Between the Bells

It was a strong session for US equities overnight, with all three major benchmarks rallying higher. Strong earnings results came in from the banks that boosted the volatile market. The Dow Jones gained 550 points or 1.86%. The S&P500 gained 2.65% and oversold tech names also enjoyed a rebound, with the Nasdaq closing with a 3.43% gain. 

What to watch today: 

• The SPI futures are suggesting the Australian market rise 0.92% at the open this morning. 
• In economic news, today the RBA will release the minutes from its October meeting, when the cash rate was raises a further 25 basis points to 2.6%, while brining borrowing costs to a level last seen mid-2013. It’s not likely the minutes will move markets but it will provide us with some more commentary the RBA’s current position. 
• In commodities, 
  • Oil is trading flat at around US$85 per barrel as China’s continuation of loose monetary policy offset fears of high inflation and energy costs. 
  • The price of gold is up 0.5%, extending its rebound after hitting a two-week low earlier in the week, as the UK’s decision to reverse unfunded tax cuts lifted market sentiment. 
  • Seaborne iron ore is down 1%. 
• Watch the price movements of Rio Tinto (ASX:RIO) and Hub24 (ASX:HUB). Both companies are set to release a quarterly report today. 
• While Endeavour (ASX:EDV), Cochlear (ASX:COH) and Brambles (ASX:BXB) will hole their AGMs today. 

Trading Ideas:

• Bell Potter maintain a Buy rating on Coronado Global Resources (ASX:CRN). The companies CY22 guidance implies a strong July- December lift in coal output and corresponding lower costs. And Bell Potter say that CRN will generate strong free cash flow on their met coal price outlook. And in the absence of acquisition or major project developments, the company is likely to return surplus funds to shareholders, and that’s reflected in their strong dividend yield outlook. Bell Potter have increased their price target to $2.20 and at CRN’s current share price of $2.06, this implies 6.8% share price growth in a year. 
• And Trading Central have identified a bearish signal in BHP Group (ASX:BHP) indicating that the stock price may fall from the close of $39.09 to the range of $34.40 to $35.30 over 15 days, according to the standard principles of technical analysis. 

The local market followed in the footsteps of Wall Street on Friday, with the ASX200 closing the first trading session of the week down 1.4% as every sector ended the day in negative territory, led by a sharp sell-off in energy stocks. The energy sector was weighed down by declining oil prices over the last week.

Embattled casino giant Star Entertainment Group (ASX:SGM) entered a trading halt today after the New South Wales casino regulator slapped the company’s Sydney casino with a record $100 million fine and suspended its licence for compliance failures. Whitehaven Coal (ASX:WHC) shares dipped today after Morgan Stanley reported La Nina weather events present a 5% to 10% production risk to 2023 financial year guidance for mines operating on Australia’s east coast and in South-East Asia. Four of Whitehaven Coal’s mines are located in the Gunnedah Basin of New South Wales, while a number of its other sites are near the Bowen Basin in Central Queensland. Lithium stocks were pushed higher today by the price of lithium carbonate soaring to an all-time high on Friday of 532,000 yuan per tonne, or $118,596.09 AUD. Core Lithium (ASX:CXO) added 5.63%, Liontown Resources (ASX:LTR) jumped 5.5% and Lake Resources (ASX:LKE) rallied 1.74% today.

The winning stocks for today’s session were, Core Lithium (ASX:CXO) amid the rising price of lithium carbonate, Liontown Resources (ASX:LTR) came in as the second top stock of the session and News Corporation (ASX:NWS) rounded out the top the winning stocks for Monday, adding 3.63%. And the stocks investors sold-off today included Adbri (ASX:ABC), which tanked 22% after the company announced a leadership transition regarding the CEO Nick Miller leaving his role as CEO and as a director, as well as a trading update outlining external headwinds set to impact the company’s underlying NPAT for the full year ending December 31. Investors also sharply sold out of Costa Group (ASX:CGC) shares today, with its share price sinking 13% after the company also released a trading update outlining increased costs related to adverse weather conditions. St Barbara (ASX:SBM) rounded out the bottom three performing stocks today, with its share price falling 8.22% to close the session.

The most traded stocks by Bell Direct clients today were Hawsons Iron (ASX:HIO), Bank of Queensland (ASX:BOQ) and the BetaShares Strong Bear Hedge Fund (ASX:BBUS).

Investors will be awaiting the release of the RBA’s meeting minutes out tomorrow to give an indication of future rate hike moves by the country’s central bank.

The Australian dollar is buying 62.18 US cents, 55.09 British Pence, 92.76 Japanese Yen, and 1 dollar 12 cents New Zealand.

The local market soared 1.75% on Friday on the back of the US markets sharp rebound on Thursday, after US headline inflation came in below market expectations of a decline to 8.2% for the month of September, while core inflation jumped to 6.6%, which is a 40-year high. Investor sentiment locally was boosted by the US markets experiencing the biggest turnaround since 2020 from negative to sharply positive territory after CPI data was released. For the week, the ASX lost 0.06%.

Locally, the 2022 favourite energy sector led the charge again on Friday, adding 3.75%, while utilities stocks jumped 3.62% and Consumer Staple stocks rallied 2.04%. All 11-sectors of the ASX ended Friday’s session in positive territory. The winning stocks on Friday were Virgin Money UK (ASX:VUK), which lifted 9.525, Domino’s Pizza (ASX:DMP) added 7.6% and Liontown Resources (ASX:LTR) jumped 7.57%. On the losing end, Pilbara Minerals (ASX:PLS) fell 5.06%, St Barbara (ASX:SB) lost 3.31% and Ramelius Resources (ASX:RMS) ended the day down 3.1%.

The most traded stocks by Bell Direct clients on Friday were the BetaShares Australian Strong Bear Hedge Fund (ASX:BBOZ), Pilbara Minerals (ASX:PLS) and Whitehaven Coal (ASX:WHC).

Overseas on Friday, US markets closed lower across the key indices on Friday, following the release of big bank earnings reports. The Dow Jones fell 1.3%, the S&P500 lost 2.4% and the tech-heavy Nasdaq took the biggest hit, closing the day down 3%. Investors reacted to a mixed bag of earnings from the big banks with consensus across the big banks indicating the economy is strong now but outlook for the future is uncertain. JP Morgan Chase was one bank that impressed investors in its earnings results with the bank rallying 1.6% on the back of reporting stronger revenues amid higher consumer spending, high interest rates and strong performance on its trading desks. Morgan Stanley on the other hand fell 5% after its reports missed analysts’ expectations for both earnings and revenue.

Over in Europe and the UK, the key indices closed higher on Friday. The FTSE100 added 0.12%, the French CAC jumped 0.9% and Germany’s DAX added 0.67%. Markets in Europe and the UK turned higher after the UK government U-turned on some of its controversial fiscal policies and the country’s finance minister was fired. New UK Prime Minister Liz Truss said on Friday that the government would include a further reversal of tax-cutting plans laid out in the mini-budget on September 23.

What to watch today:

• ASX futures are expecting the local market to open sharply lower, down 1.51% to start the new trading week following on from the sell-off on Wall Street on Friday.
• In economic data, the RBA’s meeting minutes will be released on Tuesday, giving an insight into just how dovish the RBA are toward raising interest rates in future months, and the country’s unemployment rate is out on Thursday. Over in the US, it is a week for building and property market data with building permits and house starts data for September both out on Wednesday and existing home sales data for September out on Thursday.
• On the commodities front, it’s a red start to the week for commodities with Brent Crude oil trading 3.08% lower at US$91.65 per barrel, Gold is trading down 1.34% at US$1643 per ounce, and iron ore is trading flat at US$96.50 per ton.

Trading Ideas: 

• Trading Central has identified a bullish signal on James Hardie Industries (ASX:JHX) 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 $32.90 to the range of $37.50 to $ 38.50 according to standard principles of technical analysis.
• Trading Central has also identified a bearish signal on Euroz Hartleys Group (ASX:EZL) following the formation of a pattern over a period of 15-days which is roughly the same amount of time the share pr

The Aussie share market tumbled 1.78% this week (Mon-Thu), following stronger than expected jobs data in the US. The energy sector was sharply sold off, amid the declining price of oil. 
 
 In this week's wrap, Grady covers:

• (0:49) Why retail stocks have been beaten down this year
• (1:45) Holding banks in a rising interest rate environment 
• (2:23) Consumer staples businesses that have done well
• (4:00) The biggest movers on the ASX200 this week
• (6:05) The most traded stocks & ETFs by Bell Direct clients 
• (6:35) Two economic news items to watch out for

In New York overnight, we saw quite a major reversal in intraday trading. The Dow Jones rose 2.8% or more than 800 points, after being down more than 500 points earlier in the day. It was an impressive rebound, following US inflation data coming in; CPI jumped to a 40-year high and higher than expected, while the country’s headline inflation declined to 8.2%, in line with market expectations. This saw stocks fall to their lowest levels since 2020, before rebounding. The S&P500 posted its widest trading range since March 2020, and closed 2.6% higher, while the Nasdaq closed 2.2% higher. It was the fifth largest intraday reversal from a low in the history of the S&P500, and the fourth largest for the Nasdaq. 

What to watch today:

• The Australian market is set jump 1.66% at the open this morning, following Wall Street’s strong lead. 
• In commodities: 
  • The price is oil has jumped over 2%, halting three sessions of declines. 
  • Gold has dropped to an over two-week low as the US dollar jumped. 
  • Iron ore has fallen more than 1%, the lowest in nearly 11 months as the looming threats of fresh lockdowns in China’s major cities kept demand for industrial inputs low. 
• Harvey Norman (ASX:HVN) is set to go ex-dividend today. 

Trading Ideas: 

• Bell Potter maintain a Buy recommendation on DroneShield (ASX:DRO), after the company released September Quarter results in-line with expectations. Their price target is $0.24 and at its current share price of $0.17, this implies 40% share price growth in a year. 
• And Trading central have identified a bullish signal in West African Resources (ASX:WAF) indicating that the stock price may rise from the close of $1.06 to the range of $1.20 to $1.24 over 20 days according to the standard principles of technical analysis. 

The local market followed the global market sell-off overnight to close Thursday’s session down 0.07% as investors fled REIT stocks, sending the sector down 1.87%, while piling into the banks and lifting the financial sector 1.4%.

 The story of the day and winning stock of the day was Australia’s national carrier Qantas (ASX:QAN) releasing a group market update outlining strong demand has accelerated the airline’s recovery. The flying kangaroo expects first half profit before tax of between $1.2bn and $1.3bn, which is a sharp recovery from the $1.9bn loss before tax reported for FY22. Qantas also said operational performance continues to improve to expect operations to be back at or around pre-COVID service levels in first half of October, and annual wages for around 20,000 employees will be increased following a two-year wage freeze. Other winning stocks today included Kelsian Group (ASX:KLS) and St Barbara (ASX:SBM) which added 6.3% and 4.1% respectively.

 Software company ELMO (ASX:ELO) soared 22% today after the HR tech company confirmed it has received takeover approaches from a number of parties including Accel-KKR, which ELMO has said it is in discussions with some parties in the context of maximising shareholder value.

 On the losing end of the market, NIB Holdings (ASX:NHF) tanked almost 12% today following the completion of the company’s $135m institutional placement. Graincorp (ASX:GNC) fell 6.3% today and Allkem (ASX:AKE) also fell 5.56% to end Thursday’s session.

Medibank Private shares entered a trading halt today after the health insurance provider reported a cyber incident, specifically it ‘detected unusual activity on its network yesterday’. The company has engaged specialised cyber security firms to assist with containing and investigating the attack.

 Tonight’s big focus is the release of US core inflation data for September which is out at 10:30pm AEDT, with the market expecting US core inflation to drop slightly to 8.1% in September from 8.3% in August.

 The Australia dollar is buying 62.78 US cents, 56.60 British Pence, 92.19 Japanese Yen and 1 New Zealand dollar and 12 cents.

The US markets closed lower on Wednesday and the US dollar retreated as investors digested the Fed’s latest FOMC minutes released overnight.

 For the most part, the FOMC minutes were in-line with expectations of further aggressive rate hikes by the Fed to come, but investors also noted that many Fed officials ‘emphasised the cost of taking too little action to cool inflation outweighed the cost of taking too much action’ but the Fed’s are aware of the possible consequences of hiking interest rates too rapidly.

The Dow Jones industrials index fell 0.1%, the Nasdaq closed 0.09% lower and the S&P500 ended the day down 0.33%.

 Also overnight, the FDA approved new Omicron-targeted COVID-19 booster shots from Pfizer and Moderna for administration in children.

OPEC+ has slashed its forecast for global economic growth and crude oil demand in a move to justify its move last week to cut daily oil production by 2 million barrels per day. OPEC+ said a host of factors including escalating tensions between Russia and Ukraine, rising inflation, and aggressive action by the central banks, were behind its forecasted decline in demand for crude oil.

Over in Europe and the UK, markets extended their sell-off into a 6th consecutive session with Germany’s DAX ending the midweek session down 0.4%, while the French CAC lost 0.25%.

The UK’s FTSE100 was also sold off, ending the day down 0.86%. 

On the commodities front, brent crude oil continues to decline this morning, trading 1.84% lower at US$92.56/barrel, gold is trading 0.54% higher at US$1674/ounce and iron ore is trading 0.5% lower at US$97.50/ton.

What to watch today:

• Ahead of the local trading session, ASX futures are expecting the Australian market to open 0.27% lower, weighed down by the global sell-off overnight.
• On the economic data front today, investors will be keeping a close eye on Core inflation data for September in the US which is out later tonight.
• Stocks going ex-dividend today include CPT Global (ASX:CGO) and Katana Capital (ASX:KAT). If you have been thinking about these stocks it might be worth considering buying in today as stocks going ex-dividend generally trade lower on the ex-dividend date.

Trading Ideas:

• Trading Central has identified a bullish signal on Select Harvests (ASX:SHV) following the formation of a pattern over a period of 19-days which is roughly the same amount of time the share price may rise from the close of $5.12 to the range of $5.85-$6.05 according to standard principles of technical analysis.
• Trading Central has also identified a bearish signal on Mineral Resources (ASX:MIN) following the formation of a pattern over a period of 21-days which is roughly the same amount of time the share price may fall from the close of $70.12 to the range of $57-$60 according to standard principles of technical analysis.

The local market rallied in afternoon trade before sharply declining in the last hour of trade to close just 0.04% higher as a rally for the banks offset a sharp sell-off in utilities and energy stocks. Some relief was also felt for the REIT sector today as real estate stocks edged 1.44% higher at the end of the midweek session. The lacklustre session followed a mixed day on Wall Street as investor sentiment remains on edge ahead of FOMC minutes and core inflation data due out tomorrow.

 The mining giants took a hit following a 0.5% decline in the price of iron ore to US$97.5 per ton, while Lake Resources (ASX:LKE) rallied 2% after inking a supply deal to supply battery grade lithium to SK On from the company’s Kachi Project in Argentina. The winning stock was the Bank of Queensland (ASX:BOQ) as it soared 11.13% to have its best session in 2-years after releasing its FY22 annual report outlining key achievements including NPAT up 15% to $426 million for FY22. Coronado Global Resources (ASX:CRN) rose more than 8% today and Sayona Mining (ASX:SYA) regained ground today closing the midweek session up 4.65%.

 On the losing end, Mineral Resources (ASX:MIN) fell 3.65% today amid the declining price of iron ore, Nickel Industries (ASX:NIC) lost almost 3.2% and Telix Pharmaceuticals (ASX:TLX) ended the day down just over 3%.

 The most traded stocks by Bell Direct clients today were the BetaShares Geared Australian Equity Hedge Fund (ASX:GEAR), Mineral Resources (ASX:MIN) and Fortescue Metals Group (ASX:FMG).

 On the economic data front for tomorrow it is a big day over in the US with the FOMC minutes due out, indicating exactly how hawkish the Fed is toward raising interest rates further moving forward, and Core inflation data in the US is also out which will give an insight into just how successful the Fed’s aggressive interest rate hikes have been at cooling the country’s high inflation.

 The Australian dollar has hit a fresh 2.5 year low today, with 1 Aussie dollar buying 62.67 US cents, 65 Euro cents, 56.60 British Pence, 91.74 Japanese Yen, and 1 New Zealand Dollar and 12 cents.

 Taking a look at global markets overnight, in the final hours of trade on Tuesday the S&P500 overturned a morning rally to close 0.65% lower, the tech-heavy Nasdaq shed 1.1% and the significant early morning rally for the Dow Jones weakened, causing the industrials index to close just 0.12% higher. Stocks lost momentum in afternoon trade ahead of key inflation data out later in the week that will provide an update on the state of the US economy.

 In the UK and Europe, it’s a different story today as investors continued selling out of the markets there on Tuesday with the UK’s FTSE100 ending Tuesday’s session down 1.06%, while in Europe, Germany’s DAX fell almost half a percent while the FRENCH CAC ended the session down 0.13%. European markets were sold-off for a fifth straight session amid persistent investor concerns over global growth, the prospect of further monetary policy tightening and the escalating tensions between Russia and Ukraine. Over the last month investors have pulled 694 million pounds worth of investments in UK shares, Asia-focused equities manager Platinum Asset Management posted $172 million in outflows for September and retail investors locally have pulled $400 million from Magellan Financial Group in the last month amid rising interest rates and the possible recessionary market environment especially for the UK and Europe.

What to watch today: 

• Ahead of the new trading day, ASX futures are expecting the local market to open 0.33% lower following the afternoon sell-off on Wall St overnight.
• On the commodities front, brent crude oil continues to decline this morning, trading 1.65% lower at US$94.62 per barrel, gold has rebounded to trade 0.58% higher around US$1677 per ounce, and iron ore is trading flat at US$98 per ton.
• In economic data, there is no local economic data released today but over in the UK investors will be awaiting GDP data for the month of August, while US PPI data for September will be out later tonight.
• Stocks going ex-dividend today include Horizon Oil (ASX:HZN), Regis Resources (ASX:RRL), and WAM Global – Wilson Asset Management (ASX:WGB). If you have been thinking about these stocks it might be worth considering buying in today as stocks going ex-dividend generally trade lower on the ex-dividend date.
• The Aussie dollar has weakened to buy 62.62 US cents, 56.50 British Pence, 92.06 Japanese Yen and 1 New Zealand Dollar and 12 cents.

Trading Ideas:

• Trading Central has identified a bullish signal on Superloop (ASX:SLC) following the formation of a pattern over a 32-day period, which is roughly the same amount of time the share price may rise from the close of $0.71 to the range of $0.82-$0.84 according to standard principles of technical analysis.
• Trading Central has also identified a bullish signal on Race Oncology (ASX:RAC) following the formation of a pattern over a period of 15-days which is roughly the same amount of time the share price may rise from the close of $2.05 to the range of $2.25 to $2.29 according to standard principles of technical analysis.

The ASX succumbed to the pressure of the global market sell-off today, closing Tuesday’s session 0.34% lower despite a morning rally. Investors sharply sold out of energy stocks amid a decline in the price of oil, while also weighing up declining consumer and business confidence data which were released today for September and October respectively. Westpac Consumer Confidence slid almost 1% for October, while NAB Business Confidence data dropped 5 points in September amid difficult business and economic conditions.

The oil and gas mining giants took a hit today on the declining price of oil, with Beach Energy (ASX:BPT) falling 2.5%, Woodside Energy (ASX:WDS) shedding 2% and New Hope Corporation (ASX:NHC) ended the day down 1.2%.

Despite the market closing lower, some stocks made headlines for surging ahead today including John Lyngs Group (ASX:JLG), which recovered 6% of yesterday’s sharp sell-off, while Allkem (ASX:AKE) added nearly 5% and Orica (ASX:ORI) gained 4.4% today.

On the losing side, Sayona Mining (ASX:SYA) was the worst performing stock on the ASX200 today despite no price sensitive news released by the lithium producer today. Imugene (ASX:IMU) continued its sell-off today, losing 5.5%, despite no news out of the company. Megaport (ASX:MP1) rounded out the bottom three performing stocks today, closing just under 5% lower. Baby retailer Baby Bunting (ASX:BBN) shares tanked more than 20% today after the company issued a warning about the company’s gross profit margin as it fell 208 basis points over the PCP to 37.2%. While travel business Helloworld Travel (ASX:HLO) fell 0.5% today, despite the company releasing an update flagging a rebound in travel is imminent as its total transaction value soared 352% in the September quarter to $561m from the same period a year earlier.

On the economic data front for tomorrow there is no local data released tomorrow, however overseas the UK’s GDP data for August will be released tomorrow afternoon and US Producer Price Index data for September will be out later tomorrow night.

The Australian dollar has weakened again, trading at 62.6 US cents, 57.19 British Pence, 91.16 Japanese Yen and 1 New Zealand dollar and 13 cents.