday, the ASX fell just 0.07%, taking lead from the US and European sell-off on Tuesday weighed down by rate-sensitive sectors as the REIT and tech-sectors fell 1.53% and 1.13% respectively at the closing bell of the midweek session.

De Grey mining rose 4.8% after Bell Potter released a broker note responding to positive drill results out of the gold miner on Wednesday. Bell Potter retained its buy rating following positive results out of the company’s Hemi gold project.

Lovisa shares also lifted 2% on Wednesday after the fashion jewellery company released a trading update at its AGM including overall sales up strongly, driven by the company’s strong global rollout strategy with the first store in China on the horizon soon.

What to watch today:

• Ahead of the local trading session here in Australia, the SPI futures are anticipating the ASX to open Thursday’s session down 0.17% despite the overnight rally on Wall St.
• On the commodities front this morning, oil has dipped 1.45% to trade at US$76.65/barrel after OPEC+ delayed a meeting to further discuss production cuts to stabilise oil prices. Gold is down almost half a percent at US$1989/ounce and iron ore is up 0.73% at US$137.50/tonne.
• AU$1.00 is buying US$0.65, 97.86 Japanese Yen, 52.45 British Pence and NZ1.09.

Trading Ideas:

• Bell Potter has reduced the 12-month price target on Brickworks (ASX:BKW) from $28.50 to $27.80 and maintain a buy rating on the leading industrial conglomerate following a 1st quarter trading update at the company’s AGM including the Building Products division in Australia and the US remaining resilient, and margin improvement across both regions. The reason for the target price decrease is due to Brickworks’ revised cap rate of 5.2% and the outlook for further devaluation to come among industrial properties Bell Potter covers.
• And Trading Central has identified a bearish signal on HelloWorld Travel (ASX:HLO) following the formation of a pattern over a period of 20-days which is roughly the same amount of time the share price may fall from the close of $2.44 to the range of $2.00 to $2.08 according to standard principles of technical analysis.

Over in the US today, the November equities rally took a pause with the key indices sliding on Tuesday following the release of some disappointing retail results and alongside the latest FOMC meeting minutes being released. The Dow Jones fell 0.18%, the S&P500 lost 0.2% and the tech-heavy Nasdaq shed 0.59%. Clothing retailers Lowe’s and American Eagle fell 2% and 16% respectively on Tuesday after both retailers reduced outlook for the remainder of FY23 in the tougher retail spend environment. Investors responded negatively to the release of the latest FOMC minutes as officials gave no indication of interest rate cuts on the horizon, despite inflation easing in the US alongside robust economic growth which supports the notion of a soft landing over a recession.

The highly anticipated third-quarter results from leading chipmaker Nvidia were released just before 8am AEDT and investors appeared unimpressed with what they saw as shares fell almost 1% at the closing bell on Wall St. Despite reporting revenue and earnings that beat consensus, the company warned that they expect sales to destinations like China to decline significantly in Q4 due to export restrictions on the region.

And in Europe, markets closed mostly lower on Tuesday as investors await the release of final third-quarter results and ahead of the FOMC meeting minutes released in the US. The STOXX600 fell 0.1%, Germany’s DAX lost 0.01%, the French CAC fell 0.24%, and, in the UK, the FTSE100 shed 0.2%.

The Aussie market rally extended into Tuesday’s session with the ASX adding 0.28% at the closing bell, as news of further stimulus in China boosted the price of iron ore and subsequently the big miners surged in afternoon trade. The new stimulus to boost the world’s second largest economy out of deflationary territory, is through Beijing increasing budget spending to support post-pandemic recovery efforts. China is set to deploy a host of local and central government bonds which will push Beijing’s budget deficit up to a 2-decade high. The Chinese treasury also maintained its benchmark lending rates at a monthly fixing meeting on Monday.

The latest RBA meeting minutes were also released yesterday with a more cautious outlook on the future of rate hikes down under. The minutes noted that underlying inflation was more persistent than expected and the risk of not achieving the 2-3% target range by the end of 2025 had increased.

What to watch today:

• Ahead of the midweek trading session here in Australia, the SPI futures are expecting the ASX to open just 0.08% lower following the sell-off on Wall St overnight.
• On the commodities front this morning, oil is trading 0.34% lower at US$77.54/barrel despite speculation that OPEC+ will intervene again with further output cuts to bolster oil prices, gold is up 1.16% at US$2000/ounce and iron ore is up 1.5% at US$136.50/tonne.

Trading Ideas:

• Bell Potter has decreased the 12-month price target on Volpara Health Technology (ASX:VHT) from $1.20 to $0.85 and maintain a buy rating on the MedTech company focused on the early detection of breast cancer, following the release of the company’s first half results. Despite revenue increasing by 17%, this growth rate in revenue more than halved relative to the PCP. Bell Potter’s analyst believes slower than anticipated customer implementations are to be expected in the coming financial years as many clients acquired in the MRS acquisition of 2020 remain on the legacy product rather than upgrading.
• And Trading Central has identified a bullish signal on Patriot Battery Metals (ASX:PMT) following the formation of a pattern over a period of 17-days which is roughly the same amount of time the share price may rise from the close of $1.05 to the range of $1.30 to $1.36 according to standard principles of technical analysis.

Wall Street started the shorter trading week strongly, finishing higher by market close on Monday. The Dow Jones jumped 0.58%, the S&P 500 closed 0.74% higher and the tech-heavy Nasdaq ended Monday 1.13% in the green. Markets remain in rally mode post the release of softer-than-expected inflation data out of the world’s largest economy last week. 

The tech-driven rally on Monday was led by Microsoft lifting 2%, following the announcement of former OpenAI chief Sam Altman, joining to lead a new research team. Chipmaker, Nvidia also added 2.3% before its earnings report release on Tuesday afternoon.

Over in Europe, markets closed marginally higher as the release of third quarter earnings starts to slow. The STOXX600 closed 0.1% higher, led by oil and gas stocks up 1.3%. Germany’s DAX fell 0.11%, the French CAC gained 0.18% and over in the UK the FTSE 100 ended the day 0.11% in the red.

Locally yesterday, the ASX200 closed 0.12% higher, led by gains in the energy and consumer discretionary sectors of 1.33% and 0.64% respectively. This was slightly offset by losses in the consumer staples sector of 0.83%

What to watch today:

• The Australian share market is set to open higher, with the SPI futures suggesting a rise of 0.37% at the open this morning.
• In terms of economic data today, at 10:30am this morning, the RBA minutes meeting will be released following the rise in the cash rate to 4.35%.
• On the commodities front this morning,
  • Oil is up 2.26% to US$77.75 with surging crude oil inventories in the US and Russia recently lifting a ban on gasoline exports. 
  • Gold is down 0.1% to US$1,977 an ounce and iron ore is up 1.51% to US$134.50 a tonne.

Trading Ideas:

• Bell Potter maintains a buy rating on Accent Group (ASX:AX1), despite lowering the price target by $0.15 to $2.35. The slight decrease in the 12-month price target follows the leading athleisure retail company releasing a trading update for the first 19-weeks of FY24 including group owned sales and gross margins remaining broadly flat on the prior corresponding period. The buy rating is maintained though as Accent Group is Bell Potter’s preferred retail sector stock given its scale and exposure in terms of channels, brands and size. 
• Trading Central has identified a bearish signal in Lifestyle Communities (ASX:LIC), indicating that the stock price may fall from the close of $17.37 to the range of $14.40 to $14.90, over a period of 15 days, according to the standard principles of technical analysis.

Wall Street closed higher on Friday, extending on the November rally among equities in the US with each of the key indices posting a gain for a third straight week. The rally on Friday extended from the prior sessions on the back of softer-than-expected inflation data being released, boosting investor hopes that further rate hikes will be off the table. The Dow Jones added 0.01% on Friday while the S&P500 rose 0.13% and the tech-heavy Nasdaq added 0.08%.

Shares in clothing retailer Gap soared 30% on Friday, a day after the company posted better-than-expected results for the third quarter. While on the other end of the market, EV charging network ChargePoint tanked 35% after the company announced a change up to its product suite and cut forecast for third-quarter revenue.

Over in Europe, markets closed higher on Friday following the release of eurozone inflation data indicating a sharp slowdown, with October’s YoY inflation reading coming in at 2.9% compared to 4.3% in September. The STOXX600 rose 1%, Germany’s DAX added 0.84%, the French CAC added 0.91%, and, in the UK, the FTSE100 rose 1.26% boosted by a 0.3% decline in retail sales figures to the lowest level since early 2021.

Locally on Friday, the ASX200 fell 0.13% as a sharp decline in the price of oil sparked a sell-off in energy stocks, with the sector ending the day down 1.6%. Industrials and tech stocks offset some of the session’s heavy losses with 0.45% and 0.43% gains respectively.

Gold miners rallied on Friday on a rise in the price of the precious commodity, with Northern Star Resources, Evolution Mining and Bellevue Gold each rising over 3%.

Telix Pharmaceuticals and NextGen Energy were two beneficiaries of the Sohn Hearts & Minds Conference last week after industry experts said the healthcare stock and uranium stock were undervalued and the top stock pick, respectively at the conference.

What to watch today:

• Ahead of the local trading session here in Australia the SPI futures are expecting the local market to open the new trading week 0.4% higher.
• On the commodities front this morning, oil has rebounded to trade 4.1% higher at US$75.89/barrel, gold is down 0.04% at US$1980.01/ounce and iron ore is down 0.38% at US$132.50/tonne.
• 1 Aussie dollar is buying 65 US cents, 97.40 Japanese Yen, 52 British Pence and 1 New Zealand dollar and 9 cents.
• Stocks trading ex-dividend today include Silk Laser Australia and Tamawood. 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:

• Bell Potter has increased the 12-month price target on GrainCorp (ASX:GNC) from $9.45 to $9.55 and maintain a buy rating on the leading Australian grain facilitation company following the release of the company’s FY23 results including underlying NPAT slightly above Bell Potter expectations at $268.9m, revenue up 5% to $8.23bn which topped Bell Potter expectations and lease adjusted operating cash inflow of $534.6m, which is above the inflow of $407.1m in FY22.
• And Trading Central has identified a bullish signal on ClearView Wealth (ASX:CVW) following the formation of a pattern over a period of 278 days which is roughly the same amount of time the share price may rise from the close of $0.58 to the range of $0.69 to $0.71 according to standard principles of technical analysis.

Our Market Analyst, Grady Wulff, sat down with executives from some of the top resource companies on the ASX. Hear from the helm of these companies, on their outlook and operations and discover some hidden investing gems heading into 2024.
 
 In this week's wrap, Grady covers: 

• (0:39) Australian Rare Earths' (ASX:AR3) latest drilling campaign
• (1:35) why Spartan Resources (ASX:SPR) entered a trading halt
• (2:22) 92 Energy's (ASX:92E) outlook for uranium
• (3:15) Kingsland Minerals' (ASX:KNG) role in the green energy transition
• (4:14) Patriot Battery Metals' (ASX:PMT) Covette Project exploration.