Between the Bells

Wall Street rallied on Tuesday as investors shift focus from China’s covid-lockdowns to a number of strong earnings reports due out in the short trading week including from Nordstrom and HP Inc. The Dow Jones industrials index closed 1.16% higher, the tech-heavy Nasdaq added 1.25%, and the S&P500 rose 1.30%. Investors are keenly focused on a number of Fed official speeches this week, particularly on Wednesday, in hope of gaining an insight into future rate hike movements. Tesla shares hit the lowest level since July 2020 to start the week, amid a tech sell-off, however shares in the electric vehicle maker have been sold-off since the company’s CEO Elon Musk took over Twitter. Shares in Tesla are also being sold-off in line with China’s COVID lockdowns.

Over in Europe, markets closed higher on Tuesday driven by a rally for oil stocks after Saudi Arabia denied a report that OPEC+ may boost oil output. The STOXX 600 closed up 0.8%, Germany’s DAX added 0.29% and the French CAC rose 0.35%. And the UK’s FTSE 100 closed Tuesday’s session up 1.03%.

What to watch today:

• On the commodities front this morning, it’s a mixed bag as crude oil trades 2.29% higher at US$81.89 a barrel, natural gas is up 0.23%, gold is flat at US$1,739 an ounce and iron ore is down 2.01% at US$97.50 a tonne.
• Ahead of the local trading session, the SPI futures are expecting the ASX to open 0.74% higher on the back of the rally on Wall Street overnight.
• After the closing bell yesterday, RBA governor Philip Lowe spoke at the annual Ceda dinner outlining that the inflation we are feeling right now was the same high inflation that was felt in the 70s and 80s that damaged the economy and hurt our standards, which Mr Lowe is wary of allowing to happen again, therefore warned Aussies to brace for higher inflation and lower growth, fewer jobs and lower real wages. All in all Mr Lowe reiterated the RBA’s need to continue raising interest rates in order to curb the current period of high inflation and that they are not ruling out further 50-basis point rate hikes if needed in future.
• Looking at economic data, Australia’s S&P Global services and manufacturing preliminary PMI data is out for November giving an insight into demand for private services and manufacturing production companies in Australia which has been declining since September as the RBA continues to raise interest rates to tackle the nation’s red-hot inflation. The Reserve Bank of New Zealand will also announce its latest cash rate hike this morning with the market expecting a hike of 75-basis points, with the nation accelerating its monetary tightening to control rising inflation.
• The Aussie dollar has strengthened to buy 66.34 US cents, 56.16 British Pence, 93.74 Japanese Yen and NZ$1.08.

Trading Ideas:

• Trading Central has identified a bullish signal on Cooper Energy (ASX:COE) following the formation of a pattern over a period of 30-days which is roughly the same amount of time the share price may rise from the close of $0.20 to the range of $0.27-$0.29 according to standard principles of technical analysis.
• Trading Central has identified a bearish signal on Infomedia (ASX:IFM) following the formation of a pattern over a period of 34-days which is roughly the same amount of time the share price may fall from the close of $1.11 to the range of $0.78-$0.84 according to standard principles of technical analysis.

The ASX rebounded from Monday’s losses to close Tuesday’s session up 0.59% at a fresh 5-month high, with the gains largely driven by investors piling into the energy sector today amid the rising price of commodities.

Coal stocks rallied today as the price of the commodity surges 2.2% to US$351/tonne. Whitehaven Coal (ASX:WHC) jumped more than 7.5%, New Hope Corporation (ASX:NHC) rallied over 7% and Yancoal Australia (ASX:YAL) added more than 6%. Coal mining stocks also rallied after Origin Energy (ASX:ORG) warned the coal exit could be delayed globally.

As we head into the Black Friday sales, Australian Retailers Association and Roy Morgan are forecasting sales will reach a record $6.2bn over the four-day period from Friday to Monday, with most Aussies in the survey saying they will spend the same or more than last year despite rising interest rates.

Star Entertainment shares fell almost 2% today after the company released a trading update at its AGM outlining revenues have fallen 11% in Sydney from July to November 2022, giving an idea of the impact competitor Crown’s new Barangaroo casino has on Star’s performance in NSW.

The winning stocks today were led by Virgin Money UK (ASX:VUK) climbing more than 10% after releasing full year results including a 43% increase in statutory profit before tax and an interest margin of 1.85%. Whitehaven Coal (ASX:WHC) soared almost 8% today and New Hope Corporation (ASX:NHC) also added more than 7% today.

And the stocks that weighed on the market today were Block Inc (ASX:SQ2) tumbling 3.22%, De Grey Mining (ASX:DEG) closing down 2.34% and Inghams (ASX:ING) shedding 2.15%.

The most traded stocks by Bell Direct clients were Fortescue Metals Group, Appen and Lake Resources.

Taking a look at commodities, crude oil is trading flat at US$80.05/barrel, natural gas is down 3.2%, gold is up 0.3% at US$1743/ounce and iron ore is down just over 2% at US$97.50/tonne.

The Aussie dollar has slightly strengthened today to buy 66.08 US cents, 55.95 British Pence, 93.78 Japanese Yen and 1 New Zealand dollar and 8 cents.

RBA governor Philip Lowe will address the Annual Ceda dinner tonight and is poised to talk about price stability, the supply side and prosperity.

US equities closed the first session of the week in the red. The Dow Jones down 0.2% and the S&P500 down 0.4%, while the Nasdaq dropped a little over 1%. And this week is a short trading week on Wall Street due to the Thanksgiving holiday. Fears that China may again enforce COVID restrictions after reporting deaths from the virus, weighed on markets overnight, and sent energy stocks and oil prices lower.

European markets also closed lower, as investors continue to assess inflationary pressures. The STOXX 600 closed flat, Germany’s DAX down 0.4%, the French CAC down just 0.2%, while in the UK the FTSE100 closed down just 0.1%.

What to watch today:

• Despite the losses across overseas markets, the SPI futures are suggesting the Australian market will rise 0.4% at the open this morning.
• In economic data, the RBA Governor Phillip Lowe is set to give a speech at 6pm tonight.
• And in commodities, the oil price is steady after falling over 5% to its lowest level since January, after Saudi Arabia denied news of a potential oil output increase. The gold price continues to weaken, falling for the fourth straight session. While iron ore is trading more than 2% higher at US$99.50 per tonne, its highest level in eight weeks, and advancing 22% since the start of the month.

Trading Idea:

• Bell Potter have initiated coverage on Cedar Woods Properties (ASX:CWP) with a Buy rating. CWP is a medium sized Australian property developer that operated in four Australian states, with around half of its operations in WA. The main business model is to buy land, seek approvals to develop, then either subdivide and sell the land, or build apartments and townhouses. Rising interest rates have had an impact on sentiment and the share price. Bell Potter price target on CWP is $5.40, and at the stock’s current share price of $4.04, this implies 33.7% share price growth in a year.

The local market rallied in the opening hour of trade before declining throughout the first trading session of the week to end the day down 0.18% as investors sharply sold out of materials, energy and information technology stocks today. Utilities stocks led the market gains, with the sector adding 1.77% at the closing bell today.

Lake Resources (ASX:LKE) shares rallied today after the lithium developer announced it has resolved a dispute with earn-in partner Lilac Solutions over Lilac’s delivery of services at the company’s Kachi lithium project in Argentina.

NIB Holdings (ASX:NHF) shares also jumped today after the company’s CEO Mark Fitzgibbon said the health insurer is starting to see an uptick in customers switching due to competitor Medibank’s privacy and data breach.

The winning stocks for today’s session were AGL Energy (ASX:AGL) climbing 4.23%, Atlas Arteria (ASX:ALX) adding 3.76% and Whitehaven Coal (ASX:WHC) rallying almost 3.2%. And on the losing end, Nanosonics (ASX:NAN) tanked 12.23% today as brokers including Goldman Sachs responded negatively to the company’s recent trading update. Sayona Mining (ASX:SYA) fell 4.55% today and Novonix (ASX:NVX) ended the day down 4.5%.

The most traded stocks by Bell Direct clients today were Fortescue Metals Group  (ASX:FMG) , APA Group (ASX:APA) and CSL (ASX:CSL)

Commodities are still trading as a mixed bag this afternoon, with crude oil down 1.31% at US$79.06/barrel, gold is down just 0.2% at US$1746.56/ounce, while iron ore is up 2.05% at US$99.50/tonne. The decline in the price of oil impacted mining giants like Woodside today, with the oil and gas giant closing Monday’s session down 1.29%.

The Aussie dollar is trading slightly weaker this afternoon, buying 66.57 US cents, 56.14 British Pence, 93.43 Japanese Yen and 1 New Zealand dollar and 8 cents.

Asian equities had a tough start to the week today with markets closing lower amid a rise in COVID-related deaths and case numbers in China and Hong Kong prompting authorities to tighten restrictions in some areas of the region.

The local market closed 0.23% higher on Friday driven by a surge in materials stocks on the back of OZ Minerals (ASX:OZL) announcing it has received and intends to accept a revised takeover offer from BHP Group (ASX:BHP) for $28.25 per share, in a deal worth $9.6 billion. The consumer discretionary, real estate and energy sectors closed Friday’s session in the red.

The best performing stocks on Friday were led by OZ Minerals (ASX:OZL) following the takeover update, Coronado Global Resources (ASX:CRN) added 3.54% and NIB Holdings (ASX:NHF) rounded out the top 3 winning stocks for the session, up 3.2% on Friday. Lovisa Holdings (ASX:LOV) led the losing end of the market on Friday, tumbling more than 7% after releasing a trading update despite the fashion jewellery company announcing  store sales for the first 19-weeks of FY23 are up 16.1% on FY22 YTD.

Pinnacle Investment Management also fell almost 4.45%, and Corporate Travel Management lost 3.75% on Friday.

The most traded stocks by Bell Direct clients on Friday were APA Group (ASX:APA), Westpac Banking Corporation (ASX:WBC) and James Hardie Industries (ASX:JHX).

Overseas, Wall Street rallied to see out the last trading week despite US retail data out during the week alongside speeches by some policymakers still indicating the Fed’s hawkish approach remains the priority. Investors however may be slightly more confident that a Fed pivot will come sooner than expected and that rate cuts may be seen by around the end of next year. The Dow Jones industrials index ticked 0.6% higher at the closing bell on Friday, while the Nasdaq added just 0.01% and the S&P500 rallied 0.5%.

European markets rebounded on Friday as investors responded to lower-than-expected consumer and wholesale data released last week, in signs that boost investor confidence that the U.S. Fed’s will have to ease the aggressive rate hike path soon. The STOXX600 added 1.1%, Germany’s DAX rallied 1.16%, the French CAC jumped 1.04% and, in the UK, the FTSE100 rose just over half a percent.

What to watch today:

• Ahead of the local trading session on the ASX, the SPI futures are anticipating the market to open 0.33% higher amid signs inflation is beginning to cool.
• There is no local economic data being released today however investors will be awaiting RBA governor Philip Lowe’s speech tomorrow in hope of gauging any insight into the RBA’s rate hike movements over the coming months.
• On the commodities front this morning, crude oil is trading 1.91% lower at US$80.80 per barrel, gold is down 0.61% at US$1750 per ounce and iron ore is up 2.05% at US$99.50 per tonne.
• The Aussie dollar is starting the week slightly weaker at 66.59 US cents, 93.68 Japanese yen, 56.14 British Pence, and NZ$1.08.

Trading Ideas: 

• Trading Central has identified a bullish signal on Steadfast Group (ASX:SDF) following the formation of a pattern over a period of 12-days which is roughly the same amount of time the share price may rise from the close of $5.19 to the range of $5.59 to $5.69 according to standard principles of technical analysis.
• Trading Central has also identified a bullish signal on Universal Biosensors (ASX:UBI) 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 $0.26 to the range of $0.32 to $0.34 according to standard principles of technical analysis.

The Aussie share market declined 0.31% this week (Mon-Thu), however there were some positives. The materials sector rose after China announced the easing of its COVID-zero goal, as well as a property rescue package. 
 
 In this week's wrap, Sophia covers:

• (0:12) Why mining stocks advanced this week
• (0:26) Whether Chinese steel mills can return to profit
• (1:20) The current outlook for iron ore prices
• (1:59) The best performing stocks on the ASX200
• (2:45) The most traded stocks & ETFs by Bell Direct clients 
• (3:20) Three economic news items to watch out for

Rising yields sparked recession fears overnight, which saw US equities close in the red. The Dow Jones down 0.3%, the S&P500 down 0.6% and the Nasdaq down 0.7%. While stocks fell, bond yields jumped higher, after the Fed signalled the rate hikes will continue, as they aim to tame inflation. 

In Europe, investors digested geopolitical tensions and the UK budget. The UK finance minister Jeremy Hint announced his latest fiscal statement, which included billions of pounds worth of spending cuts and tax hikes. Also, global markets continue to watch the developments in Ukraine after a missile hit Polish territory. The STOXX600 closed down 0.4%, after fluctuating between marginal gains and losses in early trade. Germany’s DAX closed up 0.2%, while the FTSE100 closed flat and France’s CAC ended the session 0.5% lower. 

What to watch today:

• The Australian market is set to open flat this morning, according to the SPI futures. 
• In commodities, 
• The price of oil has dropped over 4% and is hovering around US$82 per barrel, extending losses from the previous session. 
• Gold is also in the red foe the second straight session, after the US dollar was buoyed by stronger than expected US retail sales data. The data clouded the inflation outlook by indicating a need for more interest rate hikes. 
• Iron ore is trading over 2% higher at US$99 per tonne, the highest in seven weeks, amid hopes of strong demand from China, which is of course a top consumer. 
• The a2 Milk Company (ASX:A2M), Lendlease (ASX:LLC), NEXTDC (ASX:NXT) and Mirvac Group (ASX:MGR) are set to hold its AGM today. 
• Stocks going ex-dividend today include Coronado Global Resources (ASX:CRN) and Orica (ASX:ORI).

Trading Ideas:

• Bell Potter have upgraded their rating on the Australian Agricultural Company (ASX:AAC) from a Hold to a Buy, after the company reported H1 operating EBITDA ahead of Bell Potter’s expectations at $38.3 million. They say the company have an effective go to market strategy and cost controls and are in a position to develop the asset base and add value to the portfolio. Bell Potter have lowered their price target from $2.35 to $2.15, and at its current share price of $1.63, this implies 31.9% share price growth in a year. 
• Trading Central have identified a bullish signal in Steadfast Group (ASX:SDF) indicating that the stock price may rise from the close of $5.19 to the range of $5.59 to $5.69 over 12 days according to the standard principles of technical analysis. 

The local market followed in the footsteps of Wall Street today, closing the second last trading session of the week down 0.2%, amid the release of unemployment data showing a decline in the country’s unemployment rate, which was a result vastly different to what economists’ were expecting. Consumer staples was the leading sector today, while the energy sector weighed down on the market.

The big story of was Perpetual (ASX:PPT) shares falling 13% today, while Pendal (ASX:PDL) shares jumped more than 10% during the session, after the NSW Supreme Court ruled Perpetual could face costly penalties if it walks away from the planned transaction to buy out rival Pendal, in favour of pursuing a buyout of its own, by BPEA and Regal Partners. The court ordered that the ‘break fee’ of $23 million would not be an exclusive remedy for Perpetual to pay, if it walked away, and that Pendal could see orders to enforce Perpetual’s obligations to complete the scheme.

The winning stocks today were Pendal (ASX:PDL), Webjet (ASX:WEB) and Fisher and Paykel (ASX:FPH). And on the losing end, Perpetual (ASX:PPT) declined the most, followed by New Hope Corporation (ASX:NHC) and Whitehaven Coal (ASX:WHC).

The most traded stocks by Bell Direct clients today were National Australia Bank (ASX:NAB), Terracom (ASX:TER) and Argosy Minerals (ASX:AGY).

Australia’s jobless rate declined 0.1% to 3.4% in October, the lowest level since the mid-1970s, defying economists’ expectations of an increase in unemployment. Around 32,000 jobs were added to the Australian economy in October and seasonally adjusted monthly hours worked increased by 2.3% reflecting fewer employed people than usual taking leave during October. Floods across NSW, Victoria and Tasmania saw more people working reduced hours though due to the bad weather events.

On the commodities front, oil has dropped 1.5% and is currently trading at US$84 per barrel. Gold is also in the red at US$1,762 an ounce, while iron ore has jumped more than 2% to US$99 per tonne.

And the Aussie dollar is buying 67 US cents, 56.93 British Pence, 93.57 Japanese Yen and NZ$1.09. 

Wall Street closed lower on Wednesday after US retail sales figures came in at 1.3% for October which was higher than expectations, after levelling off in September, indicating consumers are still spending despite interest rates being aggressively hiked month on month. The Dow Jones closed flat, the S&P500 fell 0.71%, and the Nasdaq ended the session down 1.51%. Yesterday, former US President Donald Trump also announced he will be running for the Republican presidential nomination in 2024, nearly 2-years after allegedly inspiring the deadly Capitol riot. The hotter than expected retail figures come despite Target warning of weaker consumer demand to come and that the department store giant had instilled a multi-billion-dollar cost-cutting plan which sent shares in the company down 13% on Wednesday.

Over in Europe, markets also closed lower as geopolitical tensions rise in the wake of escalating tensions between Russia and Ukraine. The STOXX600 fell 1%, Germany’s DAX lost 1% and the French CAC shed half a percent. In the UK the FTSE100 also closed 0.25% lower on Wednesday.

What to watch today:

• Ahead of the local trading day, the SPI futures are expecting the ASX to open Thursday’s session 0.14% lower.
• In commodities, crude oil is trading 1.40% lower at US$85.70 per barrel, gold is trading 0.3% lower at US$1773 per ounce, and iron ore is trading flat at US$97 per tonne.
• The Aussie dollar has weakened overnight to buy 67.33 US cents, 56.93 British pence, 93.87 Japanese yen and NZ$1.10.
• Investors will be awaiting the release of Australia’s unemployment rate data for October, which is released at 11:30am AEDT.

Trading Ideas:

• Trading Central has identified a bullish signal on NEXTDC (ASX:NXT) 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 $9.27 to the range of $10.10 - $10:30 according to standard principles of technical analysis.
• Bell Potter has maintained its Buy rating on Nufarm (ASX:NUF) and raised its price target from $6.75 to $7.15 due to the agricultural chemical company releasing strong FY22 results despite facing headwinds of deregistration’s in Europe and dry conditions across the Mediterranean and North America in the second half of FY22.

Investor concerns over Russia’s war with Ukraine escalating caused the sell-off on the ASX today, with the key index closing the midweek session 0.27% lower amid a Russian missile strike pounding Ukraine’s energy facilities and Poland with its biggest barrage of missiles yet, according to reports. The mining giants offset some of the sessions’ losses with BHP Group (ASX:BHP), Rio Tinto (ASX:RIO) and Fortescue Metals Group (ASX:FMG) rallying over 1% today on hopes that China’s property rescue plans will reignite demand for steel. The utilities and consumer discretionary sectors were the worst performing today.

 Oz Minerals (ASX:OZL) entered a trading halt today in relation to a potential change of control transaction. Back in August, BHP (ASX:BHP) made a takeover offer for $25 per share that Oz Minerals rejected on the grounds of ‘undervaluing’ the company, so today’s trading halt has the market guessing BHP could be back with a revised offer, however neither company has yet confirmed this is the case.

 The winning stocks for today’s session were led by Nufarm (ASX:NUF) lifting almost 9% after the agricultural chemical company released its full year results including a 24% increase in EBITDA to $447 million on revenue up 17% to $3.8 billion. Sandfire Resources (ASX:SFR) rallied 6.7% today and Whitehaven Coal (ASX:WHC) jumped 5.83%. On the losing end, Imugene (ASX:IMU) tumbled almost 10% today, while De Grey Mining (ASX:DEG) fell 9.2% and St Barbara (ASX:SBM) ended the day down just over 7%.

 The most traded stocks by Bell Direct clients today were Argosy Minerals (ASX:AGY), Core Lithium (ASX:CXO), and Lake Resources (ASX:LKE).

 On the commodities front today, crude oil is trading 0.84% lower at US$86.18 per barrel, gold is down 0.23% at US$1774 per ounce and iron ore is trading flat at US$97 per tonne.

 The Aussie Dollar is buying 67.58 US cents, 56.98 British Pence, 94.53 Japanese Yen and 1 New Zealand Dollar and 10 cents.

 Australia’s wage price index data released today showed the seasonally adjusted WPI rose 1% in the September quarter and 3.1% over the year, while the private sector rose 1.2% or double that of the public sector which rose 0.6%. Average private sector pay rises hit 4.3%, the highest quarterly growth in hourly wages recorded since March quarter 2012.