Between the Bells

Over in the US, Wall Street closed in the green as investors assess the latest corporate results released alongside a retreat in treasury yields. Coca Cola shares closed higher after the beverage giant posted revenue and earnings that topped market expectations, while music streaming service Spotify soared 10% after the company posted third quarter results that topped expectations. 

In Europe, markets snapped a 5-session losing streak to close higher on the release of strong corporate earnings results, despite unfavourable economic data being released. Hermes shares rose after the luxury retailer reported a 16% spike in sales growth for the third quarter. And the STOXX600 rose 0.4% on Tuesday, boosted by mining stocks rising 2.6%.

The ASX overcame Monday’s sell-off, closing higher yesterday as investors shook off fears of an extended war in the Middle East and bond yields continued to retreat, increasing demand for equities. The energy and materials sectors did most of the heavy lifting on the local market yesterday on the rising price of oil and iron ore.

What to watch today:

• Our local market is set to open higher this morning, with the SPI futures suggesting a 0.35% rise at the open. 
• In economic news, inflation data is out today which will give investors and the RBA an indication of how well the rate hikes to date have worked toward taming inflation. The market is expecting Q3 inflation to drop to 5.3% year-on-year from 6% year-on-year in Q2. The recent key drivers have been services and housing inflation which will be two key metrics that the RBA and investors assess in the data out later today. Pending the result, we will likely see the ASX move accordingly after the data is released this morning, with sectors that are rate-sensitive like Tech and REIT stocks, likely to have the biggest impact.
• In commodities, 
  • Crude oil is trading lower, extending losses for the third session. 
  • Gold is slightly lower, pausing its recent climb to a five-month high off the back of a stronger US dollar and elevated yields, as investors awaited US GDP and inflation numbers. 
  • While iron ore is trading higher, so keep watch of ASX-listed iron ore stocks today. 
• And AU$1.00 has slightly strengthened to buy US$0.64, 95.24 Japanese Yen, 51.93 British Pence and NZ$1.09.

Trading Ideas:

• Bell Potter maintains a Buy rating on Bega Cheese (ASX:BGA). Their price target is $3.35 and at its current share price of $2.91, this implies 15% share price growth in a year. 
• And Trading Central have identified a bullish signal in Perseus Mining (ASX:PRU) indicating that the stock price may rise from the close of $1.76 to the range of $1.86 to $1.89 over 23 days, according to the standard principles of technical analysis. 

Wall St closed mixed on Monday as the Nasdaq ended a four-day losing streak and treasury yields retreat from its 5% high. The Dow Jones closed 0.58% lower, the S&P 500 closed 0.17% lower and the tech-heavy Nasdaq ended the day 0.27% in the green.

In terms of US shares, oil company Chevron fell 3.7% following the announcement that the company would be purchasing fellow peer, Hess in an all-stock deal. Pharmacy giant, Walgreens gained 3% following an upgrade from JP Morgan and online security stock Okta retreated 8% following a data breach.

Earnings season continues with tech giants Alphabet, Amazon, Meta and Microsoft all releasing key information to the stock market this week.

Over in Europe, markets closed lower with the STOXX 600 losing 0.1% on Monday. Retail and travel stocks posted strong gains, however, heavy losses among the miners weighed on the markets in the region. 

Germany’s DAX gained just 0.02%, the French CAC gained half a percent, however over in the UK the FTSE 100 lost 0.37%.

Locally yesterday, the ASX 200 closed 0.82% lower with the energy and materials sector losing 3% and 2.34% respectively. This was offset by the health sector which gained 1.53% by market close yesterday.

What to watch today:

• The Australian share market is set to open lower, with the SPI futures suggesting a fall of 0.22% at the open this morning, extending the losing run into Tuesday’s session.
• On the commodities front this morning,
  • Oil is down 2.21% to 86 US dollars and 13 cents a barrel as efforts to keep the Israel-Hamas war from spreading to a wider conflict in the Middle East are easing concerns about supply disruptions. 
  • Gold is down 0.81% to 1965 US dollars an ounce as treasury yields moved up and the Middle Eastern War dented demand for the safe-haven asset. 
  • And iron ore is down 0.86% to 115 US dollars a tonne as worries about China’s debt-ridden property sector hampered the outlook on the country’s resource demand.

Trading Ideas:

• Bell Potter maintains a buy rating on Aeris Resources (ASX:AIS) with an unchanged 12-month target of $0.30. The buy rating is maintained as Aeris Resources is a copper-dominant producer with all assets in Australia. Its near-term outlook remains highly leveraged to increasing copper grades at the Tritton copper mine, where high graded ore sources have commenced production and exploration success is likely to sustain it.
• And Trading Central has identified a bearish signal on Commonwealth Bank (ASX:CBA), indicating that the stock price may fall from the close of $97.82 to the range of $71-$76 on a pattern formed over 468 days, according to the standard principles of technical analysis.

Rising bond yields sparked a sell-off on Wall Street on Friday as investors remain concerned about the broader state of the U.S. and global economies. The yield on the benchmark 10-year treasury note topped 5% for the first time in 16-years on Friday which offers investors a safer return on investment than the current volatility of equity markets in the U.S.

The Dow Jones fell 0.86% on Friday while the S&P500 lost 1.26% and the tech-heavy Nasdaq shed 1.53%. For the week, the Dow Jones fell 1.2%, the S&P500 shed 2.4% and the Nasdaq took the biggest hit, falling 3.2%.

American Express shares fell 5% on Friday after the big bank reported earnings per share that beat expectations, but revenue came broadly in line with expectations.

Tesla shares also tumbled over 15% across the trading week after the EV giant reported earnings on Wednesday that missed expectations on both the top and bottom lines.

Over in Europe, markets closed at the lowest level in 2023 on Friday on rising treasury yields and fears of further monetary tightening out of the US. Comments made by US Fed Chair, Jermone Powell, around the need to continue with a tightened monetary policy until inflation hits the target 2% range, sparked global investor fears of further rate hikes out of the world’s largest economy. The yield on the 30-year UK government bonds hit the highest level since 1998 on Friday amid rising tensions in the Middle East and the global fear of “higher for longer” pushing investors to favour bonds over other riskier assets in the current market. The STOXX600 fell 1.3%, Germany’s DAX lost 1.64%, the French CAC shed 1.52% and, in the UK, the FTSE100 fell 1.3%.

Locally on Friday, the ASX200 fell 1.16%, weighed down by the materials sector falling 1.7% while the communication services, and healthcare sectors fell 1.43% each. 10 of the 11 sectors on the local market closed lower on Friday as surging bonds and tensions in the Middle East weighed on local investor sentiment. Energy stocks were the only equities to rally on Friday as the price of oil continues to climb as tensions in the oil producing hub of the Middle East continue rising.

Liontown Resources (ASX:LTR) fell 32% on Friday as the lithium miner resumed trading following a trading halt to capital raise after US miner Albemarle walked away from its $6.6bn takeover offer.

What to watch today:

• Ahead of the first trading session of the week here in Australia, the SPI futures are anticipating the ASX to open Monday’s session down just shy of 1%, to carry the sell-off into the new trading week.
• On the commodities front this morning, oil is down 0.33% at US$88.08/barrel, gold is up 0.4% at US$1981/ounce and iron ore is down 2.93% at US$116/tonne.
• AU$1.00 is buying US$0.63, 94.69 Japanese Yen, 51.88 British Pence and NZ$1.08.

Trading Ideas:

• Bell Potter has slightly decreased the 12-month price target on Lynas Rare Earths (ASX:LYC) from $8.50 to $8.20 and maintain a buy rating on the leading producer of rare earths following the release of the company’s 1QFY24 trading update outlining production of NdPr was 17% lower QoQ and 7% below Bell Potter expectations as maintenance works were carried out at Lynas’ Malaysian facilities over the first quarter.
• And Trading Central has identified a bearish signal on Sigma Healthcare (ASX:SIG) following the formation of a pattern over a period of 17-days which is roughly the same amount of time the share price may fall from the close of $0.66 to the range of $0.57-$0.59 according to standard principles of technical analysis.

All eyes were on key economic data out of China this week. The data will help investors determine the pace of recovery for the world’s second largest economy, and, what that means for local and global markets.

In this week's wrap, Grady covers:

• (0:11) what China’s economic data meant for Australia,
• (0:44) China’s GDP growth rate & industrial production YoY,\
• (1:34) the outlook for commodities,
• (2:43) Cettire (ASX:CTT), Bapcor (ASX:BAP), Nick Scali (ASX:NCK) & Netwealth (ASX:NWL),
• (3:58) quarterly results in the US,
• (4:42) the best performing stocks in the ASX200,
• (5:21) the most traded stocks & ETFs by Bell Direct clients, and
• (5:50) five economic news items to watch out for.

Wall St has closed lower on Thursday as the 10-year treasury yield nears 5%. The Dow Jones lowered 0.75%, the S&P 500 fell 0.85% and the tech-heavy Nasdaq ended Thursday nearly 1 percent lower. 

Federal Reserve Chair, Jerome Powell described US inflation as “too high” and would likely require lower economic growth. As a result, investors have taken away that it is likely that the Fed would likely maintain interest rates at its next policy meeting. 

The US 10-year treasury yield reached a peak of 4.996%, closing in on a 5% mark that hasn’t been hit since 2007. 

Over in Europe, markets closed lower for a third consecutive day as investors react to the Hamas-Israel war, earnings and economic data. The STOXX600 ended Thursday down 1.16%, it’s lowest close since March 15. Germany’s Dax and French CAC closed 0.33% and 0.64% lower respectively, whilst over in the UK, the FTSE 100 ended the day 1.17% in the red. 

Locally yesterday, the ASX 200 ended the day down 1.36% with all sectors finishing in the red. This was led by the information technology and consumer staples sectors which saw a 1.84% and 1.63% close in the red. 

What to watch today: 

• The Australian share market is set to open lower, with the SPI futures suggesting a fall of 0.64% at the open this morning. 
• In terms of economic data, 
  • The Australian jobless rate was released yesterday, which saw it fall to 3.6%, a sign showing that the labour market remains tight. 
• On the commodities front this morning, 
  • Oil is up 2.23% to 90 US dollars and 30 cents a barrel as concerns in the Middle East ramp up supply issues to major distributors. 
  • Gold is up 1.37% to 1974 US dollars an ounce as the escalation in the Middle Eastern war increases the demand for the precious metal as a safe-haven asset. 
  • And iron ore is down 2.05% to 119 US dollars and 50 cents a tonne, despite Rio Tinto signalling that it will attempt to increase iron ore mining to satisfy the demand growth in China. 

Trading Ideas: 

• Bell Potter maintains a buy rating on Telix Pharmaceuticals (ASX:TLX) and has maintained its price target of $14 with a current share price of $9.20. The buy rating is maintained as revenues are ahead of the forecast and reported revenues in the third quarter representing an 11% sequential quarter increase. 
• And Trading Central has identified a bullish signal on Evolution Mining (ASX:EVN), indicating that the stock price may rise from the close of $3.60 to the range of $4.10-$4.20 over a pattern formed in 5 days according to the standard principles of technical analysis. 

Over in the US on Tuesday, Wall Street closed mixed after a volatile session as rising bond yields and corporate earnings results weigh on investor sentiment. The S&P500 closed just 0.01% lower after trading down all session, while the tech-heavy Nasdaq lost 0.25% and the Dow Jones rose just 0.04%. The 10-year US Treasury yield topped 4.8% following US retail sales data coming in at a rise of 0.8% which was higher than expected, indicating consumers are still spending in the high interest rate environment. The Bank of America shares rose 2.4% on Tuesday after posting better-than-expected results while Nvidia fell 4.7% after the US Department of Commerce said it plans to ban the export of more AI chips to China.

In Europe on Tuesday, markets closed mostly flat following the release of hotter-than-expected US retail sales data which reignited fears of further monetary tightening out of the world’s largest economy and subsequent flow-on impacts into the European region. The STOXX600 fell 0.1%, Germany’s DAX rose just 0.09%, the French CAC added 0.11% and, in the UK, the FTSE100 climbed 0.58%.

A morning rally locally was dampened in afternoon trade leading to the ASX200 close Tuesday’s session up 0.42% led by a rebound in technology stocks which started the week in negative territory. Healthcare stocks took the biggest hit yesterday with the sector closing down 0.8% while consumer staples and consumer discretionary stocks also closed the day in the red. The tech-rally was driven by strength on the Nasdaq in the US overnight.

The release of the RBA’s latest minutes sparked the sell-off in afternoon trade that saw the strong gains on the local index ease as investors took the minutes as more hawkish than previous months. The consensus of the minutes was focused on the RBA having considered raising the cash rate by 25-basis points at the last meeting before ultimately deciding to leave the rate at 4.1% for a fourth consecutive month.

What to watch today: 

• Ahead of the midweek local trading session here in Australia, the SPI futures are expecting the ASX to open 0.28% higher.
• On the commodities front this morning, the volatility in the price of oil has continued over the last few sessions amid hopes of a short-period of war between Hamas and Israel pulling against fears of a prolonged and widespread war that escalates to involve major oil producer, Iran. The rising price of oil fuelled Shell shares to hit a record high as investors price in disruption that could impact global oil supply. The price of oil is currently trading down 0.29% at US$86.42/barrel, gold is up 0.06% at US$1920.57/ounce and iron ore is up 0.84% at US$120.50/tonne.
• Looking at economic data, key Chinese economic data is out today in the form of GDP growth rate data for Q3, industrial production for September and Retail sales data, all of which will give an insight into how the world’s second largest economy is recovering post pandemic and whether further government stimulus is required to reignite growth in the region. 

Trading Ideas:

• Bell Potter has decreased the 12-month price target on Janison Education (ASX:JAN) from 65cps to 55cps and maintain a buy rating on the global education technology company following the release of a soft Q1 FY24 update including revenue up 5% YoY while ICAS revenue fell 0.6% YoY impacted by economic headwinds and discontinued unprofitable exams. The company also announced that CEO and Managing Director, David Caspari and Chairman, Michael Hill, will step down.
• And Trading Central has identified a bullish signal on BHP Group (ASX:BHP) following the formation of a pattern over a period of 95-days which is roughly the same amount of time the share price may rise from the close of $45.57 to the range of $49.50 - $50.40 according to standard principles of technical analysis.

Wall St rallied overnight following the release of positive corporate earnings despite rising treasury yields. The Dow Jones rose 0.93%, the S&P closed 1.06% higher and the tech-heavy-Nasdaq ended Monday 1.20% in the green.

In terms of US stocks, Nike and Travelers Companies lead the way, up 2.1%, with all 11 sectors in the S&P 500 trading higher.

Earnings season is ramping up with Johnson & Johnson, Bank of America, Netflix and Tesla all set to release results this week. Charles Schwab closed 4.7% higher overnight after exceeding expectations for earnings per share in the third quarter. This followed with JPMorgan Chase, Wells Fargo and United Health all posting positive quarterly results.

Over in Europe, markets ended Monday in the green as investors react to the escalating war in the Middle East. The STOXX600 rose by 0.2%, led by retail stocks which gained 2%. Germany’s DAX and the French CAC rose by 0.34% and 0.27% respectively with the UK’s FTSE100 also jumping 0.41% overnight.

Locally yesterday, the ASX 200 closed 0.35% lower with eight out of the eleven sectors finishing lower, led by losses in the information technology sector of 2.79%. However, this was slightly offset by the energy sector which saw a 0.63% increase on Monday.

What to watch today:

• The Australian share market is set to open higher, with the SPI futures suggesting a rise of 0.68% at the open this morning.
• In terms of economic data today, the RBA meeting minutes will be released today, following the decision to leave the cash rate unchanged at 4.1%.
• On the commodity front this morning,
  • Oil is down 0.79% to 87 US dollars a barrel as traders continue to look at the Hamas-Israel war and the effect it will have on global oil supply. 
  • Gold is down 1% to 1912 US dollars an ounce, as once again investors await on the impacts the Middle East war will have on the global company which may have adverse effects on the precious metal. 
  • And iron ore up 2.58% to 119 US dollars and 50 cents a tonne with Beijing announcing that it is considering raising its budget deficit this year to deliver a fresh round of stimulus for new infrastructure projects.

Trading Ideas:

• Trading Central has identified a bearish signal in Johns Lyng Group (ASX:JLG), indicating that the stock price may fall from the close $6.22 to the range of $5.60-$5.70, over a pattern formed in 34 days, according to the standard principles of technical analysis.
• And Trading Central identified a bullish signal on Perseus Mining (ASX:PRU), indicating that the stock price may rise from the close of $1.65 to the range of $1.94 to $2.00, over a pattern formed over 20 days, according to the standard principles of technical analysis.

Wall Street closed mixed on Friday amid a spike in the price of oil and renewed inflation fears which led to the Dow Jones rising 0.12% while the S&P500 fell 0.5% and the Nasdaq lost 1.23%. For the week, the S&P500 added 0.45%, and the Dow Jones rose 0.79%, but the tech-heavy Nasdaq fell 0.18% over the four trading days.

Escalating geopolitical tensions in the Middle East caused the price of oil to jump 6%, the most in one session since April.

Dollar General shares popped 8.8% on Friday after the discount retailer announced former CEO Todd Vasos would return to lead the company while chipmaker and AI shares including Adobe and Nvidia shares rallied to end the week higher. The release of key consumer sentiment data also weighed on Wall St on Friday with the reading showing investor sentiment plunged in October while inflation fears spiked. Third quarter earnings are also in focus over the next week as investors will assess how corporations are faring the high interest rate environment. JPMorgan Chase and Wells Fargo kicked off the earnings period with stronger-than-expected profit and revenue for the third quarter.

Over in Europe, markets closed lower on Friday amid global investor sentiment sliding especially on the back of rising geopolitical tensions between Hamas and Israel. The STOXX600 fell 1% weighed down by tech stocks dropping 2.5%. Germany’s DAX shed 1.55% on Friday, the French CAC fell 1.42%, and in the UK, the FTSE100 lost 0.6%.

Locally on Friday, the ASX200 fell just over half a percent, weighed down by a sell-off in technology and real estate stocks, which are both sectors impacted by higher interest rates which is the general consensus at the moment among investors through the sentiment of higher for longer. Chalice Mining fell a further 8.3% on Friday while Weebit Nano and Core Lithium fell over 6% each. Bega Cheese rallied over 3% though after Bell Potter upgraded the dairy maker to a buy rating with a price target of $3.35/share.

What to watch today:

• Ahead of the new trading session here in Australia, the SPI futures are expecting the local market to open the new trading session down 0.42% to start the new trading week lower.
• On the commodities front this morning oil is up 5.99% at US$87.87/barrel, gold is up 3.42% at US$1932.50/ounce and iron ore is up 1.74% at US$117/tonne.
• AU$1.00 is buying US$0.63, 94.13 Japanese Yen, 52.06 British Pence and NZ$1.06.

Trading Ideas:

• Bell Potter has increased the 12-month price target on Coventry Group (ASX:CYG) from $1.35 to $1.40 and maintain a buy rating on the company following the release of the multi-disciplinary industrial supply and services company’s 1QFY24 trading update indicating Coventry is on track for a very strong FY24. Group sales for the first quarter were up mid-single digits to $94.6m while unaudited pre-AASB-16 EBITDA came in at $5.4m, up 11% on the PCP.
• And Trading Central has identified a bearish signal on Ingenia Communities Group (ASX:INA) following the formation of a pattern over a period of 59-days which is roughly the same amount of time the share price may fall from the close of $3.96 to the range of $3.45 to $3.55 according to standard principles of technical analysis.

The global market rally was driven by the price of oil surging 5% on concerns of a prolonged war between Hamas and Israel. While no immediate impact was felt on the oil supply and demand front, global economies are factoring in prolonged periods of geopolitical tensions which caused the price of oil to surge.

Locally, we are seeing the release of first quarter FY24 trading updates, which had investors making some moves this week.

In this week's wrap, Grady covers:

• (0:34) companies that were sharply sold off,
• (1:06) the Israel-Hamas war’s effect on oil flows and output,
• (1:57)  China’s material stimulus package,
• (2:43) Air New Zealand (ASX:AIZ), Redbubble (ASX:RBL), and Tabcorp (ASX:TAH),
• (4:54) the best performing stocks in the ASX200,
• (5:57) the most traded stocks & ETFs by Bell Direct clients, and
• (6:29) five economic news items to watch out for.

US markets closed lower overnight, following the release of key inflation data with core inflation year on year declining to 4.1% in September as markets were expecting. The monthly inflation rate for September fell from a 0.6% rise in August to a 0.4% rise in September which was slightly above what markets were expecting at 0.3% which has reignited fears of further interest rate hikes. The S&P 500 and tech-heavy-Nasdaq closed just over 0.6% lower with the Dow Jones also losing half a percent on Thursday.

US treasury yields rose off the back of released inflation data to 4.70% after hitting its highest peak in 16 years earlier this month.

In terms of US stocks, Walgreens jumped 7% following progress in its cost-cutting plans and lower levels of losses. A potential restriction in oil supply could be on the cards with the ongoing Israel-Hamas war, with geopolitical tension and instability spreading to oil producers in the US.

Over in Europe, markets closed slightly higher on Thursday as they build on positive global momentum this week. The STOXX600 ended the day up 0.1% with oil and gas stocks rising 1.3% each. Travel and leisure stocks were on the losing end, dropping 0.9% as a number of airlines have decided to suspend flights to Israel. The UK’s FTSE 100 ended the day in the green by 0.32%, whilst Germany’s DAX and the French CAC closed 0.23% and 0.37% lower respectively.

Locally yesterday, the ASX 200 closed Thursday 0.04% higher driven by rallies among the financial and real estate sectors which each jumped 0.86%. This was heavily offset by the health sector which closed 4.52% in the red yesterday due to healthcare giant CSL tumbling 6.30%.

What to watch today: 

• The Australian share market is set to open lower, with the SPI futures suggesting a fall of 0.81% at the open this morning.
• In terms of commodities, 
  • Oil is trading 0.16% lower at 83 US dollars and 35 cents a barrel after the oil market showed a rebound as Russia and Saudi Arabia showed they were working together to help support the oil market following the events in Israel and Gaza. 
  • Gold is trading 0.26% lower at 1868 US dollars an ounce as high interest rates increase the opportunity cost of holding the precious metal. 
  • And iron ore is up 1.32% to 115 US dollars a tonne as China are still facing financial instability issues in their construction industry.

Trading Ideas: 

• Bell Potter maintains a buy rating on Bega Cheese (ASX:BGA), despite decreasing its price target from $3.50 to $3.35 with a current share price of $2.80. The recommendation has changed from a hold to a buy as the risk and reward profile has shifted due to the material valuation upside, should BGA execute on its 5-year targets.
• And Trading Central has identified a bullish signal on Data3 Limited (ASX:DTL), indicating that the stock price may rise from the close of $7.29 to the range of $7.60-$7.70 over a pattern formed in 21 days, according to the standard principles of technical analysis.