Between the Bells

Ahead of the Federal Reserve’s rate decision, US equities closed in the red overnight, pausing the rally we’ve seen in Wall St. Investors are always preparing for the busiest week of the US earnings season. 

The Dow Jones dropped 0.77%, the Nasdaq down 1.96% and the S&P500 down 1.3%. Communications services and information technology were among the biggest laggards in the S&P500, while mega-cap tech stocks such as Meta and Alphabet are down more than 2%. 

Over in Europe, Germany’s DAX, France’s CAC and the STOXX 600 all closed in the red, while the FTSE gained 0.25%. 

What to watch today:

• Ahead of the local trading day, The market is set to open slightly lower this morning, with the SPI futures suggesting a fall of 0.07%. 
• In commodities, the price of oil has dropped 2.25% amid robust Russian exports and persistent fears of the global economic slowdown. Gold is trading just 0.2% lower, while iron ore is flat. 
• There are a few companies set to release their quarterly reports today, including Beach Energy (ASX:BPT), Gold Road Resources (ASX:GOR), Megaport (ASX:MP1), Nickel Industries (ASX:NIC), PointsBet Holdings (ASX:PBH) and Syrah Resources (ASX:SYR). 

Trading Ideas:

• Bell Potter maintain a BUY rating on Alkane Resources (ASX:ALK), an exploration, mining and investment company. The company is an established gold producer and maintains a multicommodity exploration portfolio. 
• Trading Central has identified a bullish signal in Boss Energy (ASX:BOE), indicating that the stock price may rise from the close of $2.63 to the range of $2.82 to $2.88 over 36 days, according to the standard principles of technical analysis. 

The ASX started the week in negative territory, closing the day down 0.16% as insurance companies weighed on the key index today. Insurance Australia Group (ASX:IAG) and Suncorp (ASX:SUN) each fell over 3% due to catastrophic flooding in New Zealand increasing investor fears of high insurance claim numbers to come for providers.

Technology stocks surged ahead more than 2% today amid the ongoing rally for growth stocks in the US and locally as investors regain appetite for higher risk growth stocks amid renewed hopes for a slowdown in aggressive rate hike action by the Fed and RBA.

OZ Minerals (ASX:OZL) shares bounced today as investors digested the mining giant’s trading update including the warning that the cost of producing South Australian copper could incur higher electricity costs moving forward. During the fourth quarter though, the company reported its highest ever group quarterly copper production on record and met guidance for FY22. The report comes at the same time the company is recommending its shareholders accept BHP’s $9.6bn takeover offer when they vote on the bid in early April.

Pro Medicus (ASX:PME) shares rose more than 1.3% today after the leading health imaging provider announced it has signed an 8-year contact with US-based Samaritan Health Services worth $12m for Pro Medicus’ US-based subsidiary, Visage Imaging to replace legacy PACS throughout the Samaritan Health Services network.

The winning stocks today were led by Core Lithium (ASX:CXO) rallying 8.85% after the company released quarterly results including additional night shift by the company’s contractor Primero Group to ensure construction of the Dense Media Separation plant remains on schedule for production of first spodumene concentrate in the first half of 2023. Novonix (ASX:NVX) added 7.5% today and Lynas Rare Earths (ASX:LYC) rallied just under 7% today. And on the losing end Champion Iron (ASX:CIA) fell 7.1%, ResMed (ASX:RMD) lost 6.81% and Insurance Australia Group (ASX:IAG) ended the day down 3.74%.

The most traded stocks by Bell Direct clients today were Core Lithium (ASX:CXO), Westpac Banking Corporation (ASX:WBC) and ResMed (ASX:RMD).

On the commodities front this afternoon, oil is trading 0.4% lower at US$79.38/barrel, gold is up 0.26% at US$1932/ounce and iron ore is flat at US$124.50/tonne.

The Aussie dollar is buying US$0.71, 91.84 Japanese Yen, 57 British Pence and NZ$1.09.

The local market ended the week 0.8% higher after gaining 0.34% on Friday, buoyed by a rally for consumer staples and information technology stocks. Energy stocks were sharply sold off on Friday, with the sector closing down 1.84% at the end of the session amid growing uncertainty from global recession fears and geopolitical tensions.

The winning stocks from Friday’s session were led by Megaport (ASX:MP1) jumping 7.22%, while Liontown Resources (ASX:LTR) added 5.2% and Karoon Energy (ASX:KAR) rose 4.3%. On the losing end, New Hope Corporation (ASX:NHC) tumbled over 9%, Whitehaven Coal (ASX:WHC) lost 6.64% and Regis Resources (ASX:RRL) fell over 4.8%.

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

Over in the US on Friday, stocks rallied to end the week higher boosted by a growth-sectors like technology as investor fears of the Fed continuing its aggressive rate hike stance, begin to ease on the back of favourable economic data including personal spending in the US falling by 0.2% for the second consecutive month in December.

What to watch today:

• The week ahead is a big week on the reporting season front for big tech companies like Meta, Alphabet and Apple. Following a turbulent year for beaten down technology stocks last year, investors are hoping for growth outlook this reporting season from the big tech giants, especially in the wake of mass lay-offs from the likes of Google in recent weeks.
• The Nasdaq added almost 1% on Friday while the Dow Jones rose 0.08% and the S&P500 jumped 0.25%.
• In Europe, markets closed marginally higher on Friday after US economic data came in stronger than expected on Thursday with the US economy expanding by 2.9% YoY during the fourth quarter, beating expectations and maintaining recession fears. Germany’s DAX rose 0.11%, the French CAC added 0.02% and the FTSE100 in the UK rose just 0.05%.
• Ahead of the local trading session, the SPI futures are anticipating the local market to open 0.16% higher to start the new trading week.
• On the economic data front today, there is no local economic data out today, however investors will be awaiting the release of preliminary retail sales data for December in Australia which is out tomorrow.
   
  • Taking a look at commodities, oil is trading down 1.64% at US$79.68/barrel, gold is down 0.05% at US$1927.97/ounce and iron ore is trading flat at US$124.50/tonne.
• The Aussie dollar is buying, 71 US cents, 92.12 Japanese Yen, 57.76 British Pence and 1 New Zealand dollar and 10 cents.

Trading Ideas:

• Trading Central has identified a bullish signal on Lake Resources (ASX:LKE) 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 the close of $0.82 to the range of $0.98 to $1.02 according to standard principles of technical analysis.
• Trading Central has also identified a bearish signal on Nufarm (ASX:NUF) following the formation of a pattern over a period of 7-days which is roughly the same amount of time the share price may fall from the close of $5.93 to the range of $5.58 to $5.64 according to standard principles of technical analysis.

Australia’s inflation rate data for the December quarter released today showed the country’s inflation rose to 7.8% for the twelve months to December 2022, or 1.9% for the quarter, which exceeded economists’ expectations, and adding to investor fears of further interest rate hikes to tackle the stubbornly high inflation. Travel and electricity contributed the largest price rises over the December quarter of 2023, while travel and building new homes contributed the largest price hikes over the 12-months.

Following the release of the data, the ASX sharply declined before steadily climbing in afternoon trade to close the day down 0.29% as a sell-off in energy stocks and info tech stocks weighed on the key index.

Company trading updates continue being released and included in today’s announcements were updates from Mineral Resources (ASX:MIN), St Barbara (ASX:SBM) and Best & Less (ASX:BST).

Mineral Resources (ASX:MIN) shares fell more than 2% today on the release of Q2 results including delays to the expansion of production capacity at the company’s Mt Marion lithium project due to delayed supply of processing equipment and labour shortages, which has caused FY23 shipment guidance to be reduced, and Free on Board (FOB) costs to be increased. Iron ore shipments for the quarter were also down 9% QoQ, while spodumene concentrate shipped in the quarter rose 18% and a total of 7418 tonnes of lithium hydroxide and lithium carbonate was converted, with 6612 tonnes sold during the quarter, up 75% QoQ.

Investors fled St Barbara (ASX:SBM) shares today, causing the gold miner’s share price to fall over 16% on the release of a Q2 trading update including gold production of 60,976 ounces at an All-in-sustaining-cost of $2666/ounce which implies lower production and higher costs quarter on quarter.

Best & Less (ASX:BST) shares were also caught up in the trading update related sell-off today after the value retailer released an update for the 26-weeks ended January 1, 2023, including total revenue up 13% on the PCP, however like-for-like sales were down 4.9%, online sales were down 29.8% and NPAT down 31.8% on the prior first half to $13.7m.

The winning stocks from today’s session were News Corp (ASX:NWS) rallying 6.25%, Monadelphous (ASX:MND) adding 5.38% and IPH (ASX:IPH) jumping over 4%. And on the losing end West African Resources (ASX:WAF) took the biggest hit, falling almost 7.5%, while Evolution Mining (ASX:EVN) losing 5.9% and Ramelius Resources (ASX:RMS) ending the day down almost 5%.

The most traded stocks by Bell Direct clients were Core Lithium (ASX:CXO), Sierra Rutile (ASX:SRX), and Vanguard Australian Shares Index ETF (ASX:VAS).

Taking a look at commodities this afternoon, oil has steadied today as investors weigh demand recovery hopes from the world’s top crude importer China, against fears of a global economic slowdown. Oil is trading at US$80.33/barrel this afternoon. Gold is down 0.31% at US$1931.56/ounce and iron ore is flat at US$124.50/tonne.

The Aussie dollar is buying US$0.71, 92.61 Japanese Yen, 57.12 British Pence, NZ$1.09.

There will be no weekly wrap this week due to the January public holiday. We will return to normal scheduling from Monday 30th January.

The US markets turned from negative to positive in afternoon trade before closing mixed as investors digested an array of economic data released. US flash PMI data from US business activity across manufacturing and services remained below par, indicating the impact of tightening financial conditions on growth and adding to hopes that the Fed is on track to ease its aggressive rate hike stance soon. The Dow Jones closed 0.4% higher, the S&P500 closed flat and the Nasdaq fell just 0.1%.

Retail company Bed Bath and Beyond jumped over 13% on Tuesday as investors continue piling into the heavily shorted company despite the company warning of a potential bankruptcy.

General Electric rallied over 1% after posting quarterly results that topped expectations amid the company working through a multi-year program to cut debt and simplify its operations.

Over in Europe, markets closed mixed despite PMI data in the region showing services and manufacturing sectors in the eurozone returned to modest growth in December, boosting hopes that the 20-member currency bloc may avoid recession. The stronger-than-expected PMI data reinforced expectations that the European Central Bank will maintain its aggressive stance against inflation at the upcoming meeting on the 2nd February. The PMI data also boosted business confidence which rose the most since the aftermath of the COVID-19 outbreak despite high inflation and rising borrowing costs. The STOXX600 fell 0.2% driven by losses in healthcare, oil and gas stocks, while Germany’s DAX fell 0.07%, the French CAC rallied 0.26% and the FTSE100 in the UK fell 0.35%.

Swiss watchmaker Swatch Group shares rose more than 5% on Tuesday after the company reported a 2.5% increase in 2022 sales and said it was positive about recovery especially in the Chinese market.

On the commodities front, oil is trading 1.53% lower at US$80.35/barrel, gold is up 0.15% at US$1934/ounce, and iron ore is flat at US$124.5/tonne.

What to watch today:

• Ahead of the local trading session here in Australia, the SPI futures are anticipating the ASX to open the midweek session 0.22% lower despite the afternoon rally on Wall St.
• The Aussie dollar is buying 70 US cents, 91.57 Japanese Yen, 56.71 British pence and 1 New Zealand Dollar and 8 cents.
• On the economic calendar today, the highly anticipated inflation rate data for Australia in the fourth quarter will be released at 11:30am AEDT with the market expecting a rise to 7.6% Year on Year from 7.3% in Q3.

Trading Ideas:

• Trading Central has identified a bullish signal on Galan Lithium (ASX:GLN) following the formation of a pattern over a period of 33-days which is roughly the same amount of time the share price may rise from the close of $1.23 to the range of $1.47 to $1.53 according to standard principles of technical analysis.
• Trading Central has also identified a bullish signal on Breville Group (ASX:BRG) following the formation of a pattern over a period of 112-days which is roughly the same amount of time the share price may rise form the close of $22.39 to the range of $25.10 to $26 according to standard principles of technical analysis.

The ASX extended its green run into Tuesday, adding 0.44% at the closing bell driven by a surge in real estate and technology stocks. Lithium stocks took flight today after UBS raised its rating on a number of key players including upgrading Pilbara Minerals (ASX:PLS) to Neutral, upgrading Mineral Resources (ASX:MIN) to Buy and upgrading lithium price outlook amid China’s reopening.

Cooper Energy (ASX:COE) shares came under pressure today after the oil and gas company released a Q2 update including revenues down 17% due to lower production especially at its Orbost gas processing plant and lower average gas prices.
Zip shares plunged more than 9% today after the buy now, pay later company released a Q2. Despite reporting a record quarter with record quarterly transaction volume up 22% to $2.7bn, record group quarterly revenue of $188m, record transaction numbers up 15% and cash transaction margin lifting 2.6%. For the first time, the company’s US operations delivered positive cash EBTDA in November and December. The company may have had a record quarter, but it still continues to burn through cash with available cash and liquidity falling almost 50% to $78.7m from the prior quarter.

Retail giant Myer (ASX:MYR) rallied more than 4% today after also releasing a trading update including sales growing 24.8% in the five months ended December 31, which is the best sales on record for the first five months, according to CEO John King.

The winning stocks from today’s session were Breville Group (ASX:BRG) adding over 7.5%, Block Inc (ASX:SQ2) rallying 5.7% and Mineral Resources (ASX:MIN) lifting 5.3%. And on the losing end Telix Pharmaceuticals (ASX:TLX) fell 3.45%, Imugene (ASX:IMU) lost 3.23% and Cochlear (ASX:COH) fell 2.53%.

The most traded stocks by Bell Direct clients today were BHP Group (ASX:BHP), Mineral Resources (ASX:MIN) and IGO (ASX:IGO).

On the economic data front today, NAB Business Confidence data for December was released today and came in at -1 point for the holiday month, which was the third consecutive decline but moderately higher than the 4-point drop in November, as pricing pressure began to ease hinting toward a likely peak in inflation.

Taking a look at commodities, oil is trading 0.25% higher at US$81.81/barrel, gold is slightly higher at US$1932/ounce, and iron ore is flat at US$124.50/tonne.

The Aussie dollar is buying US$0.70 US cents, 91.51 Japanese Yen, 56.81 British pence and NZ$1.08.

The US Market rallied to start the week, led by the tech-heavy Nasdaq jumping more than 2% as investors weigh the Fed’s rate path moving forward in favour of a slowdown in rate hikes to come. Favourable economic data released last week showed a decline in wholesale and retail sales in a sign consumer spending is also starting to cool. The Dow Jones added 0.76% to start the week and the S&P500 rallied 1.19%. Semiconductor shares, as well as Apple and Tesla shares all climbed on Monday amid hopes that the reopening of China would stimulate business for these tech companies.

In Europe, markets started the week on a positive note as investors globally increasingly believe the Federal Reserve is ready to slow its rate hike pace amid signs of cooling growth in the US economy. Company earnings reports out in Europe also made waves yesterday with German fragrance and flavouring producer Symrise tumbling 7% after missing full year earnings expectations, while French liquor company Remy Cointreau shares rose 3% after Citigroup raised its rating from neutral to buy and raised its price target on the company.

Germany’s DAX closed almost half a percent higher on Monday, while the French CAC added 0.52% and in the UK, the FTSE100 rose 0.18%.

What to watch today:

• Ahead of the local trading session, the SPI futures are expecting the ASX to open 0.31% higher on the back of a strong session on Wall St overnight.
• On the commodities front, oil is trading just 0.05% lower at US$81.59/barrel, gold is up 0.12% at US$1928.88/ounce, and iron ore is flat at US$124.50/tonne.
• The Aussie dollar is buying US$0.70 US cents, 91.81 Japanese yen, 56.52 British pence, and NZ$1.08.
• On the economic calendar today, NAB business confidence data for December is released with consensus expecting a rise of 3 points to -1 points for the month, after a fall of 4 points in November.

Trading Ideas:

• Bell Potter has downgraded its price target on Allkem (ASX:AKE) from $19.45 to $19.36 but maintains a buy rating on the lithium company following the release of Q2 results. Bell Potter sees despite a record quarter at the company’s flagship Olaroz operations, the Mt Cattlin project December quarter production of spodumene concentrate fell short of Bell Potter expectations and costs exceeded expectations. Bell Potter sees Allkem is through the worst at Mt Cattlin but expects an ambitious recovery in the second half of the financial year.
• Trading Central has identified a bullish signal on Ardent Leisure Group (ASX:ALG) following the formation of a pattern over a period of 61-days which is roughly the same amount of time the share price may rise from the close of $0.61 to the range of $0.74 to $0.78 according to standard principles of technical analysis.

The ASX seesawed throughout the first trading session of the week before closing just 0.07% higher as strong gains in the tech and energy sectors offset losses in the utilities sector.

Pilbara Minerals (ASX:PLS) dominated the market gains again after releasing a production update last week including production and revenue coming in ahead of analysts’ expectations, which also prompted Morgans to reiterate their add rating on PLS with an improved price target of $5.40, announced today.

Australian based, international oil and gas exploration and production company Karoon Energy also soared over 7% today after announcing an updated assessment of reserves and resources at its 100% owned Santos Basin concession, BM-S-40 in Brazil, where the revised assessment has found better-than-expected performance at the existing wells. Proved and Probable reserves also increased 23% compared to 30 June 2022.

Food price inflation at Australia’s two largest supermarkets rose to an average of 9.2% across the December quarter, from an average of 8.2% in the September quarter according to UBS. The fresh food category had the steepest food inflation, led by the dairy and meat sector.

The winning stocks from today’s session were led by Karoon Energy (ASX:KAR) rallying over 7.41%, Liontown Resources (ASX:LTR) recovering from last week’s sell-off to climb 6.91% and Pilbara Minerals (ASX:PLS) lifted 6.15%.

And on the losing end, Fisher and Paykel Healthcare (ASX:FPH) fell 2.84%, Adbri (ASX:ABC) lost 2.72% and Chalice Mining (ASX:CHN) shed 2.52% to start the week.

The most traded stocks by Bell Direct clients were Woodside Energy (ASX:WDS), Core Lithium (ASX:CXO) and Allkem (ASX:AKE).

On the economic calendar front today, the Bank of Japan’s meeting minutes were released giving insight into the policy meeting that resulted in the surprise no change to the country’s easy monetary policy.

On the commodities front today, oil has dipped 0.4% to US$81.32/barrel due to the Lunar New Year holiday in Asia but outlook is still favourable for strong demand in 2023 as China, the world’s largest importer of oil, reopens. Coal is down 3.45% at US$350.95/ton, gold is up slightly at US$1927/ounce, and iron ore is flat at US$124.50/tonne.

The Aussie dollar is buying 70 US cents, 90.57 Japanese Yen, 56 British Pence, and 1 New Zealand dollar and 8 cents.

The local market ended last week on a 0.23% gain at the closing bell of Friday’s session, driven by a surge in energy and materials stocks on the back of rising commodity prices. Communication services and consumer discretionary stocks came under pressure to close in the red on the last trading session of the week.

Quarterly reports and company trading updates continued dominating market movements last week both locally and overseas and are expected to continue doing so for at least the next few weeks as investors respond to company performance amid challenging market conditions especially in this rising interest rate environment.

The winning stocks from Friday’s session were Pilbara Minerals rising 13% on the back of a strong trading update including a 10% increase in delivered spodumene concentrate on the prior quarter. Whitehaven Coal rallied over 6% on Friday and Fisher and Paykel Healthcare added 4.87% to end the week.

On the losing end, Liontown Resources tumbled over 8%, while Nanosonics fell 6.64% and Pinnacle Investment Management lost 3.76%.

The most traded stocks by Bell Direct clients on Friday were Whitehaven Coal, Rio Tinto and Terracom.

Over in the US on Friday, tech shares led the broad market rally as investors responded to some positive corporate news including Google’s parent company Alphabet cutting 12,000 staff to cut costs as growth in the business slows, which prompted a 5% surge in Alphabet’s share price. Netflix also surged on better-than-expect subscriber data announced in the company’s latest results update. The Nasdaq jumped 2.7%, the Dow Jones added 1% and the S&P500 rallied 1.9% on Friday.

Investors are keeping a close eye on any news around the Fed’s upcoming interest rate meeting from January 31 to February 1 where it is expected the Fed will ease its current aggressive stance on rate hikes to increase the nations’ cash rate by 25-basis points amid signs the economy is beginning to cool.

Markets in Europe rebounded from Thursday’s sell-off driven by weaker-than-expected retail sales out of the US, to close higher on Friday as investors in the region also keep a firm eye on updates out of the Fed ahead of the next policy meeting. Germany’s DAX added 0.76%, the French CAC rallied 0.63% and in the UK, the FTSE100 rose 0.3%.

What to watch today:

• Ahead of the local trading session, the SPI futures is anticipating the ASX to open 0.46% higher, buoyed by the strong session on Wall Street on Friday.
• On the economic data front today, the Bank of Japan policy meeting minutes will be released, which will give investors an insight into the rate outlook in the region following the shock maintenance of the country’s extremely low interest rate of -0.1% at the last policy meeting.
• Taking a look at commodities, oil is trading higher at US$81.64/barrel, gold is down almost 1% at US$1913/ounce and iron ore is flat at US$124.50/tonne.
• The Aussie Dollar is buying US$070, 90.25 Japanese Yen, 56.19 British Pence and NZ$1.08.

Trading Ideas:

• Bell Potter maintain a BUY rating on IVE Group (ASX:IGL), and while there is no change in forecasts, Bell Potter have updated each valuation used in the determination of our price target for market movements and time creep. The price target has increased from $2.60 to $2.75, and at IGL’s current share price of $2.37, this implies 16% share price growth in a year.
• Trading Central have identified a bullish signal in Pilbara Minerals (ASX:PLS) indicating that the stock price may rise from the close of $4.55 to the range of $4.80 to $4.90 over 26 days according to the standard principles of technical analysis.

US markets fell again on Thursday for a third straight session as investors are increasingly concerned that the Fed will continue raising interest rates despite signs the economy is beginning to cool. The increasing concerns follow new jobless claims in the US hitting the lowest level since June last week in a sign the labour market remains resilient despite the slowing economy. The Dow Jones and S&P500 each fell 0.76%, while the Nasdaq closed the day down 0.96%. US investors continue eyeing off corporate earnings results which today will be released by Netflix after the bell with analysts’ expecting EPS of $0.45/share, a decline of 66.3% from the prior corresponding period, and a modest gain of 1.8% in revenue to US$7.85bn. Shares in the streaming giant fell 3.23% on Thursday ahead of the results being released. JPMorgan Strategist Marko Kolanovic said a recession hasn’t been priced into equities just yet, meaning stocks could have further downside from their current positions. He said ‘US industrials and non-tech large caps (Dow Jones) as well as European stocks are basically flat over the past year, and close to previous highs’.

Over in Europe, markets closed lower on Thursday as investor fears of a global recession continue to weigh on sentiment, especially on the outlook front which is an item high up on the agenda at this week’s World Economic Forum in Davos.

The STOXX600 closed down 1.6%, Germany’s DAX fell 1.72%, the French CAC lost 1.86% and in the UK, the FTSE100 closed the day down 1.07%.

What to watch today:

• Ahead of the local trading session here in Australia, the SPI futures are anticipating the local market to open 0.01% lower following the turbulent session on Wall St overnight. 
• On the commodities front, oil is trading 1.21% higher at US$80.44/barrel, gold is up 1.60% at US$1934/ounce, and iron ore is trading more than 2% higher at US$123/tonne.
• In economic data, Japan’s inflation rate data for December will be released at 10:30am AEDT with consensus expecting inflation to rise 0.2% to 4% for the month.
• The Aussie dollar is buying US$0.69, 88.82 Japanese yen, 55.73 British pence and NZ$1.08.

Trading Ideas:

• Trading Central has identified a bullish signal on Bubs Australia (ASX:BUB) following the formation of a pattern over a period of 39-days which is roughly the same amount of time the share price may rise from the close of $0.34 to the range of $0.38-$0.40 according to standard principles of technical analysis.
• Trading Central has identified a bullish signal on BCI Minerals (ASX:BCI) following the formation of a pattern over a period of 143 days which is roughly the same amount of time the share price may rise from the close of $0.29 to the range of $0.33-$0.35 according to standard principles of technical analysis.