Between the Bells

The US markets rebounded on Tuesday to close higher across the key indices following the release of US producer price index data that measures wholesale inflation, for October showing an increase of just 0.2% which was below market expectations and is another sign inflation is slowing in the region. The tech-heavy Nasdaq led the gains adding 1.27% on Tuesday, while the Dow Jones and S&P500 also each lifted 0.02% and 0.7% respectively. Over in the US it has been a turbulent time for technology stocks of late with interest rates rising meaning financing growth becomes more expensive. As a result, we have seen mass lay-offs from tech giants including Twitter cutting around 3700 jobs, Amazon reportedly releasing 10,000 employees, Stripe axing 14% of its staff and Meta cutting 11,000 jobs in the biggest tech layoff of 2022, so today’s rally on the Nasdaq will bring a brief relief for tech stocks.

 Over in Europe, markets advanced on the back of that US producer price index data being released, with the STOXX 600 adding 0.2%, while Germany’s DAX and the French CAC each added almost 0.5%. In the UK, the FTSE100 bucked the trend, closing the day down 0.21%, amid UK property data indicating new homebuyer enquiries plunged in October to the lowest level since the 2008 GFC, according to the latest RICS housing surveyors report for the last week, adding to further fears of a deep recession to come.

 What to watch today: 

• Ahead of the local trading session the SPI futures are expecting the ASX to open just 0.04% higher on the back of the rally on Wall Street.
• In commodities, crude oil is trading slightly higher this morning, up 0.68% to US$86.45 per barrel, gold is trading mostly flat at US$1772 per ounce, natural gas is up 2.68%, and iron ore is continuing to surge, up 3.74% this morning at US$97 per tonne.
• There is no local economic data out today however investors will be tuning in to a number of key Federal Reserve speeches in attempt of gaining a glimpse at how aggressive the Fed’s will continue raising interest rates moving forward.
• The Aussie dollar has strengthened overnight to buy 67.75 US cents, 57 British Pence, 94.44 Japanese Yen and NZ$1.10.

 Trading Ideas:

• Trading Central has identified a bullish signal on Mach7 Technologies (ASX:M7T) 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 $0.56 to the range of $0.64 to $0.66 according to standard principles of technical analysis.
• Trading Central has identified also identified a bullish signal on Magnis Energy Technologies (ASX:MNS) following the formation of a pattern over a period of 36-days which is roughly the same amount of time the share price may rise from the close of $0.42 to the range of $0.47 to $0.49 according to standard principles of technical analysis.

The local market extended its decline on Tuesday, closing the session down just 0.07% as investor confidence has been dampened in recent days by Fed officials warning that higher interest rate hikes are to be expected despite inflation in the US slowing. Lithium miners took a hit today on the back of a poor trading session on Monday for US lithium stocks despite the price of lithium remaining strong. The decline in lithium stocks today may be due to investors taking profits from the recent rally in lithium stocks, or the market moving away from higher risk stocks amid the expectation for higher interest rate hikes to come in the US despite inflation starting to cool. Core Lithium (ASX:CXO), Pilbara Minerals (ASX:PLS) and Allkem (ASX:AKE) each fell more than 8% on Tuesday.

 The technology sector rallied today, offsetting some of the losses weighing on the market in the REIT and materials sectors.

 The winning stocks of the session today were, Imugene (ASX:IMU) adding 7.7%, Incitec Pivot (ASX:IPL) rallying 5.88% and Elders (ASX:ELD) closing the session up 4.7%. On the losing end, Core Lithium (ASX:CXO) fell almost 16% today amid weakness among lithium stocks and on the back of Macquarie downgrading Core Lithium (ASX:CXO) to a neutral rating. Allkem (ASX:AKE) also lost 12.36% in the lithium sell-off and Sayona Mining (ASX:SYA) closed the day down 9.62%.

 The most traded stocks by Bell Direct clients today were Core Lithium (ASX:CXO), Pilbara Minerals (ASX:PLS) and MSL Solution (ASX:MSL), which rocketed 70% today after announcing it has received and accepted a takeover offer implying an equity value of $119 million.

 All eyes were on the RBA’s meeting minutes from November released today which outlined that the RBA is not ruling out further rate hikes or a pause, it is keeping its options open to address inflation and is not on a set rate hike path.

 On the commodities front today, crude oil is down 4.16% to US$85.175/barrel, natural gas is up 2.31% at US$6.07/MMbtu, coal is up 1.09% at US$330.35/ton, gold is trading down 0.05% at US$1770.94/ounce, and iron ore is up 3.74% at US$97/tonne.

 The Aussie dollar has strengthened to buy 66.96 US Cents, 56.77 British Pence, 94 Japanese Yen and 1 New Zealand Dollar and 10 cents.

US stocks ended the first session of the week lower, taking a pause from last week’s big rally. The Dow closed 0.6% lower, the S&P500 down 0.9% and the Nasdaq fell 1.1%. Fed Governor Christopher Waller suggested at a conference in Sydney yesterday, that the market may have overreacted to last week’s CPI reading and said that policymakers still had “a ways to go” before the hiking cycle comes to an end.

European equities closed flat overnight, with the Stoxx 600 up just 0.1%, after struggling to break away from the flatline throughout the session.

What to watch today:

• The Australian market is set to open lower, with the SPI futures suggesting a fall of 0.52% at the open this morning.
• In economic data, today at 11:30am AEDT, the RBA will release its minutes from its November meeting. This won’t have much influence over markets however, it will provide us with insights into the meeting when the central bank decided to raise the cash rate to 2.85%, marking its seventh straight rate hike. Note that the RBA had also added that it now saw inflation peaking around 8% this year, compared with its previous forecasts of 7.75%.
• As for share prices to keep watch of today: Incitec Pivot (ASX:IPL) and United Malt Group (ASX:UMG) both are set to release their earnings results today.
• AGMs today: AGL Energy (ASX:AGL), Allkem (ASX:AKE), Genworth Mortgage Insurance (ASX:GMA) and Lifestyle Communities (ASX:LIC).
• National Australia Bank (ASX:NAB) is set to go ex-dividend today, so this may see its share price fall as investors take their profits.

Trading Ideas:

• Bell Potter maintain a Buy rating on Monash IVF Group (ASX:MVF), after the company’s AGM on Friday. MVF is tracking below Bell Potters H1 expectations, although the company has increased its market share in the key Australian markets over the first four months of the financial year. They have lowered their price target from $1.43 to $1.39, and at its current share price of $0.92, this implies 51.1% share price growth in a year.
• Trading Central have identified a bullish signal in Sayona Mining (ASX:SYA) indicating that the stock price may rise from the close of $0.26 to the range of $0.31 to $0.33 over 34 days, according to the standard principles of technical analysis.

The ASX slipped into the red in afternoon trade before closing  the first trading session of the week down 0.16%, weighed down by a sharp sell-off in industrials stocks.

 The materials sector rallied 3.4% today amid a surge for iron ore miners on the back of the price of iron ore surging 4.47% to US$93.50 per tonne overnight. Champion Iron (ASX:CIA) rose almost 13% and was the winning stock of today, while Fortescue Metals Group (ASX:FMG) added just over 10%, and BHP Group (ASX:BHP) lifted 4.56%. The other winning stocks to start the week were Core Lithium (ASX:CXO), which jumped 11.7% and Sims (ASX:SGM) which rose 6.9%. 

 The worst performing stocks today were led by Elders (ASX:ELD) plunging more than 23% after the Australian agribusiness released its full year results including operating cash flow down 28.5% to $113.7 million, a 35% jump in sales revenue to $3.445 billion and a 42% increase in underlying profit before tax of $223.5m. The company also increased its dividend by 33% on FY21 to 56cps. Shares in the company tanked today though after Elders CEO Mark Allison announced he would be retiring, bringing to an end his role as CEO after nearly 10-years, with his role as CEO ending on or before November 14, 2023. IPH (ASX:IPH) also dropped 6.56% today and Ramelius Resources (ASX:RMS) ended the session down 6.45%. Medibank’s (ASX:MPL) woes continued today with the health insurance provider revealing another 500 Medibank customers have had their medical records published to the dark web. Shares in Medibank fell 1.06% today.

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

 There was no local economic data released today however investors will be awaiting the release of the RBA’s meeting minutes for November out tomorrow.

 In commodities, crude oil has retreated to trade just 0.15% higher at US$89.09 per barrel, gold is down 0.54% at US$1761 per ounce and iron ore is up 4.47% at US$93.50 per tonne.

 The Aussie dollar has slightly weakened to buy 66.75 US cents, 56.71 British Pence, 93.17 Japanese Yen and NZ$1.10.

The local market soared 2.8% on Friday following the release of US inflation data out late on Thursday that hit 7.7% for October, which indicates a slowing of economic growth in the US and prompted investors to believe that inflation has now peaked.

Investors piled into technology stocks which have been sold-off sharply of late as the cost of borrowing financing increases with every interest rate hike, which impacts the growth outlook of tech companies, but with markets now believing inflation in the US has peaked, investors piled back into growth stocks on Friday sending the tech sector up almost 5% in the last trading session of the week.

The best performing stocks on Friday were Megaport (ASX:MP1), which added just over 13.5%, Pinnacle Investment Management (ASX:PNI), which gained 12.5% and Netwealth Group (ASX:NWL), which rose 11.67%. On the other end of the market, the stocks that weighed on the market on Friday were Whitehaven Coal (ASX:WHC) losing almost 3.5%, Origin Energy (ASX:ORG) falling 3.2% and Computershare (ASX:CPU) closing the day down almost 3%.

The most traded stocks by Bell Direct clients were BHP Group (ASX:BHP), Argosy Minerals (ASX:AGY) and Nickel Industries (ASX:NIC).

Wall Street extended its rally into Friday with the key indices closing higher, buoyed by lower-than-expected inflation data released on Thursday indicating the Fed’s aggressive rate hikes to tackle the 40-year high inflation are starting to work. The Dow Jones added 0.1%, the S&P500 jumped 0.92% and the tech-heavy Nasdaq rose 1.88%.

Over in Europe, markets notched their best weekly performance in nearly 8-months on Friday, driven by hopes of smaller rate hikes by the Federal Reserve in the US and on the easing of some COVID-19 restrictions in China. The STOXX600 added 0.1%, Germany’s DAX lifted 0.56%, and the French CAC rose 0.58%. In the UK, the FTSE100 fell 0.78% as the sterling rose on the back of a smaller-than-expected contraction in Britain’s economy in data out on Friday.

What to watch today:

• Ahead of the local trading session, the SPI futures are expecting the local market to open 0.6% higher to start the new trading week.
• On the commodities front, crude oil is up 2.88% at US$88.96 per barrel, brent oil is up 2.52% at US$96.03 per barrel, gold is trading just under 1% higher at US$1771.08 per ounce and iron ore is up 4.47% at US$93.50 per tonne.
• The Aussie dollar has strengthened to buy 67.17 US cents, 56.71 British Pence, 93.03 Japanese Yen and 1 New Zealand Dollar and 10 cents.
• In economic data out today, there’s no local economic data out today, however investors will be keeping an eye out for the RBA meeting minutes for November released tomorrow.

Trading Ideas: 

• Trading Central has identified a bullish signal on Zip Co (ASX:ZIP) 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 $0.74 to the range of $0.85 to $0.87 according to standard principles of technical analysis.
• Trading Central has also identified a bullish signal on QUBE Holdings (ASX:QUB) following the formation of a pattern over a period of 8-day which is roughly the same amount of time the share price may rise from the close of $2.77 to the range of $3.02-$3.08 according to standard principles of technical analysis.

The Aussie share market gained 1.04% this week (Mon-Thu), as investor sentiment was buoyed by recovering commodity prices, early reports of China easing its COVID-zero goal, and the anticipated results of the US midterm elections.
 
 In this week's wrap, Grady covers:

• (0:36) The shift in investments from equities to cash or term deposits
• (1:07) The big banks' corporate earnings 
• (4:12) The best performing stocks on the ASX200
• (5:40) The most traded stocks & ETFs by Bell Direct clients 
• (6:10) Three economic news items to watch out for

US equities surged to session highs in the final hour of trading overnight, after October’s reading of consumer prices raised investor hopes that inflation has peaked. US CPI rose just 0.4% for the month and 7.7% from a year ago, its lowest annual increase since January. And core CPI, where volatile food and energy costs are excluded, increased 6.3% on an annual basis, which was also less than expected. 

The Dow Jones jumped more than 1,100 points or 3.4%. This was the Dow’s largest one-day increase since stocks came out of the pandemic bear market in 2020. The S&P500 closed 5.2% higher, which was its biggest one-day rally since April 2020. And the Nasdaq gained 6.7%. A really positive session overnight, as investors took the data as a sign the worst of high inflation may finally be behind us. 

What to watch today:

• The Australian market is set to finish the week nicely, with the SPI futures suggesting the market will rise 2.31% at the open this morning. 
•  In commodities, oil is slightly higher and starting to regain the week’s losses, after losing more than 7% in the past three sessions. Gold has jumped almost 3% higher, after the inflation reading pushed the dollar higher. And iron ore is trading 0.6% higher at US$91.50 per tonne. 
• Accent Group (ASX:AX1) is set to hold its AGM today. 

Trading Ideas:

• Bell Potter maintain a Buy rating on Pendal (ASX:PDL). They say the short-term driver of Pendal’s share price is almost certainly whether PDL will be acquired by Perpetual (ASX:PPT). And this is currently in balance. PPT management have rejected the approaches so far from Regal Partners (ASX:RPL), however PPT’s share price is just under $33, which implies the market expects a higher offer, from another company perhaps, with a good chance of success. Bell Potter say that financial logic would point to the $33 per share in cash offered by the consortium for PPT. However, this offer looks opportunistic and driven by sell off in PPT’s share price down to $23 in October. When comparing PPT’s historic enterprise value over EBITDA ratio, the $33 offered is not a massive premium in Bell Potter’s opinion. They have reduced their price target from $5.90 to $4.90 and at its current share price of $3.91, this implies 25.3% share price growth in a year. 
• Trading Central have identified a bearish signal in JB Hi Fi (ASX:JBH) indicating that the stock price may fall from the close of $42.12 to the range of $35.25 to $36.75 over 28 days, according to the standard principles of technical analysis.

The local market’s green run came to an end on Thursday, with the key index closing 0.5% lower, as investor sentiment was dampened by the global sell-off from overnight on the back of tighter than expected results from the midterm US election. The ASX see-sawed throughout the session before closing lower, weighed down by sharp sell-offs in the energy, metals and mining and resources sectors. The utilities sector rocketed more than 13% today after Origin Energy (ASX:ORG), one of Australia’s leading energy companies, soared 34% after receiving a takeover offer worth $18.4 billion from Brookfield Asset Management and MidOcean Energy. The offer for $9 per share is the third revision of the initial offer the takeover partners first approached Origin with. Unsurprisingly, Origin Energy was the winning of today’s session.

It was a big day on the M&A front with fund manager Perpetual (ASX:PPT), also gaining over 12% after announcing it has received an improved takeover offer from the consortium comprising BPEA and Regal Partners, for $33 per share, which has been rejected by Perpetual’s board as the company determines the offer ‘continues to materially undervalue the company’.

Invictus Energy (ASX:IVZ) bucked the trend of the energy sector sell-off today, surging almost 150% after the upstream oil and gas company released a positive drilling update from its Mukuyu-1 well that is currently being drilled at the company’s 80%-owned SG 4571 licence in Zimbabwe’s Cabora Bassa Basin.

The winning stocks from today’s session were led by Origin Energy (ASX:ORG), followed by Perpetual (ASX:PPT) adding 14.82%, and News Corp (ASX:NWS) rallying 8.72%. And on the losing end, investors sold out of Pendal Group (ASX:PDL) fell 10.93% amid Perpetual’s requested delay to its acquisition of Pendal. Xero (ASX:XRO) also fell 10.85% today after releasing a first half trading update that missed expectations, and Block Inc (ASX:SQ2) fell 5.7% today.

The most traded stocks by Bell Direct clients today were Mineral Resources (ASX:MIN), New Hope Corporation (ASX:NHC) and Whitehaven Coal (ASX:WHC).

The Aussie Dollar is buying 64.22 US cents, 56.66 British Pence, 93.85 Japanese Yen and 1 New Zealand Dollar and 9 cents.

In economic data out today consumer inflation expectations data in Australia for November came in at an increase to 6% which beat the market forecast of a decline to 5.1%. Tonight, investors will be awaiting the release of core inflation data for October out of the US with the market expecting a decrease to 6.5% from 6.6% in September.

Wall Street ticked lower on Wednesday after the midterm election results came in tighter than expected. It was widely predicted that a “red wave” of Republican victories would be announced after Tuesday’s vote, however early results are showing the Democrats are performing better than expected in the poll, with the control of congress still hanging in the balance. The Dow Jones closed the midweek session 1.5% lower, the S&P500 fell 1.68% and the tech-heavy Nasdaq fell 2.12%.

Over in Europe markets closed lower as global investors await the final outcome of the midterm US election. The STOXX600 closed 0.3% lower, Germany’s DAX ended Wednesday’s session down 0.16%, the French CAC fell 0.17% and in the UK the FTSE100 closed 0.14% lower on Wednesday. European markets are still being moved by earnings season with Germany’s second biggest bank Commerzbank reporting yesterday that its net profit dropped by 52% in the third quarter and the company maintained its full-year profit outlook despite soaring inflation in the country.

What to watch today:

• Ahead of the local trading session the SPI futures are expecting the ASX to open 0.64% lower on the back of the global sell-off overnight
• On the commodities front, it’s a red run across the board this morning with crude oil trading 3.44% lower at US$85.85 per barrel, brent oil is down just over 3% at US$92.48 per barrel, gold is down 0.34% at US$1706.74 and iron ore is up 2.82% at US$91 per tonne.
• Taking a look at economic data out today, it’s a data dump on Australia’s building front with building permits data for September out at 11:30am AEDT and private house approvals data also out just before lunchtime.
• The Aussie dollar has weakened to buy 64.31 US cents, 56.35 British pence, 94.26 Japanese yen and 1 New Zealand dollar and 9 cents.

Trading Ideas:

• Trading Central has identified a bullish signal on The Lottery Corporation (ASX:TLC) following the formation of a pattern over a period of 35-days which is roughly the same amount of time the share price may rise from the close of $4.47 to the range of $4.78 to $4.86 according to standard principles of technical analysis.
• Trading Central has identified a bearish signal on Ridley Corporation (ASX:RIC) following the formation of a pattern over a period of 49-days which is roughly the same amount of time the share price may fall from the close of $2.14 to the range of $1.81 to $1.87 according to standard principles of technical analysis.

The following Wall Street closing higher again overnight before the midterm election results, the Australian market climbed for the fourth consecutive day. The rebound in metal prices lifted miners with gold stocks leading the group. St Barbara (ASX:SBM) and Regis Resources (ASX:RRL) soared higher, while energy stocks were dragged down by the fall in the oil price amid China demand worries. Whitehaven Coal (ASX:WHC) dropped more than 9%, weighing on other coal miners as well, as it cut full year guidance after being impacted by La Nina. 

 Sectors that have gained the most are materials, real estate and the financials, while the other 5 industry sectors closed in the red. 

 Miners boosted the market today. The best performers following St Barbara (ASX:SBM) and Regis Resources (ASX:RRL), were De Grey Mining (ASX:DEG), Evolution Mining (ASX:EVN) and Perseus Mining (ASX:PRU). The worst performing stocks were News Corp (ASX:NWS) and Whitehaven. 

 The most traded stocks by Bell Direct clients today were ANZ, Westpac (ASX:WBC) and PayGroup (ASX:PYG). 

 The Australian dollar is buying 65 US cents, 56.43 British Pence, 94.68 Japanese Yen and NZ$1.09.