Between the Bells

The ASX rose 0.4% in the final trading session of last week, buoyed by a rally for communications services and healthcare stocks, while the REIT sector was the only sector to close in the red on Friday. For the week though, the key index posted a 0.32% loss, its fourth straight weekly loss, as sharp losses for REIT and Financial stocks offset strong gains in the energy and materials sectors.

The winning stocks from Friday’s session were led by Liontown Resources (ASX:LTR) jumping over 13% following a broker note out of Bell Potter, where analyst Stuart Howe believes the lithium miner’s shares could have much further to run. Ramelius Resources (ASX:RMS) also rose 5.6% on Friday and Netwealth Group (ASX:NWL) rallied 4.95% to end the week. On the losing end, Capricorn Metals (ASX:CMM) fell 4%, Silver Lake Resources (ASX:SLR) lost 3.74% and Centuria Capital Group (ASX:CNI) fell 3.7%.

The most traded stocks by Bell Direct clients on Friday were Liontown Resources (ASX:LTR), Fortescue Metals Group (ASX:FMG) and Mineral Resources (ASX:MIN).

Over in the US, stocks rallied on Friday following a retreat in the Treasury yields from recent highs, and comments from Atlanta’s Federal Reserve President backing a ‘slow and steady’ rate hike approach, boosted investor sentiment. The Dow Jones rose 1.17%, the S&P500 added 1.61% and the tech-heavy Nasdaq rose almost 2% on Friday. The yield on 10-year Treasury notes rose to 4.091% on Friday while the two-year US Treasury yield fell 0.4 basis points to 4.885%.

Over in Europe, markets closed higher in the region following a positive global trend on Friday. Germany’s DAX rose 1.64%, the French CAC added 0.88%, and in the UK the FTSE100 rose just 0.04%.

It’s a big week on the economic calendar this week as the RBA announces the latest rate hike decision for Australia on Tuesday, and later in the week we will gain an insight into how the US labour market is faring with nonfarm payrolls, unemployment and JOLTs jobs data all released in the US.

What to watch today:

• Ahead of the local trading session here in Australia, the SPI futures are anticipating the ASX to open 0.87% higher to start the week on a positive note.
• Stocks going ex-dividend today include QBE Insurance (ASX:QBE), Nick Scali (ASX:NCK), Sims (ASX:SGM), REA Group (ASX:REA), Iluke Resources (ASX:ILU), Helloworld Travel (ASX:HLO), Bendigo and Adelaide Bank (ASX:BEN), Insurance Australia Group (ASX:IAG) and more. 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.
• Taking a look at commodities this morning, oil is trading almost 2% higher at US$79.68/barrel, gold is up 1.05% at US$1855.25/ounce and iron ore is flat at US$129/tonne.
• The Aussie Dollar is buying US$0.67, 91.75 Japanese Yen, 56.24 British Pence and NZ$1.09.

Trading Ideas:

• Bell Potter has increased its price target on Capricorn Metals (ASX:CMM) to $4.67 from $4.35 and has increased its rating to buy from hold on the company on the grounds of buying in at the dip ahead of catalysts. Bell Potter sees recent share price depreciation provides an opportunity to buy into the stock as the company’s management team has an excellent track record of delivering to plan, the gold miner is a sector leader, AISC are among the lowest in the sector, and the company has consistently strong cash generation per ounce produced.
• Trading Central has identified a bullish signal on Champion Iron (ASX:CIA) following the formation of a pattern over a period of 274-days which is roughly the same amount of time the share price may rise from the close of $7.95 to the range of $11.20 to $12.00/share, according to standard principles of technical analysis.

The Aussie share market declined 0.71% (Mon-Thu), with energy and materials stocks the only two sectors to close in positive territory. This week, rising commodity prices were boosted by favourable manufacturing data in China, as the country's economy reopens post-pandemic.

In this week's wrap, Grady covers:

• (1:29) The sectors thriving in tough market conditions
• (3:14) What to expect from the RBA next week
• (4:35) The best performing stocks in the ASX200
• (5:33) The most traded stocks & ETFs by Bell Direct clients
• (6:20) Four economic news items to watch out for

Equities closed higher in New York, as traders ignored concerns over higher interest rates. The Dow gained more than 400 points or 1.25%, boosted by Salesforce shares rallying 11%, on a strong quarter and forward guidance. The S&P500 trading 0.5% higher, while the Nasdaq was down earlier in the session, however also closed up 0.5%. 

Rates moved higher, with the 10-year note yield trading above 4% and the 2-year note yield reaching levels not seen in over a decade. 

European markets closed in the green, recovering from earlier losses, after the eurozone inflation data came in above expectations. Headline inflation fell to 8.5% in February, from 8.6% the previous month. 

What to watch today:

• The SPI futures are this morning suggesting that Australian market will open 0.31% higher. 
• We may see miners Rio Tinto (ASX:RIO) and BHP Group (ASX:BHP) end the week on a positive note, after their shares on the NYSE pushed higher in late trade overnight. Yesterday, ASX-listed BHP saw its biggest one-day gain in almost 4-months, amid evidence of China’s reopening economy. 
• In commodities, 
  • Oil prices have jumped, as the market weighs hopes for a rebound in Chinese demand, against concerns about further policy tightening from the Fed. So, keep your eye on energy producers today such as Woodside Energy (ASX:WDS) and Beach Energy (ASX:BPT). 
  • Gold has remained steady for three days, amid the prospect of further monetary tightening. 
  • Iron ore is strong, currently trading 1.6% higher with investors optimistic about higher Chinese demand after since the country’s reopening. 
• Stocks that are set to go ex-dividend today are Ampol (ASX:ALD), Nine Entertainment (ASX:NEC) and Treasury Wine Estates (ASX:TWE). Remember, this may see share prices fall, as investors take their profits. 

Trading Ideas:

• Bell Potter maintain a Buy rating on Mincor resources (ASX:MCR), although the company’s H1 2023 results were below Bell’s forecasts. They have reduced their price target by 9% to $1.70, and at MCR’s current share price of $1.27, this implies 34% share price growth in a year. 
• Trading Central have identified a bearish signal in Macquarie Group (ASX:MQG), indicating that the stock price may fall from the close of $184.86 to the range of $174 to $176 over 30 days, according to the standard principles of technical analysis. 

Rising bond yields fuelled the sell-off on Wall Street overnight with the benchmark 10-year yield topping 4% for the first time since November, while the 1-year Treasury yield climbed above 5%. Investors also reassessed the outlook for tightening monetary policy and economic growth as key data has been released around the world showing inflation continues to remain stubbornly high in Europe and other key regions. The Dow Jones closed up 0.02%, while the S&P500 fell 0.47% and the Nasdaq fell 0.66%. Salesforce shares soared 13% on Wednesday after the cloud software company posted better-than-expected fourth quarter and full year results including Q4 revenue up 14% to US$8.38bn, while full year revenue rose 22%. The company’s strong results were attributed to cost cutting measures including laying off staff during the quarter as it pushes to become more profitable.

Over in Europe economic data continues to weigh on investor sentiment in the region with local markets there closing mostly lower on Wednesday following the release of a flash estimate into Germany’s harmonised inflation rate showing an increase from 9.2% to 9.3% in February. This comes ahead of Eurozone inflation due out on Tuesday. Germany’s DAX fell 0.39%, the French CAC lost almost half a percent, and in the UK the FTSE100 rose almost half a perfect on Wednesday.

Global markets may face some relief today though buoyed by China releasing its official purchasing managers’ index data for February overnight showing a rise to 52.6 points in February, the highest since April 2012, in a sign the world’s second largest economy is beginning to ramp up manufacturing and overall operations following the removal of its harsh COVID restrictions.

What to watch today:

• In commodities, oil is trading 0.66% higher at US$77.55/barrel, gold is up 0.56% at US$1837/ounce and iron ore is flat at US$126/tonne.
• The Aussie dollar is buying US$0.68, 92.01 Japanese Yen, 56.07 British Pence and NZ$1.08.
• The local market slipped into the red yesterday after Australian GDP data for Q4 was released, showing the economy grew 0.5% over the quarter, which is a slower pace than was expected. This is the fifth straight quarter of growth in the economy but the softest pace in the period amid intense cost-of-living pressures and rising interest rates.
• Ahead of the local trading session here in Australia, the SPI futures are anticipating the ASX to open flat on the second last trading session of the week.
• Stocks trading ex-dividend today include Baby Bunting (ASX:BUB), Woolworths (ASX:WOW), Propel Funeral Partners (ASX:PFP), Coles Group (ASX:COL), Pro Medicus (ASX:PME), Medibank Private (ASX:MPL), Pilbara Minerals (ASX:PLS) and Jumbo Interactive (ASX:JIN). 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:

• Trading Central has identified a bullish signal on Deep Yellow (ASX:DYL) following the formation of a pattern over a period of 22-days which is roughly the same amount of time the share price may rise from the close of $0.68 to the range of $0.90 to $0.96 according to standard principles of technical analysis.
• Bell Potter has downgraded its price target on Bubs Australia (ASX:BUB) to 29cps but maintains a hold rating on this company following the release of the infant formula company’s first half results that focused on costs eating into margins. For the half, Bub’s reported revenue down 6%, an underlying EBITDA loss of $22m, elevated inventory position of $8.4m and expect higher operating cost assumptions between FY23-25.

Wall Street had a choppy final session for the month of February before closing lower on Tuesday as investors digested a slew of economic data and corporate earnings results. Chicago’s PMI fell to 43.6 points for February from 44.3 points in January in another sign the US Fed’s aggressive rate hike stance is having impact across the country. The Dow Jones ended Tuesday’s session down 0.71%, the S&P500 lost 0.1% and the Nasdaq fell 0.3%. The yield on the 10-year US Treasury note ticked higher to 3.94% on Tuesday, its highest level since November. Target shares are up over 1.7% on Tuesday after the retail giant released fourth-quarter earnings results that exceeded expectations, while Zoom video Communications is also up over 1.2% after posting a top and bottom line beat for the fourth quarter.

In Europe overnight, hotter-than-expected inflation data out of Spain and France for February caused a sell-off in the region as the data is the latest sign that inflationary pressures are still running high, adding to concerns that the European Central Bank must continue raising rates to get inflation under control. The STOXX600 fell 0.2%, Germany’s DAX fell 0.11%, the French CAC fell 0.38% and, in the UK, the FTSE100 fell 0.74%.

What to watch today:

• Ahead of the local trading session here in Australia the SPI futures are anticipating the local market to open 0.26% lower.
• In commodities, oil is heading for its fourth straight monthly decline amid stockpiles of the commodity in the US and slower-than-expected demand increase from China post the country reopening. Today, oil is up 1.4% at US$76.76/barrel, gold is up 0.52% at US$1826/ounce and iron ore is down 2.70% at US$126/tonne.
• The highly anticipated Australian GDP growth rate for Q4 is released today which will give an insight into how well the RBA’s attempts have been so far at cooling the stubbornly high inflation down under. The consensus expectation is for a rise of 0.8% following a 0.6% increase in Q3.
• The Aussie dollar is buying US$0.67, 91.68 Japanese Yen, 56.22 British Pence, and NZ$1.09.
• Stocks trading ex-dividend today include Humm Group (ASX:HUM), AMP (ASX:AMP), The Lottery Corporation (ASX:TLC) and Telstra Group (ASX:TLS). If you’ve been thinking about these stocks it might be worth buying in today as stocks trading ex-dividend generally trade lower on the ex-dividend date.

Trading Ideas:

• Trading Central has identified a bullish signal on Resolute Mining (ASX:RSG) following the formation of a pattern over a period of 18-days which is roughly the same amount of time the share price may rise from the close of $0.24 to the range of $0.31 to $0.33 according to standard principles of technical analysis.
• Trading Central has identified a bearish signal on Westpac Banking Group (ASX:WBC) following the formation of a pattern over a period of 99-days which is roughly the same amount of time the share price may fall from the close of $22.53 to the range of $20.50 to $20.90 according to standard principles of technical analysis.

US equities closed in the green overnight, trying to recover some ground after the Wall Street had its worst week of the year. The Dow gained 0.2%, the S&P500 up 0.3% and the Nasdaq rose 0.6%. These moves came as Treasury yields eased, following a jump on Friday. We’re seeing a renewed focus on inflation and again seeing rates driving equities. Investors are also looking ahead to another week in retail earnings. 

European equities were also higher, with all major benchmarks in positive territory. And the European Central Bank has stated that it’ll be hiking rates by another 50 basis points in March, so investors are preparing for that announcement this month. 

What to watch today:

• The Australian market is looking to start the day higher. The SPI futures are suggesting a rise of 0.47% at the open. 
• Reporting season is wrapping up today with the final list of companies set to release their earnings reports today. Some of these companies include DGL Group (ASX:DGL), Mach7 Technologies (ASX:M7T) and Tyro Payments (ASX:TYR). So, with one day to go, this reporting season we’ve seen 268 companies report their earnings. 80 of these beat expectations, 107 were in line with expectations, and 81 companies missed expectations. It’s also been a busy month for brokers – we saw a total of 50 rating upgrades and 38 rating downgrades. 
• Keep watch of the stock going ex-dividend today, as this often sees their share prices fall as investors take their profits. These include Amcor (ASX:AMC), Accent Group (ASX:AX1), Bega Cheese (ASX:BGA), Domino’s Pizza (ASX:DMP), Evolution Mining (ASX:EVN), Origin Energy (ASX:ORG) and Worley (ASX:WOR). 
• In commodities, oil is down, as lingering concerns about a recession-driven demand downturn offset prospects of tighter global supplies. Gold is higher, however still hovering at its weakest level in two months, and iron ore has dropped more than 1.5%, so watch iron ore stocks today. 

Trading Ideas: 

• Bell Potter have a Hold rating on Appen (ASX:APX) and have lowered their price target from $3 to $2.25. The company’s 2022 revenue fell 3% to US$388.5 million, which was slightly below Bell Potter’s forecast of US$393.8 million. Underlying EBITDA fell 39%, but was in line with Bell’s forecast. 
• Bell Potter also maintains their Buy rating on Accent Group (ASX:AX1), after the company beat expectations for H1 and H2 trading has commenced on strong note. AX1 reported EBIT of $81 million, NPAT of $50.7 million and dividends per share of 12cps. 

The local market ended Friday’s session 0.3% higher as a surge in tech stocks led the markets higher, while every sector aside from materials stocks also finished the day in the green.

The winning stocks from Friday’s session were led by Bega Cheese (ASX:BGA) adding over 7.5% on the back of the company’s first half results being released, while Brambles (ASX:BXB) and Block Inc (ASX:SQ2) each also added over 7.4 and 5.8% respectively. On the losing end, Regis Resources (ASX:RRL) fell almost 5% after releasing first half results and providing a mineral resource update on its Tropicana project.

The most traded stocks by Bell Direct clients on Friday were AGL Energy (ASX:AGL), Pilbara Minerals (ASX:PLS) and Core Lithium (ASX:CXO).

For the week, the key index posted a 0.54% loss despite the Utilities sector gaining over 6% buoyed by Origin Energy jumped over 15% on the back of receiving a revised takeover offer for $8.90/share.

Over in the US, Wall St closed lower on Friday as, yet another inflation-related report came in stronger than expected. Personal Consumption Expenditure price index, the Fed’s preferred measure of inflation in the US, jumped to 4.7% in January which well exceeded expectations of a rise to 4.3%. The Dow Jones fell 1%, the S&P500 also lost 1% and the tech-heavy Nasdaq slid 1.7%, to wrap up Wall St’s worst week in 2023.

Over in Europe on Friday, markets also closed lower in the region as investors assessed the latest corporate earnings results in addition to economic data out of the US. Germany’s DAX fell 1.72%, the French CAC lost 1.78% and in the UK the FTSE 100 fell 0.37%.

What to watch today:

• This week Q4 GDP growth rate in Australia out on Wednesday with consensus expecting a growth rate of 0.9%, up from 0.6% growth in Q3. If the figure comes in at 0.9% it will make it the fifth straight quarter of growth in the economy, and a higher rise than Q3 which may cause a market sell-off on Wednesday.
• Preliminary Australian retail sales data for January is released in just over an hour with consensus expecting a rise of 1.2%, following a 3.9% decline in December.
• Over in the US, several Federal Reserve officials will speak this week, giving clues into the size of the next interest rate hike so investors locally and globally will be keeping an eye out for these speeches, and we may see markets move accordingly post these speeches.
• On the commodities front, oil is trading 1.23% higher at US$76.23/barrel, gold is down 0.64% at US$1810.90/ounce and iron ore is trading 1.13% lower at US$131.50/tonne.
• The Aussie dollar is buying US$0.67, 91.81 Japanese yen, 56.04 British pence and NZ$1.09.
• Ahead of the local trading session the SPI futures are anticipating the ASX to open sharply lower amid the global sell-off that ended the last trading week on a sour note.

Trading Ideas:

• Trading Central has identified a bullish signal on Lake Resources (ASX:LKE) 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 $0.61 to the range of $0.87 to $0.93 according to standard principles of technical analysis.
• Trading Central has identified a bearish signal on Sandfire Resources (ASX:SFR) following the formation of a pattern over a period of 73-days which is roughly the same amount of time the share price may fall from the close of $6.22 to the range of $4.00 to $4.40 according to standard principles of technical analysis.

The Aussie share market declined 0.84% (Mon-Thu), as investors reacted to the latest company earnings announcements. This reporting season so far, we've seen 192 companies report, 62 beat expectations, 71 came in-line with expectations, while 59 companies fell short of expectations. 
 
In this week's wrap, Grady covers:

• (0:50) Why your weekly food shop has increased in price
• (2:03) The shift from coal to green operations by the big miners 
• (3:44) Qantas' turns a profit, but raises CAPEX
• (4:32) The best performing stocks in the ASX200
• (5:59) The most traded stocks & ETFs by Bell Direct clients
• (6:30) One economic news item to watch out for

Overnight in the US, equities advanced higher in a late-day rally, with all three major benchmarks in positive territory. European stocks also moved higher in response to the Federal Reserve’s meeting minutes, which showed that they’re still committed to fighting inflation with interest rate hikes. Equities were in the green, with the STOXX 600, Germany’s DAX and France’s CAC all closing in the green, while the FTSE 100 ended the session lower. 

What to watch today:

• The Australian market is set to open slightly higher this morning, with the SPI futures suggesting a rise of 0.06%. 
• In commodities: 
  • Oil prices are rallying, currently trading around US$75.56 per barrel, ending two days of losses, amid lingering concerns about tight global supplies. Russia has announced its plans to cut oil exports from its western ports by up to 25% in March, exceeding its announced output curbs of 500,00 barrels per day. The market is also expecting China’s oil imports to hit a record high this year, amid rising demand for transportation fuel and as new refineries come online. 
  • US natural gas is trading 8% higher, however remained not far from a 29-month low, as the market monitors demand and weather forecasts, with recent projections pointing to cold-than-expected temperatures. 
  • Iron ore is trading at its strongest level in 8-months, with signs of stronger demand for Chinese construction, grouped with supply concerns. 
  • Gold has held its recent decline, at its lowest in 8-weeks, after the Fed’s meeting minutes shoed that policymakers will continue interest rate hikes. 
• Companies reporting today include Allkem (ASX:AKE), Aristocrat Leisure (ASX:ALL), BWX (ASX:BWX), Brambles (ASX:BXB), Harvey Norman Holdings (ASX:HVN), Link Administration Holdings (ASX:LNK)and Mineral Resources (ASX:MIN). 

Trading Ideas:

• Bell Potter maintain a BUY rating on Eagers Automotive (ASX:APE) after the company reported its earnings. 2022 revenue fell, but was in line with Bell Potter’s expectations. Underlying operating profit before tax grew 1% to $405.2 million and was 3% above Bell’s forecast of $392.4 million. The company provided strong revenue guidance and forecasts were upgraded. Bell Potter’s price target dropped to $15 from $15.50, and at APE’s current share price of $13, this implies 15.4% share price growth in a year. 
• Trading Central has identified a bearish signal in Rio Tinto (ASX:RIO) indicating that the stock price may close from the close of $123.40 to the range of $114.50 to $116.25 over 62 days, according to the standard principles of technical analysis. 

Wall St closed mixed on Wednesday following the release of the Federal Reserve’s latest meeting minutes from earlier this month. The minutes outlined most Federal Reserve policymakers were in favour of slowing the pace of rate hikes in a bid to assess the economy’s progress, however policymakers also agreed unanimously that ongoing increases in the nation’s cash rate would be appropriate. This caused a mixed reaction across Wall St, and enhances fears of a global recession as the cost of living continues to rise.

The Dow Jones ended the midweek session down 0.26% and the S&P500 lost 0.16%, but the Nasdaq rose 0.13%.

Earlier on Wednesday, European stocks closed lower again on Thursday as investors awaited the release of the US Fed’s meeting minutes to gauge insight into whether the Fed will remain hawkish on its stance to tackle inflation. Investors in the region also sold out of markets across Europe also on the back of downbeat earnings reports including British bank Lloyds reporting flat profit growth on the prior year. The STOXX600 fell 0.3%, Germany’s DAX closed flat, the French CAC fell 0.13% and, in the UK, the FTSE100 shed 0.59%.

Taking a look at commodities, iron ore is again the only key commodity trading higher this morning, up 2.31% at US$133/tonne, while oil is down 3.4% at US$73.76/barrel and gold is down almost half a percent at US$1825/ounce.

What to watch today:

• Ahead of the local trading session, the SPI futures are anticipating the ASX to open 0.3% lower, extending on yesterday’s losses and on the back of the continued global sell-off overnight.
• Australian wages and construction data out yesterday add further support for the RBA to continue its steady rate hike path as opposed to considering any 50-bps hikes in future. Wages growth in Q4 showed growth of just 0.8% for the quarter, which was lower than expectations of 1%, while construction work done in the fourth quarter fell by 0.4% which was well below consensus expectations of a 1.5% increase.
• Stocks trading ex-dividend today include Codan (ASX:CDA), Whitehaven Coal (ASX:WHC), IRESS (ASX:IRE) and JB Hi-Fi Group (ASX:JBH). 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 downgraded its price target on Clean Seas Seafood (ASX:CSS) from $0.85 to $0.75 cents per share, but maintain a speculative buy rating on the company following the release of the company’s first half results which were weaker than expected including revenue down 22% YoY and higher feed costs, up 20% YoY. Production costs are also likely to run above previous targets for the near term however for the most part are mitigated by higher average selling prices.
• Trading Central has identified a bullish signal on Xtek (ASX:XTE) following the formation of a pattern over a period of 21-days which is roughly the same amount of time the share price may rise from 73 cents to the range of 83 cents to 85 cents according to standard principles of technical analysis.