Between the Bells

US equities had a strong run overnight, after the US producer price index for March was released, which was another economic report to point to the fact that US inflation may be cooling down. PPI dropped 0.5% month over month, compared to market expectations for prices to be flat. Excluding food and energy, the core wholesale prices reading declined, when the market was expecting an increase. 

All three major benchmarks rallied. The Dow and the S&P500 both closed over 1% higher, with the S&P500 closing at its highest level since February. The Nasdaq closed 2% higher, boosted by the PPI report. So its good to see tech stocks among the gainers, after being hit the hardest during the periods of rising inflation and rates. 

What to watch today:

• The SPI futures are suggesting that the Australian market will open 0.2% higher, following Wall Streets lead. 
• In commodities, 
  • Oil prices are trading lower, easing from the five-month high hit earlier this week. Watch energy producers such as Beach Energy (ASX:BPT) and Woodside Energy (ASX:WDS)
  • Gold moved higher overnight, trading at its highest level since March 2022. Gold miners such as Newcrest Mining (ASX:NCM) and St Barbara (ASX:SBM) could have a good finish to the week. 
  • And iron ore is also flat at US$121.50 per tonne. 

Trading Ideas:

• Bell Potter maintain a Buy rating on Beach Energy (ASX:BPT) and have lowered their price target from $2.21 to $2.18. at BPT’s current share price of $1.52, this implies 43.4% share price growth in a year. 
• And Trading Central have identified a bearish signal in Stanmore Resources (ASX:SMR) indicating that the stock price may fall from the close of $3.26 to the range of $2.40 to $2.55 over 34 days, according to the standard principles of technical analysis. 

Annual US inflation fell for a ninth consecutive month in March to 5% or the lowest level since May 2021. Economists were expecting annual inflation to fall to 5.2% so the larger drop to 5% beat expectations. Core inflation, the Fed’s preferred measure of inflation as it removes the volatile food and energy prices, on the other hand inched up for the first time in 6-months to 5.6% for March from 5.5% in February. Investors were spooked into sell-off mode on Wednesday after some fed officials said a mild recession is likely this year before the economy recovers over the next 2-years. The Dow Jones fell 0.11%, the S&P500 lost 0.41% and the tech-heavy Nasdaq fell 0.85% on Wednesday.

Over in Europe, markets closed slightly higher as investors digested key inflation data out of the US, with markets already factoring in a 75% chance that the Fed will raise interest rates by a further 25-basis points in May. Germany’s DAX rose 0.31%, the French CAC added 0.09% and, in the UK, the FTSE100 rose 0.5% on Wednesday.

The local market closed 0.47% higher buoyed by a rally for technology and materials stocks, extending the local bourse’s rally into a second straight session.

What to watch today:

• Ahead of the local trading session the SPI futures are anticipating the ASX to open 0.04% lower or flat on the second last trading session of the week as global recession fears enhance on the back of the comments made by Fed officials overnight.
• On the commodities front this morning oil is trading 2.12% higher at US$83.26/barrel, gold is up 0.53% at US$2013.70/ounce and iron ore is up 1.25% at US$121.50/tonne. Iron Ore prices have risen in recent days following the formation of a cyclone off the Kimberley coast in Western Australia, a key region for iron ore export in Australia.
• Stocks trading ex-dividend today include Best & Less (ASX:BST), Horizon Oil (ASX:HZN) and Duxton Water (ASX:D2O). 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.
• On the economic calendar front today, there is no local data released however over in the US tonight, Producer Price Index data for March will be released with the market expecting a rise of 0.1% following a 0.1% drop in February.

Trading Ideas:

• Bell Potter has initiated coverage of LGI Limited (ASX:LGI) with a Hold recommendation and a 12-month price target of $2.56. Bell Potter is positive on the long-term prospects for the market leader in the biogas recovery and renewable energy space, but feels the company is well valued at its current range.
• Bell Potter has cut its price target on Whitehaven Coal (ASX:WHC) from $8.15 to $7.05 and maintain a hold rating on the leading Australia coal producer, after the company cut its FY23 production guidance. Whitehaven Coal cited predicted labour shortages, operational constraints at Maules Creek, and weather interruptions during March, as the reasons for the downgrade in guidance.

Wall Street ended mixed again on Tuesday as investors try to shrug off recession concerns ahead of the release of key inflation data out later this week. The Dow Jones rose 0.3%, the S&P500 finished muted and the tech-heavy Nasdaq fell 0.4% on Tuesday. Investors are anticipating the release of the March readings for consumer price index out Wednesday and producer price index out Thursday to gain an insight into how the Fed might proceed on its current rate-hike journey. Moderna shares fell more than 3% overnight after the biotech firm said it delaying its flu vaccine after the experimental vaccine did not meet the criteria for ‘early success’ in a late-stage trial.

In Europe, markets closed higher following the return to trade after the Easter long weekend with the mining giants leading the gains across the board. Germany’s DAX rose 0.4% on Tuesday, while the French CAC added 0.9% and, in the UK, the FTSE100 added 0.6%.

The local market closed 1.26% higher on the first trading session of the shortened week, led by a surge in materials and consumer discretionary stocks. The materials sector was boosted by strengthening commodity prices and demand outlook from China, while consumer discretionary stocks were possibly driven higher by consumer confidence lifting. Westpac consumer confidence rebounded 9.4% in April, to the highest level since June 2022, following the RBA announcing a pause in interest rate hikes last week. The largest gains in consumer confidence were for the outlook in property prices. NAB business confidence for March also improved in data out yesterday, with the reading coming in at minus 1 from minus 4 in February, but business conditions slightly dropped from 17 to 16 for the month, indicating business confidence has stabilised but remains below the average at -1 index point. Newcrest Mining (ASX:NCM) shares jumped over 5% on Tuesday after the Aussie gold miner announced it had received an upgraded takeover offer from US gold mining giant Newmont valuing the company at almost $30 billion, implying a share price of $32.87/share, or a 22% premium to NCM’s previous closing price. After assessing the revised proposal, Newcrest has agreed to grant Newmont the opportunity to conduct confirmatory due diligence to enable it to put forward a binding proposal. Evergreen Lithium debuted on the ASX yesterday, jumping 20% during its debut session in another sign the lithium era is far from over. The lithium explorer aims to mirror the success of neighbours Core Lithium (ASX:CXO) and Liontown Resources (ASX:LTR), through its flagship Bynoe, Fortune Lithium and Kenny Projects.

What to watch today:

• Ahead of the local trading session the SPI futures are anticipating the ASX to open 0.34% higher to start the midweek session in the green.
• On the commodities front this morning crude oil is trading 2.4% higher at US$81.63/barrel, its highest level since late January, buoyed by prospects of higher Chinese demand and tighter global supplies. Gold is up 0.73% at US$2004.14/ounce and iron ore is up 0.42% at US$120/tonne.
• Taking a look at the Aussie dollar, AUD$1.00 is buying US$0.67, 88.97 Japanese Yen, 54.89 British Pence and NZ$1.07.

Trading Ideas:

• Bell Potter has increased its price target on 4D Medical (ASX:4DX) from $0.96 to $1.05 and maintain a speculative buy rating on the company following the company announcing it has signed an inaugural contract in the US to deliver its XV LVAS scans to a US hospital client, in the first steps of commercialisation for the company’s lung scanning technology.
• Trading Central have identified a bullish signal on Beach Energy (ASX:BPT) following the formation of a pattern over a period of 37-days which is roughly the same amount of time the share price may rise from the close of $1.54 to the range of $1.73-$1.77 according to standard principles of technical analysis.

It was a mixed session on in New York ahead of key inflation data and quarterly bank reports out this week. Tech stocks struggled to make gains, with shares of Apple falling 1.6% and Alphabet falling 1.8%. The Nasdaq closed in the red, while the Dow and the S&P500 advanced. 

What to watch today:

• To start the trading week after we return from the Easter long weekend, the Australian market is set to open 0.3% lower this morning. 
• In commodities, 
  • Oil prices have taken a downward turn amid renewed concerns that a potential global recession would weaken demand, and this offset the bullish bets around tighter global supplies. 
  • The price of gold is also lower, retreating slightly from its one-year high, as the US dollar gained some ground after the US non-farm payrolls report pointed to a tight labour market. The report also supported bets for another interest rate hike form the Fed in May. 
  • Iron ore continues to fall, reaching the lowest in three months, due to weak demand at the beginning of China’s construction season. 
• In economic data today, Westpac will release its data on consumer confidence for April, and NAB will release its data on business confidence for March. 

Trading Ideas:

• Bell Potter have re-initiated coverage on Alicidion (ASX:ALC), an Australian healthcare informatics company. Bell Potter have a speculative buy rating on ALC and a valuation of $0.20 per share. At the current share price of $0.12, this implies 73.9% share price growth in a year. 
• Trading Central have identified a bullish signal in Jumbo Interactive (ASX:JIN), indicating that the stock price may rise from the close of $13.43 to the range of $13.80 to $13.95 over 19 days, according to the standard principles of technical analysis. 

Wall Street closed mixed overnight with the Dow closing 0.2% higher, while the S&P500 closed 0.3% lower and the tech-heavy Nasdaq fell more than 1%. The Nasdaq dropped for the third straight session as investors shifted away from growth stocks amid signs that the US economy is weakening. The losses also followed weak eco data, where the latest ADP private payrolls report showed slowing job growth in March. 

European markets were also mixed, with the FTSE 100 the only index to close in positive territory. Germany’s Dax, France’s CAC and the Stoxx 600 were all lower. So it seems that investors uncertainly has resurfaced this week, over the global economy outlook. 

What to watch today:

• The SPI futures are suggesting the Australian market will open just 0.1% lower this morning. 
• Watch Santos (ASX:STO)’s share price today, as the oil and gas producer is set to hold its AGM. 
• Brickworks (ASX:BKW) is set to go ex-dividend today. 
• In commodities:
  • Oil is trading slightly lower, after being on the rise this week off the back of OPEC’s production cut announcement. 
  • Gold is steady at its highest levels in a year, around US$2,020 an ounce, as weak US data fuelled expectations that the Fed may not need to tighten further in the coming months to prevent a recession. 
  • Iron ore is at its lowest level since mid-January as the concerns continue of the low demand at the start of China’s peak construction season. 
• In economic data, Balance of Trade data for February will be out at 11:30am AEST. The last time this data was announced, Australia’s trade surplus declined to $11.69 billion in January, from a downwardly revised $12.99 billion in December, with exports rising less than imports. 

Trading Idea:

• Bell Potter maintains a Buy rating on IPD Group (ASX:IPG), a leading distributor of electrical equipment and industrial digital technologies. They have increased their price target from $3.50 to $4.00. The broker says that IPD is set for two consecutive years of approximately 15% volume growth. Their EPS changes across FY23-25 estimates are +4-6% and they say the company has a large future runway of replacement demand as incentives behind the electrification of buildings infrastructure, transport and logistics sectors continue to evolve. 

US equities closed lower overnight. The Dow Jones fell nearly 200 points as investors assessed what the spike in oil prices could mean for the global economy. The S&P500 closed 0.6% lower; both the Dow and S&P500 snapped a four-day win streak. The Nasdaq closed 0.5% in the red. Also prompting the market losses was the latest job openings report out in the US, which saw that the number of available positions in February dropped below 10 million for the first time in almost two years. 

European stocks were marginally lower. The oil and gas sector declined following the announcement earlier this week by OPEC; they’re cutting output by over a million barrels of oil per day, starting from May. Investors are now focusing on demand trends and the impact of higher prices on the global economy. 

Also overnight, we saw the British pound trade higher against the US dollar throughout the session and hit a 10-month high. This followed the Bank of England’s chief economist warning that “domestically-generated inflation remains a risk” and that the fall in US job openings suggests that the Fed’s aim of slowing the labour market is taking effect. 

What to watch today:

• After global markets closed in negative territory overnight, the SPI futures are suggesting that our local market will fall 0.18% at the open this morning. 
• A few stocks to watch today include Novonix (ASX:NVX) and Scentre Group (ASX:SCG) both holding their AGMs today. While stocks going ex-dividend today include ARB Corporation (ASX:ARB), Imdex (ASX:IMD) and Ridley Corporation (ASX:RIC). Remember this often sees share prices fall, as investors take their profits. 
• In economic news, today the RBA Governor Phillip Lowe will give a speech, following yesterday’s cash rate decision, with the RBA holding the cash rate at 3.6% for the first time in 10 months. 
• In commodities:
  • Oil prices continue to rise, underpinned by the surprise production cut announcement by OPEC. 
  • The price of gold has reached its highest level since March 2022, after the US jobs opening data pointed to a slowdown in the labour market, which suggests that the Fed may not need to raise rates. 
  • Iron ore is currently trading almost 3% lower at US$123.50 per tonne, approaching a two-month low, amid underwhelming demand in the Chinese peak construction season, as well as signs of increased speculatory control. So, keep watch of iron ore stocks today. 

Trading Idea:

• Bell Potter maintain a Speculative Buy rating on Chalice Mining (ASX:CHN), after the miner announced a major resources upgrade for the Gonneville deposit, at its 100% owned Julimar Nickel-Copper Platinum Group Elements (PGE) project, which is approximately 70km north of Perth. Bell Potter says that the “project represents a unique opportunity to establish a new, strategic, long-life, low-cost PGE and base metals supply in a top mining jurisdiction. It’s partly because of the inclusion of PGE’s nickel and cobalt on Australia’s and the USA’s critical minerals lists, due to their role in the lithium-ore battery and hydrogen fuel cell production value chain and Russia’s market dominance. The company’s latest update exceeded Bell Potter’s expectations and they have lifted their valuation by 8% to $12. At CHN’s current share price of $7.25, this implies 65.5% share price growth in a year. 

In New York overnight, the Dow Jones closed 300 points higher or 0.98%, to begin April’s trading. The S&P500 saw its fourth straight day of gains, closing 0.37% in the green, while the Nasdaq closed 0.3% lower. US investors showed resilience despite an oil output cut from OPEC.

Oil prices notched their biggest gain in nearly a year after OPEC announced it was cutting output by more than 1 million barrels per day. The cuts begin in May and run until the end of this year. Saudi Arabia have said that it was a “precautionary measure” targeted toward stabilising the oil market. Oil is current trading 6.28% higher at US$80.42 per barrel. This announcement complicates the outlook for inflation and interest rates, as investors had been betting that easing price pressures would give central banks room to pause the current tightening cycle. So, energy shares will be on watch today; some include Beach Energy (ASX:BPT), Woodside Energy (ASX:WDS) and Santos (ASX:STO). 

Also in commodities, natural gas has hit its lowest level since September 2020, pressured by weak demand due to high temperatures and ample inventories. The price of gold is steady, while iron ore has rebounded on expectations of strong demand as China enters the spring construction season. 

What to watch today:

• The Australian market is set to open just 0.06% higher this morning, if you’re going by the SPI futures. 
• In economic news, the RBA will announce its next cash rate decision. The Commonwealth Bank and Westpac have forecast the RBA will pause hiking the cash rate this month, and hold it at 3.6%, only to increase again in May, while NAB and ANZ predict a further 0.25% hike today. 

Trading Ideas:

• Trading Central have identified a bullish signal in Link Administration (ASX:LNK) indicating that the stock price may rise from the close of $2.13 to the range of $2.51 to $2.59 over 44 days, according to the standard principles of technical analysis. 

Wall Street extended gains into a third straight session on Friday and the US market posted a second straight quarter of gains despite turbulence during the three-month period around the unfolding of a potential global banking crisis. On Friday the Nasdaq rose 1.7%, the Dow Jones added over 400 points and the S&P500 rose 1.4%. Sentiment in the US was boosted last week by US core personal consumption expenditures price index, the Fed’s preferred measure of inflation, coming in below expectations at 4.6% in yet another sign inflation has peaked in the US. For the quarter the tech-heavy Nasdaq soared 17.6% as investors regain appetite for growth stocks, while the Dow Jones rose 0.4% and the S&P500 added 7.4%.

Over in Europe markets closed higher again buoyed by headline inflation cooling to 6.9% in March from 8.5% in February, a preliminary report showed. Germany’s DAX added 0.7%, the French CAC added 0.81% and, in the UK, the FTSE100 rose 0.15%. For the quarter, the STOXX600 added 7.05% despite a few weeks of banking turmoil.

The ASX ended Friday’s session up 0.78% driven by a 1.88% rise in materials stocks, while healthcare stocks added 1.09% in the last trading session of the week. For the week, the key local index rose 3.20% as global fears of a banking crisis continued to ease.

What to watch today:

• The strength overseas for the last quarter drives the SPI futures to anticipate the ASX to open 0.63% higher to start the new trading week and month.
• On the commodities front oil is trading 6.77% higher at US$80.87/barrel after OPEC oil producers announced a surprise cut in oil output to support market stability following the recent dive in oil prices. Saudi Arabia is cutting its output by 500,000 barrels per day while Iraq is cutting by 211,000 barrels per day, among other countries making cuts to output. Gold is trading down 0.73% at US$1965.73/ounce and iron ore is up almost 0.8% at US$127/tonne.
• The Aussie dollar is buying US$0.67, 88.93 Japanese Yen, 54.89 British Pence and NZ$1.07.

Trading Ideas:

• Bell Potter has downgraded its rating on The A2 Milk Company (ASX:A2M) from a buy to a hold, and reduced the price target on the dairy company from $7.65 to $6.80 following the company’s infant formula producer, Synlait Milk (ASX:SM1), downgrading its earnings guidance and pushing out its expected GB registration in China. Bell Potter sees the balance dates between A2M and SM1 don’t align, as well as cost of goods sold being expected to rise in FY24.
• Trading Central has identified a bearish signal on TPG Telecom (ASX:TPG) on the 25th of March, 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 $4.81 to the range of $4.47 to $4.55 according to standard principles of technical analysis.

The Aussie share market advanced 2.4% (Mon-Thu), driven by the materials sector jumping 5.04%, amid increasing commodity prices. Utilities and energy stocks also jumped over 3% each. The ASX200 felt some relief this week, after a few weeks of turbulence, as investor fears of a global banking crisis eased when regulators and industry bodies stepped in to support crumbling banks. 
 
 In this week's wrap, Grady covers:

• (3:10) The outlook for oil prices 
• (3:30) Stocks Bell Potter are bullish on
• (4:24) The best performing stocks in the ASX200
• (5:57) The most traded stocks & ETFs by Bell Direct clients
• (6:35) Four economic news items to watch out for 

The rally on Wall Street continued overnight as investor fears of a regional and global banking crisis continued to ease as President Biden urged federal regulators to take up a set of reforms to safeguard the banking system.

Weekly jobless claims in the US increased by 7000 to 19,800, in yet another sign the Federal Reserve’s aggressive interest rate action to tackle inflation in the US is starting to take effect. The rise in jobless claims is also another sign the fed could begin easing its rate hike stance. The Dow Jones closed 0.43% higher on Thursday while the S&P500 added 0.57% and the tech-heavy Nasdaq rose 0.73%.

Over in Europe, markets continued to rally as investor fears of a banking crisis also continued to ease in the region. UBS shares jumped 3.4% again on Thursday as investors responded to the news of Sergio Ermotti retaking his position as CEO ahead of the Credit Suisse takeover. Germany’s DAX added 1.26%, the French CAC added 1.06% and, in the UK, the FTSE100 rose 0.74%.

Locally yesterday, the ASX jumped 1.02% joining the global rally as banking crisis fears ease, with technology stocks leading the gains yesterday as the sector closed up 1.7%. Materials and Financial stocks also felt some relief yesterday following a week of turbulence in these respective sectors.

What to watch today: 

• Ahead of the local trading session here in Australia the SPI futures are anticipating the local market to open 0.53% higher, extending on the global rally from the past 2-sessions.
• Taking a look at commodities, crude oil is trading almost 2% higher at US$74.37/barrel, gold is up 0.81% at US$1979.94/ounce and iron ore is also up 0.8% at US$125.50/tonne. 
• Stocks trading ex-dividend today include Harvey Norman (ASX:HVN), and Russell Investments High Dividend Australian Shares ETF (ASX:RDV). 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.
• The Aussie dollar is buying US$0.67, 89.05 Japanese Yen, 54.89 British Pence and NZ$1.07.

Trading Ideas:

• Bell Potter has downgraded its price target on Synlait Milk (ASX:SM1) from $3.20 to $2.55 but maintain a buy rating on the company as the dairy company faces a few unknowns in the current environment including whether it can deliver acceptable returns on the new Pokeno nutritionals customer, as well as successfully navigating A2 Milk’s new-GB registration in China. The company also faces higher costs of production due to the volume uplift for the new Pokeno customer.
• Trading Central has identified a bullish signal on Regis Resources (ASX:RRL) following the formation of a pattern over a period of 26-days which is roughly the same amount of time the share price may rise from the close of $2.00 to the range of $2.17 to $2.21 according to standard principles of technical analysis.