Between the Bells

The US markets extended the green run this week into Tuesday as investors anticipate the midterm election results, expecting Republicans to take back the House of Representatives and possibly win the Senate as well, which could impact government spending and regulation. The Dow Jones industrials index added 1.36%, the S&P500 gained 0.97%, and the tech-heavy Nasdaq rallied 0.85%.

Over in Europe, markets closed higher as global investors looked to the US where the midterm elections are dominating headlines. The STOXX600 rallied to close Tuesday’s session 0.78% higher, while Germany’s DAX added 1.15% and the French CAC closed the session up 0.39%. In the UK, the FTSE100 added just 0.08% at the closing bell on Tuesday which was a recovery from a sell-off early in the session. The morning sell-off was sparked by British Retail Consortium figures showing UK retail sales growth slowed in October to 1.2% YoY compared to 1.8% in September which dampened investor sentiment.

What to watch today:

• In commodities, it’s been a mixed week across the board with commodities moving with investor sentiment around China’s COVID zero goal updates. This morning, crude oil is trading 1.32% lower at US$90.57 per barrel, natural gas is down 10.54%, gold is trading up 2.32% at US$1712 per ounce, and Iron ore is down 0.56% at US$88.50 per tonne.
• Ahead of the local trading day the SPI futures are expecting the local market to open 0.73% higher on the back of a strong session on Wall Street so far on Tuesday.
• The Aussie dollar has strengthened to buy 64.5 US cents, 56.25 British Pence, 95.07 Japanese Yen and 1 New Zealand Dollar and 9 cents.
• On the economic data front today, China’s inflation rate for October will be announced today with the market expecting the inflation in the region to have slightly cooled in October to 2.6% from 2.8% in September. High inflation is bad for markets and stock markets are forward looking. Inflation expectations have already been priced into current share prices so the risk for investors is that the inflation number comes in higher than expected and, if it does, then that is likely to put further pressure on share prices. With so much commentary on inflation right now, it’s important for listeners to look at what has already been priced in and new information that has not because that is where we will see movement.

Trading Ideas:

• Trading Central has identified a bullish signal on Telix Pharmaceuticals (ASX:TLX) following the formation of a pattern over a period of 7-days which is roughly the same amount of time the share price may rise from the close of $6.96 to the range of $8.10 to $8.40 according to standard principles of technical analysis.
• Trading Central has identified a bearish signal on Infomedia Limited (ASX:IFM) following the formation of a pattern over a period of 24-days which is roughly the same amount of time the share price may fall from the close of $1.23 to the range of $1.02 to $1.06 according to standard principles of technical analysis.

The ASX extended its green run into Tuesday, closing the session up 0.36% buoyed by a surge in utilities and consumer staples stocks, however strong gains were offset by a sharp sell-off in the energy sector amid declining commodity prices with crude oil down 0.5% at US$91.31 per barrel, natural gas down 3.35%, gold down 0.24% at US$1670.66 per ounce and iron ore down 0.56% at US$88.50 per tonne.

 Ingham’s (ASX:ING) shares fell more than 2% today after the poultry provider released its AGM presentation which outlined the challenging business conditions the company continues to face, including feed prices remaining elevated due to ‘tight global supply”. The Lottery Corporation (ASX:TLC) rallied today after the company reported overall group revenues rose 11% over the first four months of FY23. Magellan Financial Group (ASX:MFG) closed flat today after the company’s co-founder, Hamish Douglass, sold two-thirds of his shares in the company on Monday night. The share sale comes just days after MFG announced its funds under management increased to $51 billion in October.

 COP27 kicked off today, where global leaders meet in Glasgow this year for the 2-week long global climate summit which on the summit’s opening day has already had the UN warn leaders that the world is speeding down a ‘highway to hell’.

 The winning stocks for today’s session were Mineral Resources (ASX:MIN), Pilbara Minerals (ASX:PLS) and The a2 Milk Company (ASX:A2M). And the losing stocks today were led by James Hardie Industries (ASX:JHX) tanking more than 13.7% after the global building materials company announced first half results including the scrapping of the company’s dividend in favour of a share buyback program. Sims (ASX:SGM) lost almost 10% today and New Hope Corporation (ASX:NHC) fell 7.75%.

The most traded stocks by Bell Direct clients today were Lake Resources (ASX:LKE), Pilbara Minerals (ASX:PLS) and WA1 Resources (ASX:WA1).

 In economic data out today, Westpac Consumer Confidence dropped to 78 for November from 83.7 in October as rising interest rates and surging inflation weigh on family finances and the economy. NAB’s Business Confidence data for October fell from 5 points in September to 0 in October, amid growing concerns over rising interest rates and an uncertain global outlook.

 The Australian dollar has strengthened to buy 64.74 US cents, 56.25 British Pence, 94.83 Japanese Yen, and 1 New Zealand Dollar and 9 cents.

US equities had a positive run overnight, ahead of the US midterm elections, as well as key inflation data on deck over the next few days. Tonight, the midterm election will determine which party will control Congress, which currently, the House is controlled by Democrats. And on the economic front, investors are waiting on the consumer price index report out on Thursday. Stocks hit session highs in afternoon trade. The Dow Jones gained more than 400 points or 1.48%, the S&P500 gained 1.1% and the Nasdaq closed 1% higher. 

In Europe the STOXX600 closed 0.3% higher, Germany’s DAX up 0.6%, the French CAC down 0.5% and in the UK the FTSE100 gained 0.9%. 

What to watch today:

• Following the strong sessions in overseas markets, the Australian market is set to rise 0.6% at the open this morning, if you’re going by the SPI futures. 
• Watch the share price movements of James Hardie Industries (ASX:JHX) and SSR Mining (ASX:SSR), as both companies are set to release a quarterly report today.
• AGMs today include Bendigo and Adelaide Bank (ASX:BEN), Inghams Group (ASX:ING), Sims (ASX:SGM), and Lottery Corporation (ASX:TLC). 
• In commodities, oil is hovering at levels last seen in August, as investors weigh tight supply again a negative outlook for demand. The gold price has now steadied, following a 3% rally to 4-week highs in the previous session, after government officials backed rumours of China’s reopening. And iron ore has jumped 4.7% higher, rebounding from the three-year low of US$81.50 it hit on November 1st. Iron ore is now trading at US$89, amid hopes that China will transition away from its zero-COVID policy. So watch iron ore miners today like Champion Iron (ASX:CIA), BHP (ASX:BHP), Rio Tinto (ASX:RIO), Fortescue Metals (ASX:FMG) or Mineral Resources (ASX:MIN). 
• In economic data, today at 10:30am AEDT, Westpac will release its data on consumer confidence for November and NAB will release its data on business confidence for October. 

Trading Ideas:

• Bell Potter maintain a buy rating on United Malt Group (ASX:UMG) and have lowered their price target to $3.90. At its current share price of $3.10, this implies 25.8% share price growth in a year. 
• Bell Potter also maintain a buy rating on EROAD (ASX:ERD) and lowered their price target to $2.50. At its current share price of $1.20, this implies over 100% share price growth in a year.

The local market started the week in positive territory, closing Monday’s session up 0.6% driven by a surge in materials stocks amid a broad surge in commodity prices including iron ore jumping 4.71% to US$89 per tonne. Oil prices rallied in early trade before sharply declining after China indicated a relaxation of its COVID zero goal is not being considered yet. Crude oil fell 1.4% to US$91.31 per barrel, while brent crude dropped 1.17% to US$97.42 per barrel.

 Medibank Private (ASX:MPL) confirmed today it will not pay the ransom asked to protect the stolen data of 9.7 million current and former customers, and the insurer also warned customers they may get a call from criminals or see their leaked data online. Investors punished Westpac (ASX:WBC) today after the big bank released FY22 results including a decline in full-year cash profit to $5.276 billion and a fall in earnings across its consumer and business divisions compared to the prior financial year. The big bank’s chief executive also warned Aussies will be impacted by higher rates including when borrowers’ low fixed-rate loans are rolled over. Coronado Global Resources (ASX:CRN) shares plunged today after the leading global producer of high-quality metallurgical coal announced its potential $9 billion+ merger discussions with Peabody Energy Corporation have ended.

 The winning stocks for today’s session were Capricorn Metals (ASX:CMM), which added 10% after the company reported a major Mineral Resource Estimate boost at its Mt Gibson Gold Project in WA. Evolution Mining (ASX:EVN) added just under 7% today and West African Resources (ASX:WAF) rallied 6.93%. On the losing end, Coronado Global Resources (ASX:CRN) lost over 7% today, WiseTech Global (ASX:WTC) fell almost 6% and Altium (ASX:ALU) shed almost 4.5%.

 The most traded stocks by Bell Direct clients today were Woodside Energy (ASX:WDS), Northern Star Resources (ASX:NST) and Syrah Resources (ASX:SRY).

 In economic data out today, China’s trade balance data for October was released showing exports for the month dropped 0.3% from the year earlier, while imports fell 0.7%, with both missing market expectations. For the month, China’s trade surplus fell to US$85.15 billion, while the market was expecting the trade surplus to hit US$95.95bn.

 The Australian dollar has slightly weakened today to buy 64.08 US cents, 57.01 British Pence, 94.64 Japanese Yen, and 1 New Zealand dollar and 9 cents.

The local market rebounded from Thursday’s sell-off on Friday to close the session 0.5% higher, boosted by a surge in energy stocks on the back of a rebound in the price of oil, up 4.30% to US$98.74 per barrel. Block Inc. (ASX:SQ2) was the leading stock on Friday, gaining 10.93% after the fintech company released a Q3 trading update that beat market expectations. Coronado Global Resources (ASX:CRN) extended its rally on Friday adding 8.61%, while Allkem (ASX:AKE) added just over 6% in the last trading session of the week. On the losing end, Ramelius Resources (ASX:RMS) fell 5.63% despite no price sensitive news out of the gold mining company on Friday. Blackmores (ASX:BKL) fell 3.72%, and Hub24 (ASX:HUB) lost 3.27% on Friday.

 The most traded stocks by Bell Direct clients on Friday were Pilbara Minerals (ASX:PLS), Allkem (ASX:AKE) and Woodside Energy (ASX:WDS).

 Over in the US, Wall Street rallied on Friday after nonfarm payrolls grew by 261,000 in October, which well exceeded market expectations of an increase between 190,000 - 205,000. The unemployment rate in the US increased to 3.7% with the biggest job gainers by industry including health care, professional and technical services and leisure and hospitality. Average hourly earnings in the US also rose 0.45 for the month and were up 4.7% from a year ago. The Dow Jones added 1.26%, the Nasdaq rose 1.28% and the S&P500 jumped 1.36% on Friday. Pfizer shares jumped 1.4% after the biotech company announced it has commenced an early-stage study of a combined COVID-19 and flu vaccine.

 Over in Europe, the STOXX600 closed 1.9% higher on Friday after a big week of corporate earnings results. German sportswear brand Adidas jumped 20% on Friday to top the STOXX600 after announcing new collaborations following its split from artist Kanye West. Germany’s DAX added 2.51%, the French CAC rose 2.77% and in the UK the FTSE100 added 1.03%.

 What to watch today:

• The ASX is expected to rise 1.32% on the back of the rally on Wall Street that ended last week.
• In economic data today, China’s trade balance data for October is out today with the market expecting an increase in China’s trade surplus to $95.95 billion from $84.74 billion in September. Local investors will be keeping a close eye on local data out tomorrow in terms of Westpac Consumer Confidence data for November and NAB Business Confidence data for October out tomorrow.
• In commodities, it’s a green run to start the week with crude oil up 5.04% at US$92.61 per barrel, brent crude is up 4.30% at US$98.74 per barrel, natural gas is soaring 8.3%, gold is up 3.15% at US$1680.54 per ounce and iron ore is up 4.71% at US$89 per tonne.
• The Aussie dollar has strengthened to buy 64.64 US cents, 57 British Pence, 94.58 Japanese Yen and 1 New Zealand dollar and 9 cents.

 Trading Ideas: 

• Trading Central has identified a bullish signal on Strandline Resources (ASX:STA) 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 $0.43 per share to the range of $0.58 to $0.62 per share according to standard principles of technical analysis.
• Trading Central has also identified aa bearish signal on JB Hi-Fi (ASX:JBH) following the formation of a pattern over a period of 24-days which is roughly the same amount of time the share price may fall from the close of $42.50 to the range of $35.25 to $36.50 according to standard principles of technical analysis.

The Aussie share market gained 1.06% this week (Mon-Thu) despite the US Federal Reserve maintaining its hawkish approach to tackling inflation and China’s slowing factory activity. 

In this week's wrap, Grady covers:

• (0:11) Why iron ore entered freefall mode this week
• (2:32) China's GDP forecasts
• (3:40) The best performing stocks on the ASX200
• (4:42) The most traded stocks & ETFs by Bell Direct clients 
• (5:20) Three economic news items to watch out for

US markets closed sharply lower again on Thursday after Fed Chair Jerome Powell said that hopes for a policy pivot were ‘premature’ after the central bank delivered a fourth consecutive 75-basis point rate hike on Wednesday. The S&P500 fell 1.1%, the Dow Jones lost 0.5% and the tech-heavy Nasdaq took the biggest hit, closing the session down 1.7%. Despite the tech sell-off, shares in creative marketplace Etsy rallied 15% on Thursday after the company released quarterly earnings results that beat market expectations. US investors now shift focus to the important jobs data out today, with the market expecting an increase of 190,000 jobs to payrolls in October. Should the figures come in at 190,000 it would indicate the tight labour market in the US remains as demand of jobs continues to well outweigh supply of available workers across the nation.

Over in the UK, investor sentiment was also dampened by the Bank of England following in the US footsteps by also raising the UK’s interest rate 75-basis points yesterday. Despite the rate hike, the FTSE100 rose 0.62% on Thursday. In Europe, the sell-off from Wednesday continued with Germany’s DAX falling almost 1%, the French CAC dropping 0.54% and the STOXX600 closing down 0.93%.

What to watch today:

• Ahead of the local trading session, the SPI futures are anticipating the ASX to open 0.35% lower on the back of the Wall Street sell-off overnight.
• In commodities this morning, crude oil is trading 2.05% lower this morning at US$88.15 per barrel, brent oil is trading 1.79% lower at US$94.45 per barrel, gold is also trading 0.29% lower at US$1630.10 per ounce and iron ore is flat at US$81.50 per tonne.
• The Aussie dollar has weakened overnight to buy 62.94 U.S. cents, 55.91 British Pence, 93.33 Japanese Yen and 1 New Zealand dollar and 9 cents.

Trading Ideas: 

• Trading Central has identified a bullish signal on Galan Lithium (ASX:GLN) following the formation of a pattern over a period of 8-days which is roughly the same amount of time the share price may rise from the close of $1.61 to the range of $2.04 to $2.14 according to standard principles of technical analysis.
• Trading Central has also identified a bearish signal on Bendigo and Adelaide Bank (ASX:BEN) following the formation of a pattern over a period of 23-days which is roughly the same amount of time the share price may fall from the close of $8.99 to the range of $7.40 to $7.70 according to standard principles of technical analysis.

The local market followed in the footsteps of global markets following the Fed’s latest 75-basis point rate hike announced yesterday, with the ASX closing Thursday’s session down 1.84% as a sharp sell-off in materials stocks weighed on the key index. Every sector aside from communications services stocks ended the session in the red.

The story of the session today was shares in Australian investment fund and trustee group Perpetual (ASX:PPT) lifting more than 8% after the company announced it has received and rejected a takeover offer for $30 per share from a consortium of BPEA Private Equity and fund manager Regal Partners. Woolworths (ASX:WOW) released first quarter results this morning including sales up 1.8% to $16.36 billion, however online sales tumbled 14.5% as Australians cycled out of lockdowns in the post-pandemic era. The supermarket giant also revealed average Australian food prices increased 7.3% on the PCP, with the company unsure of how much of this relates to the cost-of-living pressures compared to COVID-19 normalisation. The a2 Milk Company (ASX:A2M) also made waves today announcing it has been granted temporary access to sell its a2 Platinum infant formula in the US until 6th January 2023, as the country continues facing a significant baby formula shortage crisis following the contamination scare back in February.

The winning stocks today were Perpetual (ASX:PPT) after receiving and rejecting a takeover bid, New Hope Corporation (ASX:NHC) and Downer EDI (ASX:DOW). On the losing end, Domino’s Pizza (ASX:DMP) tanked almost 12% after the pizza giant released a disappointing trading update at its AGM. Pendal Group (ASX:PDL) shares fell 10.7% and Lendlease (ASX:LLC) lost 8.73% today.

The most traded stocks by Bell Direct clients today were the BetaShares Strong Bear Hedge Fund (ASX:BBOZ), Norfolk Metals (ASX:NFL) as the gold and uranium explorer soared more than 125% today after announcing its maiden drill test intersected native copper and sulphide mineralisation at the Roger River project. Bell Direct clients also traded BHP Group (ASX:BHP) and Rio Tinto (ASX:RIO) today.

Australia’s trade balance data for September released today indicated the country’s trade surplus surged to a three-month high of $12.44bn for the month, well exceeding market expectations, and showing a recovery in the country’s exports, driven by LNG and metal ore exports rising 19.5% and 8.7% respectively.

On the commodities front, brent oil is down 0.7% at US$95.50 per barrel, coal is up 0.56% at US$361 per tonne, gold is up 0.14% at US$1637 per ounce and iron ore is flat at US$81.50 per tonne.

The Australian dollar has weakened to buy 63.5 US cents, 55.91 British Pence, 93.76 Japanese Yen, and 1 New Zealand dollar and 9 cents.

The US markets were sharply sold off across the key indices on Wednesday after the Federal Reserve moved to raise the country’s cash rate by 75-basis points for a fourth straight month, in a bid to tackle the nation’s 40-year high inflation. Federal Chair Jerome Powell said there were ‘no grounds for complacency’ but also said the chances of the US economy achieving a ‘soft landing’ and avoiding recession as it fights off inflation have ‘narrowed’. The Dow Jones industrials index fell 1.55%, the S&P500 shed 2.5% and the tech-heavy Nasdaq plunged 3.36%. Powell also indicated the Fed expects to raise interest rates to 4.4% by the end of this year.

 Tech stocks tumbled on Wednesday, with Alphabet, Apple and Microsoft each slumping more than 3%. Trading volumes surged on Wednesday after the Fed handed down its latest interest rate hike with FactSet data showing volume was fairly muted ahead of the decision, with the widely followed SPDR S&P500 ETF which tracks the benchmark index, traded about 100.3m shares with roughly 20 minutes left in the session. The midweek global sell-off extended into Europe with Germany’s DAX falling 0.61%, the French CAC losing 0.81% and, in the UK, the FTSE100 closed 0.58% lower, as investors focus on the Fed’s aggressive rate hike moves.

 What to watch today:

• Ahead of the local trading session the SPI futures are expecting the ASX to open 1.59% lower amid the global market sell-off overnight.
• In commodities, it’s a mixed bag this morning with Brent crude oil trading 0.79% higher at US$95.40 per barrel, while gold is down 0.64% at US$1,637 per ounce, and iron ore is down 0.61% at US$81.50 per tonne. The Aussie dollar has weakened overnight to buy 63.55 US cents, 55.91 British Pence, 93.90 Japanese yen and 1 dollar and 9 New Zealand cents.
• Australia’s trade balance data will be released at 11:30am AEDT today, with the market expecting a rebound in trade surplus to $8.85 billion.

 Trading Ideas:

• Trading Central has identified a bullish signal on Bellevue Gold (ASX:BGL) following the formation of a pattern over a period of 40-days which is roughly the same amount of time the share price may rise from the close of $0.77 to the range of $0.91 - $0.95 according to standard principles of technical analysis.
• Trading Central has also identified a bullish signal on Energy Resources (ASX:ERA) of Australia following the formation of a pattern over a period of 38-days which is roughly the same amount of time the share price may rise from the close of $0.22 to the range of $0.26 - $0.28 according to standard principles of technical analysis.

The local market extended its rally into the midweek session, closing the day up just 0.14%, buoyed by the materials sector jumping 1.13% while real estate stocks were sharply sold-off on the back of the RBA’s 0.25% interest rate hike announcement. A day after the RBA continued its dovish approach to tackling the country’s inflation by announcing another 25-basis point rate hike, CBA has announced its variable home loan interest rate will increase by 0.25%, passing the full RBA rate hike onto customers. Shares in the big bank rose 0.15% today following the announcement.

New data released out of the US indicating crude oil inventories are declining, signal further signs of demand-driven market tightness which fuelled the price of crude oil to jump 1.25% today to US$89.5 per barrel. The new data also sparked a rally for oil giants Woodside Energy (ASX:WDS) and Santos (ASX:STO) today, each gaining 1.5% and 0.6% respectively. The energy sector regained momentum today after closing lower yesterday, on the back of the news about the declining oil stockpile in the US.

The story of the session today was global market-leading packaging company Amcor (ASX:AMC) falling 4.35% despite releasing its quarterly update including a 9% increase in revenue to US$3.7bn, and net income rising 15% to US$232m. The packaging company also reported price rises totalling US$400m over the three months to pass on the increase in raw materials to customers.

Taking a look at the stocks that led the market gains today, Coronado Global Resources (ASX:CRN) jumped 8.55% after Morgans retailed its ‘add’ rating on the coal miner and increased its price target on CRN to $2.40, noting better than expected revenue and earnings during the last quarter as the reason. Lake Resources (ASX:LKE) lifted 5.2% today following the release of a positive update on the company’s Kachi project in Argentina. Imugene (ASX:IMU) also added 5% today, to round out the top three winning stocks of the session. And on the losing end of the market, Domino’s Pizza (ASX:DMP) fell 5.8% today, Cromwell Property Group (ASX:CMW) lost 5.5% and Amcor (ASX:AMC) fell 4.4%.

The most traded stocks by Bell Direct clients today were Seven Group (ASX:SVW), Boral (ASX:BLD) and the Commonwealth Bank of Australia (ASX:CBA).

Today was a big day for housing data in Australia with the release of building permits for September showing a 5.8% decline for the month which was lower than the market was expecting, while home loans for September fell 9.3% which is more than triple the amount the market was expecting.  

On the commodities front today, gold is trading 0.2% higher at US$1,650.85 per ounce, iron ore is down 0.6% at US$81.50 per tonne, and lithium carbonate continues rising to new records, up 2.2% to 564,500 Chinese Yuan per tonne.

The Australian dollar is buying 64 US cents, 55.7 British Pence, 94.71 Japanese Yen and 1 New Zealand Dollar and 9 cents.