Between the Bells

Wall St closed lower on Friday following a volatile week and ahead of the Federal Reserve’s policy meeting on Thursday. While the tech- heavy Nasdaq lost 1.56%, the Dow Jones was also in the red by 0.83%. Meanwhile, the S&P 500 suffered its 2nd week in a row of losses rounding out Friday with a loss of 1.22%

Within the S&P 500 the information technology sector performed the worst with Adobe shares falling more than 4%, despite recording better-than-expected quarterly results. Recently debuted company Arm Holdings also had its share price lowered by 4.2% following its successful public debut.

European stocks ended the week higher on Friday following the market’s reaction to the European Central Bank’s suggestion that its latest rate hike may be its last. The STOXX600 ended Friday up 0.2% with household goods leading gains, up by 1.4%. The German DAX ended the week 0.56% higher and the FTSE100 and the French CAC followed suit closing 0.50% and 0.96% higher respectively. 

Locally on Friday, the ASX200 ended the week 1.29% higher, with the materials sector advancing the most, while the info tech sector also performed strongly, up almost 2%. 

What to watch today: 

• The Australian share market is set to open lower, with the SPI futures suggesting a fall of 0.56% at the open this morning.
• In terms of economic data this week, the RBA Meeting Minutes will take place on Tuesday. This will give us insight into why the central bank decided to keep the cash rate on hold this month. 
• On the commodity front today,
  • Oil is trading 0.40% higher at 91 US dollars and 12 cents a barrel amid improving global demand outlook. 
  • Gold is up 0.72% to 1924 US dollars an ounce following China’s better-than-expected industrial output results and a weaker US dollar. 
  • And iron ore is up 2.03% to 125 US dollars and 50 cents a tonne following an increase in expectations that Beijing will mandate steel output controls in the near future.

Trading Ideas: 

• Bell Potter has initiated coverage on Seven Group Holdings (ASX:SVW) who is a leading Australian diversified operating and investment Group with market leading businesses in Industrial Services. Bell Potter are positive on the near-term outlook for mining production and transitional energy markets and have placed a price target of $33 with the current share price at $29.05.
• And Trading Central has identified a bullish signal in Deterra Royalties (ASX:DRR), indicating that the stock price may rise from the close of $4.85 to the range of $5.30-$5.45 over 36 days, according to the standard principles of technical analysis.

Artificial Intelligence or AI is the phrase and phenomenon of 2023, paving the way for hyper efficiencies, cost-cutting, and overall operational excellence. With recent government assistance, the scale of in-house investing in AI for ASX listed companies is ramping up. Learn about which companies are leading the way.

In this week's wrap, Grady covers:

• (0:11) Australia’s AI landscape
• (1:08) Temple & Webster’s (ASX:TPW) AI investment strategy
• (1:54) WiseTech Global’s (ASX:WTC) acquirement of Shipamax
• (2:24) Coles Group (ASX:COL) experimenting with ChatGPT
• (2:57) AI in the mining sector - (3:56) Investing in AI-themed stocks
• (4:55) Best performing stocks in the ASX200
• (5:50) The most traded stocks & ETFs by Bell Direct clients
• (6:23) Five economic news items to watch out for

Read the article transcript here

Wall St rallied on Thursday, following the revival of Wall Street’s IPO market and favourable results from economic data. The Dow Jones had its best day since August adding 0.96% while the S&P 500 and the Nasdaq both performed strongly, finishing in the green by 0.84% and 0.81% respectively.

Chip design company Arm debuted on the New York Stock Exchange on Thursday which saw shares increasing by 24.7% as investors hope that the biggest tech offering of the year could kickstart a ‘sleepy’ IPO market.

Over in Europe, markets closed higher on Thursday as investors reacted to the European Central Bank’s decision to hike interest rates once again. Interest rates were increased for the 10th consecutive time by the ECB by 25-basis points taking the core rate to 4%.

The STOXX600 finished Thursday’s session, 1.52% higher following the ECB announcement. This was led by the basic resources sector up 4.2% following China’s central bank announcing it would cut the reserve requirement ratio on banks by 25-basis points. The German DAX closed 0.97% higher and the FTSE100 and French CAC ended Thursday in the green, up by 1.95% and 1.19% respectively.

Locally yesterday, the ASX200 finished the day 0.46% in the green, led by materials up by 0.96% and the financial index ending the day 0.69% higher. This was slightly offset by the health index which finished Thursday in the red 0.57%.

What to watch today:

• The Australian share market is set to open higher, with the SPI futures suggesting a rise of 1.22% at the open this morning.
• In terms of commodities this morning,
  • Oil is up 2.43% to 90 US dollars and 67 cents a barrel, following expectations of a tightening of the global oil market. 
  • Gold is up 0.23% to 1910 US dollars an ounce following retail sales and producer prices for the US coming back hotter than expected. 
  • And iron ore is up 1.24% to 122 US dollars a tonne amid bets of robust demand for Chinese steel production in the short term.

Trading Ideas:

• Bell Potter maintains a speculative buy rating on Clarity Pharmaceuticals (ASX:CU6) and have increased the 12-month price target from $1.30 to $1.70 with the current share price at $1.23. The price target has increased as closing cash at June 30th was $65 million, meaning the company will be well funded through FY24.
• And Trading Central has identified a bullish signal in Whitehaven Coal (ASX:WHC), indicating that the stock price may rise form the close of $6.37 to the range of $7.50-$7.80 over a pattern formed over 18 days, according to the standard principles of technical analysis.

Wall Street closed mixed on Wednesday after the highly anticipated inflation reading was released, showing an inflation reading that was hotter than expected. Inflation in the US accelerated for a second straight month to 3.7% in August from 3.2% in July which was above the 3.6% reading markets were expecting. The higher CPI reading was driven by rising energy and fuel costs as well as higher growth in transportation costs. Core inflation which strips out energy and food rose by 0.3% month on month and 4.3% year on year which also slightly exceeded expectations. Investors responded negatively to the rise in core inflation as it provides further support for the Fed to continue raising interest rates. The Nasdaq rose 0.29%, and the S&P500 added 0.12%, while the Dow Jones fell 0.2%. Tech giants including Tesla and Amazon were the key drivers of the rally for the Nasdaq and S&P500 on Wednesday.

Over in Europe, markets closed lower in the region following the hotter-than-expected inflation reading out of the U.S. The STOXX600 fell 0.99% weighed down by retail stocks while Germany’s DAX lost 0.39%, the French CAC fell 0.42% and, in the UK, the FTSE100 closed just 0.02% lower. UK GDP data came in below expectations with a 0.5% contraction for the month of July which is the biggest decline so far this year and reversed the 0.5% growth in June.

Locally yesterday, the ASX rally that started the week on a positive note came to an end with the key index closing 0.73% lower, weighed down by the tech-sector falling 1.56% on the back of weakness in US tech-stocks on Tuesday. Qantas shares fell even further yesterday after the high court upheld a Federal Court ruling that Qantas breached the Fair Work Act at the start of the COVID-19 pandemic by standing down workers and replacing their services with third-party providers to cost cut during in 2020. While the airline has apologised and taken full responsibility, the impact is said to be wide ranging on the flying kangaroo. Coronado Global Resources led the wins on the ASX200 yesterday with the coal miner adding over 3%, while Eagers Automotive was the worst performer, down 4.54% at the closing bell.

What to watch today:

• Ahead of the local trading session here in Australia the SPI futures are expecting the local index to open 0.07% lower on the back of the global sell-off overnight.
• On the commodities front this morning, oil is trading slightly lower at US$88.81/barrel, gold is down 0.22% at US$1908.97/ounce and iron ore is up 0.42% at US$120.50/tonne.
• AU$1.00 is buying US$0.64, 94.61 Japanese Yen, 51.28 British Pence and NZ$1.09.
• Stocks trading ex-dividend today include Ramelius Resources (ASX:RMS), Cleanaway Waste Management (ASX:CWY), Cash Converters International (ASX:CCV), Austal (ASX:ASB), Ingham’s Group (ASX:ING), BBHI, Seven Group Holdings (ASX:SVW), and Spark New Zealand (ASX:SPK). 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 decreased the price target on Select Harvests (ASX:SHV) from $5.50 to $5.30 and maintain a buy rating on the almond producer following the release of the company’s crop and market update including Select Harvests reducing its FY23 pricing estimate per kilo due to downward movement in crop pricing linked to the market and quality of crop. FY23 orchard production has been lifted though following a higher recovery in the pollinator crop.
• And Trading Central has identified a bearish signal on Medibank Private (ASX:MPL) following the formation of a pattern over a period of 97-days which is roughly the same amount of time the share price may fall from the close of $3.47 to the range of $3.09 to $3.17 according to standard principles of technical analysis.

Wall Street closed lower on Tuesday, led by the Nasdaq falling 1.04% in its first losing session in three days as Oracle shares plunged 13% on weaker-than-expected quarterly revenue and guidance. The S&P500 fell 0.57% and the Dow Jones fell in afternoon trade to close 0.05% lower after trading higher all day. Chevron shares rallied almost 2% on strength in the price of oil to offset some of the losses for the Dow Jones on Tuesday. Apple shares were also lower in afternoon trade after the tech giant unveiled a new iPhone model this afternoon in US time. Investor attention in the US is focused this week on key inflation data which will be released on Wednesday US time as it will give an indication into how the US economic inflation is faring and provide further support for the Fed to either raise or hold rates at the next FOMC meeting.

In Europe, markets closed mixed across the board on Tuesday ahead of key economic data released later this week. The STOXX600 fell 0.2%, Germany’s DAX fell 0.54%, the French CAC lost 0.35% and, in the UK, the FTSE100 rose 0.41%.

UK average earnings data released overnight showed regular pay excluding bonuses in the UK went up 7.8% YoY in the three months to July, which is the same reading as the prior quarter and the highest regular growth rate since comparable records began in 2001, in a sign inflation remains high in the region.

The local market has rallied across the first two sessions of this week amid a rise in staple and financial stocks over the two trading sessions. On Tuesday, the ASX200 rose 0.20% led by materials stocks lifting 0.9% on a 3% rise in the price of iron ore following better-than-expected economic data out of China in the form of total credit growth climbing in August 2023, marking the first month-on-month acceleration since March.

It was a big day for lithium miners yesterday with some mining giants making key strategic moves that had investors excited. Delta Lithium shares jumped almost 6.5% after Mineral Resources founder and CEO joined Delta Lithium’s board as non-executive chairman, and Mineral Resources increased its shareholding in Delta to 17.4%.

What to watch today:

• Ahead of the local trading session here in Australia the SPI futures are anticipating the local market to open the midweek session down 0.29%.
• On the commodities front this morning, oil continues to strengthen, trading up 1.70% at US$88.77/barrel, gold is down just shy of half a percent at US$1913/ounce and iron ore is up 3% at US$120/tonne on the back of that favourable economic data out of China reigniting demand outlook for iron ore from the region.
• AU$1.00 is buying US$0.64, 94.48 Japanese Yen, 51.28 British Pence and NZ$1.09.

Trading Ideas:

• Bell Potter has increased the rating on EROAD (ASX:ERD) from a hold to a buy whilst lowering the 12-month price target from $1.25 to $0.90 amid forecasting for the NZ$50m capital raising and the subsequent impact to NPAT that is expected by Bell Potter’s analyst. Bell Potter questions the decision to raise equity capital at such a sharp discount to the last close – especially after the EROAD board rejected the non-binding indicative offer of NZ$1.30/share from Brillian APAC, but the Bell’s analyst does recognise the much-strengthened balance sheet which now removes risk of another capital raise in the short term.
• And Trading Central has identified a bearish signal on Boral (ASX:BLD) following the formation of a pattern over a period of 9-days which is roughly the same amount of time the share price may fall from the close of $4.65 to the range of $4.13 to $4.23 according to standard principles of technical analysis.

Wall St opened the week higher as important inflation data is set to be released later in the week. The tech heavy Nasdaq rebounded after recent weakness, closing the day 1.14% higher. Both the S&P 500 and the Dow Jones also finished Monday in the green gaining 0.67% and 0.25% respectively.

Morgan Stanley has upgraded Tesla stock by 10% following ‘significant breakthroughs with its autonomous software.’ Qualcomm shares also rallied 4%, following news that the chipmaker will be supplying Apple 5G modems for smartphones through 2026.

Stronger-than-expected economic data points from last week has investors looking forward to key US inflation data released later this week, with prior worries that the Federal Reserve may raise rates for longer than previously expected.

Over in Europe, markets closed higher as investors await a big week of economic news from around the world. The STOXX600 ended the day up 0.34% as basic resources rose 2.4% following Anglo American and Rio Tinto trading higher following gains in metal prices. Germany’s DAX closed 0.36% higher, the FTSE 100 closed higher by 0.25% and the French CAC finished the day 0.52% in the green.

Locally yesterday, the ASX200 closed the day half a percent higher following strength in the financial and consumer staples sectors. This was slightly offset by the health sector which finished yesterday 0.67% in the red.

What to watch today: 

• The Australian share market is set to open higher, with the SPI futures suggesting a rise of 0.10% at the open this morning.
• In terms of commodities,
  • Oil is down 0.38% to 87 US dollars and 17 cents a barrel amid continued concerns over China’s economic recovery. 
  • Gold is up 0.21% to 1921 US dollars an ounce as investors await important economic data releases later in the week. 
  • And iron ore is down 0.85% to 116 US dollars and 50 cents a tonne following an increase in supply for production as there is an expectation that Beijing will mandate steel output controls. 

Trading Ideas: 

• Bell Potter maintains a buy rating on Nufarm (ASX:NUF) and has maintained the 12-month price target of $7.00 with shares in the ag-stock currently trading at $5.14/share. The buy rating remains unchanged following a reversal of destocking trends and growth in the beyond yield program, which is likely to see a rebound in earnings in FY24.
• And Trading Central has identified a bullish signal in South32 (ASX:S32), indicating that the stock price may rise from the close of $3.29 according to standard principles of technical analysis.

Equities rose in the US on Friday but recorded a losing week across the key indices as investor fears of further rate hikes out of the Fed strengthened on the back of weaker-than-expected initial jobless claims data released earlier last week. The Nasdaq and S&P500 both posted their first weekly losses in 3 weeks losing 1.9% and 1.3% respectively while the Dow Jones fell 0.8% over the week. Shares in e-signature company DocuSign fell 3.7% on Friday despite the company posting earnings that topped expectations and strong guidance for the third quarter.

Over in Europe, markets closed slightly higher on Friday as investor sentiment is sliding on renewed inflationary concerns in the U.S., alongside weak Chinese economic data and stronger government bond yields. The STOXX600 rose 0.22% on Friday, Germany’s DAX added 0.14%, the French CAC lifted 0.62%, and in the UK, the FTSE100 rose 0.49%. The rally on Friday was also due in part to the release of final eurozone figures for economic growth showing the economy grew 0.1% in the second quarter which was lower than the 0.3% growth economists were expecting in a sign interest rate hikes are having an impact in cooling the economy.

Locally on Friday, the ASX200 fell 0.2% weighed down by materials and consumer discretionary stocks being sold off while some of the losses were offset by strength in the utilities sector.

For the week, the ASX200 fell 1.67% with every sector closing in the red aside from energy stocks which were boosted by the rising price of oil on the back of output cuts from Russia and Saudi Arabia.

Polynovo led the winning stocks on Friday with the healthcare company adding over 3% while Lake Resources and Pexa each jumped 2.7% and 2.57% respectively. Sayona Mining tumbled 4.55% on Friday despite the lithium miner announcing it reached the major milestone of shipping the first lithium oxide concentrate and generating maiden cash proceeds from its North American Lithium operation in Quebec.

What to watch today:

• Ahead of the local trading session here in Australia the SPI futures are suggesting the ASX will open 0.06% higher to start the new trading week in the green.
• On the commodities front this morning, oil has retreated to trade 0.52% lower at US$87.05/barrel, gold is flat at US$1919/ounce and iron ore is down 0.85% at US$116.50/tonne.
• AU$1.00 is buying US$0.64, 93.95 Japanese Yen, 51.25 British Pence and NZ$1.08.
• Stocks trading ex-dividend today include Chorus (ASX:CNU), CSL (ASX:CSL), HUB24 (ASX:HUB), Terracom (ASX:TER) and Pepper Money (ASX:PPM). 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 decreased the price target on AMA Group (ASX:AMA) from 26cps to 15cps and maintain a buy rating on the leading accident repair group in Australia following the release of the company’s FY23 results including revenue falling slightly below Bell Potter’s forecast at $869.6m. FY24 guidance was reiterated and the company also announced a $55m capital raise.
• And Trading Central has identified a bearish signal on Reece (ASX:REH) following the formation of a pattern over a period of 24-days which is roughly the same amount of time the share price may fall from the close of $19.24 to the range of $17.70 and $18.00 according the standard principles of technical analysis.

With reporting season for August 2023 coming to an end, investors are being paid their dividends. Investors received $36.8 billion last financial year compared to $29 billion this financial year from the largest 100 ASX listed companies which represented a 21.2% reduction. We take a look at the companies that disappointed and those that surprised.  
 
 In this week's wrap, Grady covers: 

• (0:31) dividend cuts and increases,
• (1:46) why Accent Group (ASX:AX1) remains a key pick for Bell Potter,
• (3:06) Bendigo & Adelaide Bank’s (ASX:BEN) strong dividend yield,
• (4:06) the Pilbara Minerals (ASX:PLS) sell-off,
• (4:47) Wesfarmers’ (ASX:WES) revenue growth,
• (6:46) best performing stocks in the ASX200,
• (7:33) the most traded stocks & ETFs by Bell Direct clients, and
• (8:04) five economic news items to watch out for. 

Read the article transcript here. 

Wall Street closed lower on Wednesday as investor fears of further rate hikes out of the Federal Reserve, strengthened. The Dow Jones closed Wednesday’s session 0.57% lower, while the S&P 500 and Nasdaq followed suit, ending the day 0.70% and 1.06% lower respectively. Technology stocks have felt the incoming pressure from potential further rate hikes leading to a negative close across the sector for the third straight day. This was highlighted by Apple and Nvidia which fell by more than 3% each with Amgen and Boeing also fell 2% each.

Over in Europe, markets closed lower on Wednesday as investor focus has shifted to the oil market outlook and inflation concerns in Saudi Arabia and Russia as they each extended voluntary oil cuts until the end of 2023. The STOXX 600 ended the day 0.6% lower, led by households’ goods losing 2.2% and the banks dropping by 1.5%. Germany’s DAX ended the day 0.19% lower with the FTSE100 and the French CAC closing down by 0.16% and 0.84%. Saudi Arabia have extended their oil production cuts by 1 million barrels until the end of December with Russia following suit reducing its oil exports by 300,000 barrels.

Locally yesterday, the ASX200 ended the day 0.78% lower driven by a 1.49% decline in the info tech sector and a 1.35% drop in the communications services sector. However, this was slightly offset by a 0.95% rise in the energy sector.

What to watch today:

• The Australian share market is set to open lower, with the SPI futures suggesting a fall of 0.48% at market open this morning.
• On the commodities front this morning,
  • Oil is up by 0.97% to US$87.55 a barrel, following an increase demand after Saudi Arabia and Russia extend supply cuts until the end of 2023.
  • Gold is down 0.48% to US$1,916 an ounce after being weighed down by a strong dollar and economic uncertainty. 
  • And iron ore is up by 0.85% to US$118.50 per tonne following bets of robust demand for Chinese steel production in the short term. 

Trading Ideas:

• Bell Potter maintains a buy rating on PointsBet Holdings (ASX:PBH), but has significantly lowered the 12-month price target from $2.10 to $1.08. The reason for the price target decrease is due to the payment of the capital return which will occur on September 22nd and an increase in the number of shares on issue while all other valuation metrics remain the same. Bell Potter believes the value of the business is seen to be too low at $69 million, assuming the payout of 42 cents final distribution and cash of around 11 cents per share hence maintaining the buy rating on the company.
• Trading Central has identified a bullish signal on New Hope Corp (ASX:NHC), indicating that the stock price may rise from the close of $5.95 to the range of $7.40-$7.70 on a pattern formed over 130 days, according to the standard principles of technical analysis.

US stocks closed lower on Tuesday in the first trading session of this holiday-shortened week as the rising price of oil places further pressure on the Federal Reserve on an inflationary front. The S&P500 fell 0.42%, the Dow Jones lost 0.56% and the tech-heavy Nasdaq fell in late trade to close down 0.08% after trading higher all day. Oil prices have been on the rise over the last week after Saudi Arabia extended its 1-million-barrels per day voluntary oil production cuts. US Treasury yields also rose on Tuesday which reduces investor appetite for riskier assets like equities.

Looking at the odds of a recession in the US, Goldman Sachs cut its recession odds to 15% and said it anticipated the Federal Reserve will skip a rate hike at the next FOMC meeting later this month. While this news would normally boost the market, investors weighed this news against September being historically one of the weakest months for equities.

In Europe, markets fell on Tuesday as sentiment around stimulus out of China begins to fade despite favourable economic data released in the region in the form of the Eurozone producer price index showing producer prices were down 7.6% YoY in July, dropping for a 7th consecutive month. Another dampener on Tuesday was the revision for inflation expectations for the next three years rising from 2.3% in June to 2.4% in July, while one-year expectations remain unchanged at 3.4%. 

The local market rebounded in afternoon trade yesterday to close the session just 0.06% lower after trading in the red all day. Iron ore miners like BHP and Rio Tinto and the utilities sector weighed on the market while health care and industrials stocks offset some of the heavy losses in afternoon trade. The market also rallied in afternoon trade following the RBA’s rate decision announcement.

The RBA has maintained the nation’s cash rate at 4.1% for the month of September as Philip Lowe handed down the decision at his last meeting as RBA governor. The reason behind the hold was as the board assesses uncertainty around the economic outlook and its bid to establish a more sustainable balance between supply and demand in the economy. 

What to watch today: 

• Ahead of the local trading session here in Australia the SPI futures are expecting the ASX to open the midweek session down 0.23% on the back of the global sell-off overnight.
• Australia’s GDP Growth rate data for Q2 is out today with consensus expecting a rise to 0.3% growth for Q2 from 0.2% growth in Q1. Pending the reading we will likely see markets respond accordingly.
• On the commodities front this morning, oil is trading 0.91% higher at US$86.71/barrel, gold is down 0.62% at US$1926/ounce and iron ore is up 0.43% at US$117.50/tonne.
• AU$1.00 is buying 64 US cents, 94.30 Japanese Yen, 50.96 British Pence and NZ$1.09. 

Trading Ideas: 

•  Bell Potter has increased the price target on BCI Minerals (ASX:BCI) from 32cps to 44cps and now have a speculative risk rating associated to the buy rating on the mining and exploration company amid analysis of BCI’s cost and design review for its Mardie Salt and Potash Projects. The update highlights raised base capital costs of $1.421bn and a delay to the first salt production to 2H 2026 from the prior guidance of 2H 2024, however, the higher costs and delayed timeline are consistent with recent challenges across the industry.
• And Trading Central has identified a bullish signal on Myer (ASX:MYR) following the formation of a pattern over a period of 19-days which is roughly the same amount of time the share price may rise from the close of $0.70 to the range of $0.80 to $0.82 according to standard principles of technical analysis.