Between the Bells

Wall St closed the trading week higher on Friday, capping off the best week for US stocks so far this year after a soft jobs report drove bond yields lower. The Dow Jones closed 0.66% in the green, the S&P 500 ended the trading week nearly one percent higher and the tech-heavy-Nasdaq rose 1.38% on Friday.

October jobs reports data was released on Friday coming in lower than expected, with the US economy adding 150,000 jobs, 20,000 lower than the 170,000 consensus estimate from Dow Jones. US unemployment data was also released on Friday, with a rise to 3.9%, with expectations of it holding steady at 3.8%.

Over in Europe on Friday, markets closed slightly higher, ending a week powered by solid earnings reports. The STOXX600 ended out the week 0.2% higher, led by retail stocks which saw a 1.7% rise. Germany’s DAX closed off the week 0.30% higher whilst the French CAC and the UK’s FTSE 100 ended the trading week 0.19% and 0.39% in the red respectively.

Locally on Friday, the ASX200 closed 1.14% higher, with all but the energy sector finishing in the green. The industry and real estate sectors led the way gaining over 2% each.

What to watch today:

• The Australian share market is set to open higher, with the SPI futures suggesting a rise of 0.2% at market open this morning.
• On the commodities front this morning,
  • Oil is down 2.36% to 80 US dollars and 51 cents a barrel, as China manufacturing levels have dropped into a contraction. 
  • Gold is up 0.35% to 1992 US dollars an ounce, underpinned by a weaker US dollar and lower treasury yields. 
  • And iron ore is up 0.80% to 125 US dollars and 50 cents a tonne.

Trading Ideas:

• Bell Potter maintains a buy rating on Regal Partners (ASX:RPL) and has increased their 12-month price target to $3.40. The buy rating is maintained as the company has acquired 50% of Taurus, a specialist provider of financing solutions to global mid-tier and junior mining companies. The acquisition of Taurus will add to funds under management, will enhance earnings per share and does not involve issuance of equity.
• And Bell Potter maintains a hold rating on CSR (ASX:CSR) and has increased its price target to $5.70. The hold rating is maintained as the group is now past the peak of its current pricing cycle and as such, it is expected that recovery of fixed costs will become more challenging in FY25 as construction headwinds align.

Volatility in global markets continued into the last trading week of October, however, so far November has started on a green note across the key trading regions. Investors started buying again given Fed maintained the US cash rate for another term, eurozone inflation data came in at a 2-year low for October, and Australian quarterly company results showed resilience across some sectors.
Concurrently, governments worldwide are actively pressing forward with the transition to green energy with key commodities playing a vital role.

In this week's wrap, Grady covers:

• (0:33) geopolitical tensions and China’s recovery post-pandemic,
• (0:52) the rally of infrastructure investment company, Infratil,
• (1:02) governments pushing for a transition to green energy,
• (2:52) key commodities’ impact on the energy transition,
• (3:49) the $2 billion Hydrogen Headstart program,
• (5:11) the best performing stocks in the ASX200,
• (6:06) the most traded stocks & ETFs by Bell Direct clients, and
• (6:34) five economic news items to watch out for.

Wall St rallied overnight as treasury yields fell which saw the Dow Jones have its best day since June, ending the session up 1.7%. The S&P 500 and the tech-heavy-Nasdaq followed suit, gaining 1.89% and 1.78% respectively at the closing bell. All 11 sectors in the S&P 500 ended the day in the green, led by gains in the energy and real estate sectors.

US treasury yields dropped to 4.67%, after the benchmark yield topped 5% last month.

US Data was released overnight showing easing inflation and a slowing labour market, which added to investor confidence that the Federal Reserve may be done raising rates for the time being.

Over in Europe, markets closed higher, following investor reaction to the Federal Reserve holding rates over in the US. The STOXX 600 ended the day 1.6% higher with all sectors positive, led by auto stocks up 3% and tech stocks up 2.7%. Germany’s DAX ended the day up 1.48%, the French CAC closed the trading session up 1.85% and over in the UK the FTSE 100 gained 1.42%.

Locally yesterday, the ASX 200 finished 0.9% in the green led by the information technology and real estate sectors which gained 3.23% and 2.35% respectively. However, this was offset by the utilities sector which lost 3.83% on Thursday.

What to watch today:

• The Australian share market is set to open higher, with the SPI futures suggesting a rise of 1.23% at the open this morning, extending the green run into the final trading session of the week.
• In terms of economic data,
  • US Non-Farm Payrolls data is set to be released after Australian market close with a forecast of 180,000 new jobs added to the US economy in October which is down from the 336,000 recorded in September.
  • And US unemployment rate data will also be released with a forecast to remain steady at 3.8%.
• On the commodities front this morning,
  • Oil is up 2.51% to 82 US dollars and 46 cents a barrel, following the Federal Reserve’s decision to maintain rates. 
  • Gold is up 0.18% to 1985 US dollars an ounce and iron ore is up 0.81% to 124 US dollars and 50 cents a tonne.

Trading Ideas:

• Bell Potter maintains a buy rating on Graincorp (ASX:GNC) and maintains the 12-month price at $9.45 on the agricultural stock. The buy rating is maintained as the share pricing in a material retracement is below normalised crop level earnings and there is also a potential utilisation of surplus capital through investment in new oilseed crush capacity that lifts the sustainable earnings base.
• And Trading Central has identified a bullish signal in Pacific Current Group (ASX:PAC), indicating that the stock price may rise from the close of $9.91 to the range of $11.20-$11.70 on a pattern formed over 26 days according to the standard principles of technical analysis.

Wall Street rallied overnight after the Federal Reserve maintained the U.S. cash rate at 5.25%-5.5% for another term as was expected by economists amid inflation continuing to fall in the world’s largest economy. The Dow Jones rose 0.7%, the S&P500 added 1.05%, and the tech-heavy Nasdaq has the biggest rise of 1.64%. The Fed’s decision to maintain and not hike the US cash rate was received positively by markets however Fed Chair Jerome Powell did not rule out further rate hikes in future if inflation rebounds. Positively, economic data released in recent times all point toward economic stability while inflation also cools which supports the idea of a soft landing as opposed to a recession, with the latest ISM Manufacturing index showing manufacturing activity contracted more than expected in October.

Over in Europe, markets closed higher on Wednesday ahead of the Fed’s interest rate decision with the STOXX600 rising 0.7%, buoyed by retail stocks climbing 1.7%. Germany’s DAX added 0.76% on Wednesday, the French CAC lifted 0.68%, and in the UK, the FTSE100 rose 0.28%.

Shares in Aston Martin plunged 13% yesterday after the luxury car maker reported a bigger-than-expected quarterly loss and cut its volume target. The European rally also came off the back of fresh euro zone inflation data being released showing inflation in the region hit a 2-year low of 2.9% in October.

Locally yesterday, the ASX200 extended its green run into the midweek session, closing the day up 0.85% led by real estate stocks lifting 1.85%, while the health care and energy sectors added 1.45% and 1.13% respectively. The local rally was driven by strength in the US on Tuesday and the big miners rose on the back of the rising price of iron ore.

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 up 0.76%, extending the green run into a third session.
• On the commodities front this morning, oil is trading 0.15% lower at US$80.90/barrel, gold is flat at US$1982/ounce and iron ore is up 1.23% at US$123.50/tonne.
• AU$1.00 is buying US$0.64, 96.51 Japanese Yen, 52.22 British Pence and NZ$1.09.

Trading Ideas:

• Bell Potter has increased the rating on Infomedia (ASX:IFM) from a hold to a buy and maintain a 12-month price target of $1.75 ahead of the company’s AGM in November where it is expected at least reiterate the FY24 revenue guidance. Bell Potter now sees reasonable value in the stock with the FY24 PE ratio back around 30x and some prospect of a soft upgrade is expected at the at the upcoming AGM.
• And Bell Potter has downgraded Ingham’s Group (ASX:ING) from a buy to a hold and have slightly increased the 12-month price target to $3.95 from $3.90 following the release of a first quarter trading update from Australia’s leading poultry producer. The update was ahead of Bell Potter expectations including underlying EBITDAL guidance of $128m, underlying NPATL of $71m, and the expectation of 2H24 to be below 1H24 reflecting traditional seasonality in the business and feed cost inflation. Alternative meats like beef and lamb prices have also contracted while poultry prices have outperformed competing animal protein sources over the last 18-months. The downgrade to a hold is in light of recent share price strength as well as exposure to feed cost inflation again emerging without comparable inflation in competing protein products.

Wall St closed higher overnight, having regained some ground on a poor month strongly impacted by rising interest rates. Rising treasury yields are pressuring equities on Wall St to end a volatile trading month on the New York Stock Exchange. The Dow Jones is up 0.38%, the tech-heavy-Nasdaq closed the session nearly half a percent higher and the S&P500 ended the day 0.65% in the green. Stocks are heading for a third straight losing month, marking the first three-month losing streak for both the Dow Jones and S&P500 since March 2020.

Earnings season continued on Tuesday with Caterpillar exceeding estimates for the third quarter, however signalling fourth-quarter revenue would only be slightly higher than a year ago which caused shares in the company to fall 5% on Tuesday.

JetBlue also fell 14% after the airline’s third-quarter results missed expectations on both the top and bottom lines.

In Europe markets logged the worst monthly performance in a year for the month of October despite mostly rising on the final trading day of the month, as investors digested a slew of economic data against earning results.

The STOXX600 rose 0.6%, Germany’s DAX rose 0.64%, the French CAC added 0.9% and, in the UK, the FTSE100 fell just 0.08%, weighed down by BP falling 4.5% after the mining giant missed third quarter estimates.

The ASX200 closed slightly higher on Tuesday by 0.1% buoyed by real estate and consumer staples stocks rallying despite China’s industrial activity falling into contraction mode in October. At the other end of the market, the materials sector fell over 1% on Tuesday, tracking the declining price of iron ore.

Gold miner St Barbara fell over 10% after posting higher all-in-sustaining-costs at both of its mines in PNG and Canada.

What to watch today:

• The Australian share market is set to open higher, with the SPI futures suggesting a rise of 0.52% at the open this morning.
• On the commodities front, oil is trading 1.22% lower at 81 US dollars and 20 cents a barrel, gold is down 0.6% at 1983 US dollars an ounce and iron ore is down 0.41% at 122 US dollars a tonne.
• AU$1.00 is buying US$0.63, 96 Japanese Yen, 52.34 British Pence and NZ$1.09.

Trading Ideas:

• Bell Potter maintains a buy rating on Burgundy Diamond Mines (ASX:BDM) and holds its price target steady at $0.50. The buy rating is maintained as the potential for experienced management to enhance the value of an already top-10 global diamond mine is a key tenet to a positive investment view.
• And Trading Central identifies a bearish signal on Reece (ASX:REH), indicating that the stock price may fall from the close of $17.46 to the range of $13.90-$14.60, on a pattern formed over 131 days, according to the standard principles of technical analysis.

Wall St rallied on Monday prior to a big week ahead with the Federal Reserve’s rate decision, jobs reports and Apples’ earning set to be released. The Dow Jones had its best day since June, ending the session up 1.58% while the S&P 500 and the tech-heavy Nasdaq followed suit, rising 1.20% and 1.16% respectively.

The communications services sector was the leader on Monday, while tech giants Amazon and Meta led the tech sector, gaining 3.9% and 2% respectively.

The US Federal Reserve interest rate decision is set to be announced on Wednesday with the market expecting the central bank to hold its benchmark interest rate steady at 5.25%-5.5% for the next term.

Over in Europe, markets closed higher despite the continued rising geopolitical tensions in the Middle East. The STOXX600 closed the day 0.4% higher with most sectors ending the trading day in the green. Germany’s DAX closed out Monday’s session 0.20% higher, the French CAC ended the day 0.44% in the green and over in the UK, the FTSE100 gained 0.5%.

Locally yesterday, the ASX200 fell 0.79% with the energy and consumer staples sectors leading the losses by 2.59% and 1.27% respectively. This was slightly offset by the information technology sector which rose 0.43% yesterday.

What to watch today: 

• The Australian share market is set to open higher, with the SPI futures suggesting a rise of 0.43% at the open this morning following the global rally overnight.
• In terms of economic data,
  • Australia’s all-important retail sales data came out yesterday, which saw a 0.9% rise for the month of September, which well-exceeded economists’ expectations of a 0.3% rise. This provides further support for the RBA to raise interest rates again on Melbourne Cup Day as consumer spend remains resilient in the high inflationary environment.
• On the commodities front this morning,
  • Oil is down 3.78% to 82 US dollars and 31 cents a barrel as investors await economic monetary policy outlook and continued fears over the war in the Middle East. 
  • Gold is down 0.48% to 1996 US dollars an ounce, as investors await the Fed’s decision on interest rates on Wednesday. 
  • And iron ore is up 1.66% to 122 US dollars and 50 cents a tonne as renewed stimulus measures in China prompted an improved outlook for commodity demand. 

Trading Ideas:

• Bell Potter maintains a buy rating on Seven Group Holdings (ASX:SVW) and holds its price target steady at $33. The buy rating is maintained as Seven Group Holdings are market leaders in the industries it operates within, with scale, brand and industry expertise underpinning commercial advantages that are hard to replicate by competitors. 
• And Trading Central has identified a bullish signal on Beacon Lighting Group (ASX:BLX), indicating that the stock price may rise from the close of $1.83 to the range of $2.03-$2.07, on a pattern formed over 33 days, according to the standard principles of technical analysis.

Wall Street closed mixed across the key indices on Friday, pushing the S&P500 into correction territory as the index is now down 10.3% since its 2023 peak in July. The Dow Jones fell 1.12%, and the S&P500 lost almost half a percent, but the Nasdaq rose 0.38% on Friday buoyed by Amazon jumping over 6% on better-than-expected earnings and revenue for the third quarter.

Investors in the US have assessed disappointing earnings results against economic uncertainty which have led to the S&P500 and Nasdaq now entering correction territory. For the trading week last week, all three key indices lost of 2% each. US equities were also pressured on Friday by investor fears of further interest rate hikes after U.S. GDP data showed the economy grew by 4.9% in the third quarter which well exceeded estimates.

Over in Europe, markets in the region closed lower as investor sentiment remains shaky on geopolitical tensions and economic instability. The STOXX600 fell 0.8%, weighed down by healthcare stocks falling 2.9, while Germany’s DAX lost 0.3%, the French CAC fell 1.36% and, in the UK, the FTSE100 shed 0.86% on Friday. NatWest shares fell 11% on Friday after the bank reported third quarter results that showed net interest margin declining.

Locally on Friday, the ASX200 rose 0.21%, but for the week the ASX200 fell 1.07% as investor fears of an RBA rate hike on Melbourne Cup Day rose on the back of stronger-than-expected CPI data released earlier last week. On Friday, consumer staples stocks did most of the heavy lifting to close 1.33% higher driven by Endeavour Group and Coles Group.

ResMed shares fell 4% on Friday after the healthcare company’s September quarter update outlined higher costs further dampened the company’s margins, while Silver Lake Resources and Champion Iron rose 7.7% and 6.9% respectively on Friday.

What to watch today: 

• Ahead of the local trading session here in Australia, the SPI futures are expecting the local market to open the first trading session of the new week down almost 1% following the turbulence on Wall Street on Friday.
• On the commodities front this morning, oil is up 2.18% at US$85.03/barrel, gold is up 1.08% at US$2006/ounce and iron ore is flat at US$120.50/tonne.
• We will be keeping a close eye on the retailers as Australia’s retail sales data for September is out at 10:30am AEDT with consensus expecting a rise of 0.3% from a 0.2% rise in August. Any slowdown in consumer spending may see further weakness in consumer discretionary stocks especially following some disappointing quarterly results out of retailers over the last week.
• AU$1.00 is buying 63 US cents, 94.79 Japanese Yen, 52 British Pence and NZ$1.09.

Trading Ideas:

• Bell Potter has downgraded the rating and price target on Clean Seas Seafood (ASX:CSS) from a buy to a hold and with a 12-month price target of 47cps, down from 60cps, following commentary made at the company’s AGM and on the release of a trading update. Clean Seas highlighted a more sombre trading update than Bell Potter expected including 1Q24 sales volume down 1% and frozen inventories up 44% YoY which is a trend Bell Potter would like to see reverse over the remainder of FY24. Average selling prices were also down 2% relative to average 2H23 pricing.
• And Bell Potter has increased the 12-month price target on Fortescue Metals Group (ASX:FMG) from $15.53 to $16.21 and maintain a sell rating on the mining giant following the release of the company’s September quarter trading update including iron ore shipments and cash costs missing expectations, and net debt increasing due to the distribution of dividends. The price target increase is due to favourable outlook for iron ore prices and foreign exchange forecasts.

Higher fuel prices, rising rental costs and increased electricity prices were the key drivers of Australia’s inflation rate rising 1.2% in the September quarter, which is unsurprising as these drivers have remained the sticky points in taming inflation. This week, we explore how a 25-basis points rate hike may impact investment portfolios, the cost-of-living, and Aussie companies.

In this week's wrap, Grady covers:

• (0:11) key drivers of Australia’s inflation rate,
• (0:34) economists expecting a rate hike,
• (1:16) the Senate estimates hearing on Tuesday,
• (2:20) what the rate hike will mean for investors and businesses
• (3:06) quarterly trading updates and results,
• (4:37) the best performing stocks in the ASX200,
• (5:44) the most traded stocks & ETFs by Bell Direct clients, and
• (6:15) five economic news items to watch out for.

Wall St closed lower on Thursday as earnings season results failed to live up to investor expectations. The tech-heavy Nasdaq had the sharpest decline out of all three major indices losing 1.76%, dropping deeper into correction territory following the release of results from technology company Meta which fell short of expectations. The S&P 500 and the Dow Jones also finished the day in the red, losing 1.18% and 0.76% respectively.

Over in Europe, markets closed lower as investor attention remains on earnings season and government bond yields. The STOXX 600 closed down 0.5% with most major sectors finishing in negative territory. Germany’s DAX closed just over one percent lower, the French CAC ended the trading day down 0.38% and over in the UK the FTSE 100 retreated 0.81%.

Locally yesterday, the ASX 200 closed 0.61% lower with the information technology and real estate sector closing 2.56% and 2.07% lower respectively. This was slightly offset by the utilities sector which gained 1.30% by market close yesterday.

What to watch today: 

• The Australian share market is set to open slightly lower, with the SPI futures suggesting a fall of 0.04% at the open this morning. 
• On the commodities front this morning,
  • Oil is down 2.08% at 83 US dollars and 61 cents a barrel following an increase in supply, with crude oil inventories unexpectedly rising by 1.371 million barrels.
  • Gold is up 0.25% to 1984 US dollars and 57 cents an ounce as investors react to stronger than expected economic data from the US. 
  • And iron ore is trading flat, at 120 US dollars and 50 cents a tonne.

Trading Ideas:

• Bell Potter maintains a buy rating on Gold Road Resources (ASX:GOR) despite increasing its price target to $2.10. The buy rating is maintained as an expansion of their gold mines is yielding increased profitability and cash build. Beyond the expansion, Gold Road’s corporate strategy includes the establishment of a second, 100% owned gold mine.
• And Trading Central has identified a bullish signal in SG Fleet Group (ASX:SGF), indicating that the stock price may rise from the close of $2.54 to the range of $2.82-$2.88 on a pattern formed over 21 days, according to the standard principles of technical analysis.

Wall Street closed lower on Wednesday on the back of disappointing earnings results and rising treasury yields. The S&P500 fell 1.43% on Wednesday, while the Nasdaq tumbled 2.43% and the Dow Jones lost 0.32%. Google’s parent company, Alphabet, tumbled more than 9% after the tech giant posted quarterly results that beat expectations for earnings and revenue growth but missed expectations for the company’s cloud business. The benchmark on the 10-year treasury yield climbed nearly 11 basis points to hit 4.95%.

Over in Europe, markets closed mixed as investors reacted to the release of corporate earnings results. The STOXX600 closed flat as mining stocks rose almost 1% while retail stocks fell 1.3%.

Kering shares fell 3% on Wednesday after the French luxury group reported a 9% decline in sales for the third quarter.

Germany’s Deutsche Bank rose 8% yesterday after reporting a third-quarter net profit of 1.031bn euros, which beat analysts’ expectations.

The local market closed relatively flat on Wednesday to end the day down just 0.04% or 2.6 points as investors weighed a Tuesday rally on Wall Street against hotter-than-expected inflation reading for Australia in the September quarter.

Australia’s CPI data released yesterday showed the country’s headline inflation rose 1.2% in the September quarter to an annual rate of 5.4%, below the 6% recorded in Q2 but slightly above economists’ expectations of 5.3%. The key driver of inflation rising 1.2% in the September quarter were unsurprisingly fuel prices up 7.2%, rental prices up 2.2% and electricity prices up 4.2%.

Prior to the release of the latest CPI reading, three of the big four Aussie banks believed the nation’s cash rate had peaked at 4.1%, and after the release of the inflation reading coming in hotter-than-expected, NAB, CBA and ANZ now believe another interest rate hike is in-store for Aussies set to be announced on Melbourne Cup Day. The move in bank expectations also follows Michele Bullock’s first speech as governor of the RBA on Tuesday night where she said the board ‘will not hesitate to raise the cash rate further if there is a material upward revision in the outlook for inflation’.

What to watch today:

• Ahead of the local trading session here in Australia the SPI futures are expecting the ASX to open Thursday’s session down 0.26% following the sharp sell-off on Wall St overnight.
• On the commodities front this morning, oil is up 1.85% at US$85.29/barrel, gold is up 0.46% at US$1979.15/ounce and iron ore is up 1.26% at US$120.50/tonne.
• AU$1.00 is buying US$0.63, 94.73 Japanese Yen, 52.08 British Pence and NZ$1.09.

Trading Ideas:

• Bell Potter has decreased the 12-month price target on IVE Group (ASX:IGL) from $2.75 to $2.65 but maintain a buy rating on the largest integrated marketing communications business in Australia after the company announced it signed a binding agreement to acquire 100% of JacPac, a Melbourne based packaging company for a total purchase consideration of $35m.
• Trading Central has identified a bearish signal on Downer EDI (ASX:DOW) following the formation of a pattern over a period of 84-days which is roughly the same amount of time the share price may fall from the close of $3.76 to the range of $3.10 to $3.20 according to standard principles of technical analysis.