Between the Bells

The local market took no lead from Wall St overnight, closing Thursday’s session 0.57% higher on the release of softer than expected jobs data out for December. Materials stocks led the gains today, as investors piled back into the sector following a few sessions of selling out earlier in the week, while tech stocks were sold off today.

In economic data out today, Australia’s jobs data for December was revealed and was vastly different to the figures economists were expecting. For the month, Australia’s economy lost 14,644 jobs and the unemployment rate rose to 3.5%, compared to the expected plateau of 3.4% jobless rate and the adding of 22,500 jobs. The softer-than-expected jobs data fuelled the rally locally today as interest rate hike fears cooled and economies begin showing signs of slowing down globally.

Nanosonics (ASX:NAN) soared 8% today after releasing a first half trading update including total revenue increasing 35% YoY to $81.6m, gross profit up 39% to $64.4m and global installed base rose to 31,120 units. The company is starting to see benefits of its recent sales model switch in the US to an in-house model from a distributor model. Netwealth (ASX:NWL) shares on the other hand were sharply sold off today after the company released a quarterly update including a significant slowdown in net inflows, down 42% on the PCP to $$2.087bn.

The winning stocks for today were led by Nanosonics (ASX:NAN) rallying over 8%, Viva Energy (ASX:VEA) adding 4.74% and Pexa Group (ASX:PXA) lifting 3.77%. And on the losing end of the market, Netwealth Group (ASX:NWL) fell 9.19%, Novonix (ASX:NVX) lost 7.27% and Alumina (ASX:AWC) shed 6.76%.

The most traded stocks by Bell Direct clients today were Rio Tinto (ASX:RIO), BHP Group (ASX:BHP) and Allkem (ASX:AKE).

Oil has taken a hit today on increased recession fears following disappointing US retail data for December showing US retail sales declined more than expected and producer prices fell the most since April 2020. As a result of the renewed recession fears, oil traded at US$79/barrel today. Iron ore is trading 2.07% higher at US$123/tonne and gold has also rebounded to trade 0.35% higher at US$1910.34/ounce.

The Aussie dollar is buying US$0.69, 88.38 Japanese Yen, 56.51 British Pence and NZ$1.08.

Disappointing retail sales data released in the US overnight saw Wall Street close in the red. The Dow Jones tumbled 1.8%, as investors took their profits from the strong start to the year. The S&P500 lost 1.6% and the Nasdaq down 1.2% 

European markets were mixed as uncertainty persisted on the economic outlook, which is a key topic of debate on the agenda at the World Economic Forum in Davos this week. The STOXX 600 gained 0.2% and France’s CAC up 1%, while Germany’s DAX closed flat and the FTSE100 closed 0.3% lower. 

What to watch today:

• The SPI futures are suggesting the Australian market will drop 0.42% at the open this morning. 
• BHP (ASX:BHP)’s share price will be on watch today, with the mining giant set to releasee its second quarter production update. 
• In commodities, oil is more than 1% in the red, at levels last seen in early December. Gold is trading higher at around US$1,903 per ounce, while iron ore is down to US$120.50 per tonne, dropping from the seven-month high of US$127 touched in the previous session. 
• In economic data, at 11:30am AEDT the unemployment rate for December will be announced, expected to remain unchanged at 3.4%. 

Trading Ideas:

• Bell Potter maintains a BUY rating on Allkem (ASX:AKE) and have lowered their price target from $19.45 to $19.36. At AKE’s current share price of $12.25, this implies 58% share price growth in a year. 
• Trading Central have identified a bullish signal in Ampol (ASX:ALD), indicating that the stock price may rise from the close of $29.32 to the range $31.30 - $31.80, over 61 days according to the standard principles of technical analysis. 

The ASX had another lacklustre session today closing the day up just 0.1% as investors continued to sell off materials and utilities stocks, while piling into technology and healthcare stocks.

Allkem (ASX:AKE) shares dipped today after the lithium producer released a December quarter trading updating including record sales revenue of US$151m from the company’s flagship Olaroz operation despite softer sales units, and revenue of US$83 million from the Mt Cattlin operation. The company’s Naraha project also successfully achieved first production of lithium hydroxide and the product quality exceeded expectations. AKE shares were caught up in the lithium stock sell-off in recent days though as demand outlook for EVs has been dampened by Tesla’s price reductions and lithium price outlook reports. Ampol (ASX:ALD) shares rallied today after the petroleum company released fourth quarter results including the Lytton Refiner Margin remaining above historical levels averaging US$11.75 per barrel, while refinery production rose to 1580 ML, from 1546 ML in the third quarter including planned maintenance activities. Qantas (ASX:QAN) shares dipped in afternoon trade following the issue of a mayday call on QF144 from Auckland to Sydney just after 2pm today. The plane landed safely just after 3pm despite issuing the mayday call amid engine issues. Qantas shares rebounded in the last hour of trade after the plane landed safely to close the day up 0.76%.

The winning stocks from today’s session were, led by Sayona Mining (ASX:SYA) jumping almost 9% despite no price sensitive news out of the company today, while Telix Pharmaceuticals (ASX:TLX) rose 8.6% and Block Inc (ASX:SQ2) jumped 4.57% today. The stocks that weighed on the market today included Hub24 (ASX:HUB) falling 4.8% a day after the company provided quarterly results, Gold Road Resources (ASX:GOR) losing 4.56% and Capricorn Metals (ASX:CMM) shedding 4.53%.

The most traded stocks by Bell Direct clients today were St Barbara (ASX:SBM), Macquarie Group (ASX:MQG) and Telstra (ASX:TLS).

On the economic calendar today, the Bank of Japan maintained the country’s short-term interest rate at -0.1% after 8-years of no change, despite recent signs indicating an increase in the rate may be imminent.

Taking a look at commodities, oil is trading almost 1% higher at US$80.79/barrel, gold is down almost half a percent at US$1899/ounce and iron ore is trading -0.82% lower at US$120.50/tonne.

The Aussie dollar is buying US$0.70, 91.86 Japanese Yen – boosted higher by the Bank of Japan not raising interest rates today, 56.9 British Pence and NZ$1.08.

Wall Street closed mixed on Tuesday which was the first trading session of the week in the US as investors digested contrasting earnings results out of investment banks Goldman Sachs and Morgan Stanley, as well as GDP data out of China indicating a rise of just 3% in 2022, which fell short of Beijing’s target of 5.5%. The Dow Jones closed 1.14% lower, the S&P500 fell 0.2% but the tech-heavy Nasdaq closed the day up 0.14% Goldman Sachs fell 6% after releasing fourth quarter and full year results that fell short of analysts’ expectations including EPS of US$3.32 per share compared with the expected US$5.48/share, revenue of US$10.59 billion compared to the US$10.83 billion estimate, and profits fell by two-thirds in the final three months of last year. Meanwhile, Morgan Stanley shares rose 6% after the investment bank also released fourth quarter and full year results including net income of US$2.11 billion or US$1.26/share which topped analysts’ estimates of EPS at US$1.19/share. The bank also announced cost cutting measures in December last year through reducing its staff by 2% and boosted its safety net by setting aside US$85 million for credit losses compared with just US$5 million in the same quarter a year earlier amid rising interest rates in the US.

Over in Europe markets were relatively unchanged on Tuesday as investor concerns are focused on the World Economic Forum in Davos this week. The STOXX600 closed 0.3% higher, Germany’s DAX rose 0.35%, the French CAC added 0.48% and, in the UK, the FTSE100 fell 0.12%.

On the commodities front, crude oil is up 1.27% at US$79.71/barrel, gold is down 0.63% at US$1905.86/ounce, and iron ore is down 4.33% at US$121.50/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 0.29% higher.
• Important economic data out today includes the highly anticipated Bank of Japan interest rate decision, with the market expecting the maintenance of the economy’s -0.1% interest rate however recent indications may spell a surprise increase for the first time in 8-years.
• The Aussie dollar is buying, US$0.70, 89.51 Japanese Yen, 57.14 British Pence, and NZ$1.09.

Trading Ideas:

• Bell Potter has upgraded its price target on DroneShield (ASX:DRO) to $0.34/share following the aerial tech company announcing another new contract to kick off the new year. The $11m contract is a purchase order for several different types of the company’s counter-drone/C-UAS equipment. This is the second $10m+ contract announced by the company in less than 3-weeks, after the initial record contract of the same size in December’22, which establishes solid revenue foundation for CY23.
• Trading Central has identified a bullish signal on Goodman Group (ASX:GMG) following the formation of a pattern over a period of 172-days which is roughly the same amount of time the share price may rise from the close of $19.05 to the range of $23.75-$24.75 according to standard principles of technical analysis.

The local market’s green run came to an end today in a muted session as the key index closed just 0.03% lower. A sharp sell-off in materials and utilities stocks offset strong gains among consumer staples and healthcare stocks today. As recession fears increasingly dominate market sentiment, sectors like consumer staples and health care are remaining resilient as these companies traditionally remain strong during a recessionary environment.

Tech retail specialist JB Hi-Fi (ASX:JBH) released Q2 sales results and preliminary half year 2023 results including record sales of $5.28 billion and record earnings of $479.2 million for HY23. The strong performance follows continued elevated consumer demand and operating conditions starting to normalise following two-years of COVID related disruptions. Shares in JB Hi-Fi rallied in morning trade before retreating amid the broader market sell-off today.

Hub24 (ASX:HUB) shares were sold off on Tuesday after the wealth management technology firm released a Q2 update including net inflows for the quarter broadly flat on Q1 but dropping 23.6% to $5.8 billion from record inflows achieved in Q2 of FY22, and down 13.6% for the first half of FY23.

The winning stocks from today’s session were Novonix (ASX:NVX) adding 5.5%, Metcash (ASX:MTS) jumping 2.74% and Johns Lyng Group (ASX:JLG) rallying 2.71%. And on the losing end of the market Imugene (ASX:IMU) tumbling 5.88%, while Capricorn Metals (ASX:CMM) and Regis Resources (ASX:RRL) each fell 5.6 and 4.8% respectively.

The most traded stocks by Bell Direct clients today were ANZ (ASX:ANZ), Macquarie Group (ASX:MQG) and Telstra Group (ASX:TLS).

On the commodities front, oil is trading lower again around US$79/barrel as recession fears continue dominating global market sentiment, while iron ore is also trading sharply lower by more than 4% at US$121.50/tonne as China attempts to cool demand outlook of the commodity. Gold is also down almost 0.4% today at US$1910.58/ounce and coal is only slightly lower at US$370/tonne. Goldman Sachs researchers have said commodities have the strongest outlook of any asset class in 2023 given the perfect macroeconomic environment with critically low inventories for almost every key raw material against surging demand. The year has started with a pullback in prices due to warm weather shock and rising interest rates, however with China coming back online, the yearly outlook for commodity prices is looking up.

Westpac Consumer Confidence data released today showed Aussie confidence rose 5% to 84.3 points for January, which well exceeded market forecasts of a 2.3% decline.

The Australian dollar is buying US$0.70, 89.75 Japanese Yen, 57 British Pence, and NZ$1.09.

US markets were closed for the Martin Luther King holiday, but coming up this week in the US are Q4 earnings results, with Netflix and State Street announcing results Thursday and Friday.  

European equities mostly ended their start to the week with modest gains. A key focus for European markets this week is the World Economic Focus in Switzerland, where the heads of state, business leaders and academics debate and discuss certain topics. The key themes this week are the war in Ukraine, economic uncertainty and climate change. 

And we’re seeing defensive sectors under-performing around the world so far in 2023, notably healthcare and utilities. Australian utilities are more than 6% behind. 

What to watch today:

• Despite the positive run overnight, the SPI futures are suggesting the Australian market will drop 0.29% at the open this morning. 
• Super Retail (ASX:SUL)’s share price may continue to advance today after yesterday’s rally off the back of a strong update, with Goldman Sachs reiterating a buy rating on the stock with an improved price target of $14.20. 
• Watch HUB24 (ASX:HUB), scheduled for a market update, and Rio Tinto (ASX:RIO) set to announce a quarterly production update. 
• Katana Capital (ASX:KAT) and Tower (ASX:TWR) are set to go ex-dividend today. 
• In commodities, 
  • The oil price has dropped, after advancing 8% last week, as China’s reopening from COVID curbs raised hopes for a boost in economic activity, with analysts forecasting that oil demand in China will likely hit a record this year. 
  • Gold is currently trading slightly in the red, however is hovering at its strongest levels in nearly nine months. 
  • And iron ore has jumped more than 2.4% higher to US$127 per tonne, the highest since mid-June, due to continued optimism about demand prospects in China and weakening supply concerns. 
• In economic data, at 10:30am AEDT Westpac will release its data on consumer confidence. 

Trading Ideas: 

• Bell Potter maintain a BUY rating on Janus Henderson (ASX:JHG), ahead of the release of the company’s full year results for 2022, which will be out on the 2nd of February. Bell Potter have slightly upgraded their FY22 funds under management forecast to $279 billion from $263.5 billion previously. As a result, EPS is 0.6% higher for FY22, 5.5% higher for FY23 and 5.6% higher for FY24. EBITDA is also 0.6% higher in FY22, and 5.6% and 5.5% higher in FY23 and 24 respectively. Their dividend forecast in Australian dollars has increased, reflecting the currency movements applied to a US dollar dividend. Bell Potter have lowered their price target from $45.37 to $43.81, and at JHG’s current share price of $38.27, this implies 14.5% share price growth in a year. 
• Trading Central have identified a bullish signal in BetMakers Technology Group (ASX:BET) indicating that the stock price may rise from the close of $0.29 to the range of $0.33 to $0.35 over 44 days, according to the standard principles of technical analysis. 

The ASX extended last week’s green run into the new week with the key index closing the first trading session of the week up 0.82%, buoyed by a surge in technology and energy stocks today.

Tyro Payments (ASX:TYR) made waves today, jumping more than 8% after the fintech company announced an unaudited first half trading update including group revenue up 45%, payments transaction value up 37% and payments normalised gross profit rose 36%. These results indicate a turn-around in company performance after turbulence faced in 2022. Biotech company PolyNovo (ASX:PNV) also released a first half trading update today including record sales of $27.3 million for the first half of the 2023 financial year, up 67.5% on the prior corresponding period. This record result was driven by record sales in the US of $22.8 million.

Reformed commercial airline, Virgin Australia (ASX:VAH) may soon take its competitive edge to the ASX after Bain Capital, the firm which rescued Virgin Australia from voluntary administration back in 2020, said it will soon seek advice on an initial public offering. Investors will also be pleased with the first-half results preview released by Super Retail Group (ASX:SUL) today, the parent company of Supercheap Auto, Rebel Sport, BCF and more, after the company released record first-half sales performance.

Sector wise today, tech stocks led the rally, with the sector closing the session up 1.81%, while every other sector also closed Monday’s session in the green.

The winning stocks today were led by Super Retail Group (ASX:SUL) jumping 7.68%, Megaport (ASX:MP1) adding 7.46% and Imugene (ASX:IMU) rallying 6.25%. And on the losing end of the market, Core Lithium (ASX:CXO) tumbled 6.17%, Liontown Resources (ASX:LTR) lost 3.85% and Monadelphous Group (ASX:MND) fell 3.76%.

The most traded stocks by Bell Direct clients were the BetaShares Australian Strong Bear Hedge Fund (ASX:BBOZ), Westpac Banking Corporation (ASX:WBC) and BHP Group (ASX:BHP).

Taking a look at commodities, oil has retreated from last week’s rally, steadying just above US$79/barrel as investors weighed improving demand outlook from China, against the rising prospect of a global recession. Gold continues to rally, trading 0.26% higher at US$1925/ounce while iron ore is trading lower amid China’s latest attempt to dampen positive outlook for demand of the commodity.

The Aussie dollar is buying US$0.70, 89.24 Japanese Yen, 57.11 British Pence and NZ$1.09.

Australia’s building permits data for November released today showed a decline of 9% for the month which was in-line with market expectations.

Complete the survey here: https://www.belldirect.com.au/smarter/2022-viewer-survey-feedback-page-youtube

We’re taking a short break over the holiday period and we are very excited to debut our brand new studio in 2023.

In 2023, we want to continue to provide you with useful and interesting investment market commentary, to help you stay across the Aussie and global share markets, and to help you build an even better investment portfolio.

We’d appreciate if you could please complete a short survey and provide your feedback on our market commentary videos.

Thank you in advance for your participation and thank you for being part of our audience in 2022.

Your responses will be anonymous and used only to help inform us on the content we should be delivering to you in 2023.

The Aussie share market lost 0.12% this week (Mon-Thu), and in a tough year for investors, the ASX200 is trading 5.71% lower (YTD). All eyes will be on inflation, rates and energy prices in 2023. 
 
 In this week's wrap, Grady covers:

• (0:18) M&As, the big banks & the data breaches in 2022 
• (1:37) How commodity prices rocked this year 
• (2:07) What's in store for the year ahead
• (3:47) The best performing stocks in the ASX200
• (5:32) The most traded stocks & ETFs by Bell Direct clients
• (6:00) Four economic news items to watch out for

US equities sharply fell overnight. The selling began after the Federal Reserve’s 50 basis point interest rate hike yesterday, taking the main rate 4.25% to 4.5% range. The shift to a lower gear following four consecutive 75 basis point hikes was widely anticipated, and bond yields barely moved in response. Overnight, US retail sales data was released – retail sales declined more than expected in November which heightened concerns around rate hikes, with the data showing that inflation has taken a toll on consumers. The Dow Jones saw its worst day in three months, falling more than 700 points or 2.25%, the S&P500 dropped 2.5% and the Nasdaq dropped 3.2%. 

European markets also closed in the red after the European Central Bank signalled that “significant” rate increases are still to come. The STOXX 600 down 2.85%, Germany’s DAX and France’s CAC both closed more than 3% lower, and the FTSE 100 down 0.9%. 

What to watch today:

• The SPI futures are suggesting the Australian market will fall 1.16% at the open this morning. 
• In economic data, this morning the S&P Global Manufacturing and Services Flash PMI will be released. Remember the Flash PMI is a forward-looking estimate of the final PMI, set to be released next week. 
• In commodities, the price of oil has dropped 1.4%, currently trading just over US$76 per barrel, as Chinese factory data piled onto demand concerns. Gold has dropped 1.7% to US$1,776 an ounce, while iron ore is down 0.5% at US$110. 
• Keep watch of NAB and Link Administration (ASX:LNK) – both companies are set to hold their AGMs today. 

Trading Ideas: 

• Bell Potter maintain a Speculative Buy rating on Arafura Rare Earths (ASX:ARU) and have increased their valuation from $0.64 to $0.70. At its currently share price of $0.52 this implies 36% share price growth in a year. 
• Trading Central has identified a bullish signal in Qualitas (ASX:QAL) indicating that the stock price may rise from the close of $2.28 to the range of $2.70 to $2.76 over 37 days, according to the standard principles of technical analysis.