Between the Bells

US markets continued to decline on Monday, with the tech-heavy Nasdaq hitting its lowest point in two years led by a sharp sell-off in chip stocks, amid a policy change by President Biden to limit US companies from selling advanced semiconductor and other equipment to China. Tech stocks have also been hit hard lately from their relatively high valuations and the rising cost of borrowings. The Dow Jones industrials index closed just 0.05% lower, the S&P500 lost 0.75% and the Nasdaq fell 1.04%. Stocks extended on last week’s sell-off after JP Morgan warned that the US would likely slump into a recession in 2023 and that it may not just be a mild economic contraction as some economists have projected.

Over in Europe, the global sell-off continued amid growing concerns over economic growth and tightening monetary policy ahead of key inflation data due out next week. Investors are also keeping a close eye on escalations in tension between Russia and Ukraine as the war in the region has intensified in recent days. Germany’s DAX closed Monday’s session flat, the French CAC lost 0.45% and, in the UK, the FTSE100 also ended the day down 0.45%.

On the commodities front, the price of most commodities across the board are down, with brent crude oil trading 2.14% lower at US$95.86 per barrel, natural gas is down 3.5% to US$6.5 per Million British Thermal Units, coal is down 3.75% to US$385 per ton, gold is down 1.54% at US$1668.14 per ounce and iron ore is trading flat at US$98 per ton.

What to watch today: 

• Ahead of the local trading session in Australia, the ASX futures are anticipating a 0.18% rise at the opening bell despite the negative start to the week overseas. It could be a difficult session today for oil and gold stocks amid a decline in the price of oil and gold overnight.
• On the economic data front today, we will be keeping a close eye on Westpac Consumer Sentiment data for October and NAB Business Confidence data for September which will both be released this morning, giving an insight into business and market conditions from a business and consumer perspective.
• Stocks going ex-dividend today include Turners Automotive Group (ASX:TRA) and Reece (ASX:REH). 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 Sheffield Resources (ASX:SFX) following the formation of a pattern over a period of 87-days which is roughly the same amount of time the share price may rise from the close of $0.53/share to the range of $0.61-$0.63/share according to standard principles of technical analysis.
• Trading Central has also identified a bearish signal on Ten Sixty Four (ASX:X64) 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 $0.60 to the range of $0.47-$0.49/share according to standard principles of technical analysis.

Following the global market sell-off on the back of stronger than expected jobs data out of the US that ended last week on a negative note, the ASX kicked off the new trading week in the red, driven by a sharp sell-off in utilities, technology, and gold stocks today although every sector ended the session lower. At the closing bell, the ASX200 fell 1.4% to 6667.80 points.

 Iron Ore stocks avoided the sharp sell-off today amid a rise in the price of the commodity, which saw BHP (ASX:BHP), Fortescue Metals Group (ASX:FMG) and Rio Tinto (ASX:RIO) shares ending Monday’s session in positive territory despite the overwhelming sell-off among all sectors today. 

 The few winning stocks of today’s session were Sims (ASX:SGM) and Fortescue Metals Group (ASX:FMG), amid the rising price of iron ore and Tabcorp rounded out the top three winning stocks for today. On the losing front, Johns Lyng Group (ASX:JLG) tanked 14.8% today after providing a business update, announcing the company’s Managing Director and Group CEO Scott Didier has sold 4 million shares in the company. Capricorn Metals (ASX:CMM) and Imugene (ASX:IMU) also tumbled more than 10% and more than 7.5% respectively to start the week.

 The most traded stocks by Bell Direct clients today were in-line with market movements today, with the BetaShares Australian Strong Bear Hedge Fund (ASX:BBOZ), Whitehaven Coal (ASX:WHC), and Pilbara Minerals (ASX:PLS).

 On the economic data front for tomorrow, Westpac Consumer Confidence data for October is out tomorrow with the market expecting a decline of 2.8% from a rise of nearly 4% in the previous month. NAB Business Confidence data for September is also out tomorrow with the market also expecting a slide from 10 points to 8 points for the month.

The Australian dollar has weakened to buy 63.3 US cents, 92 Japanese Yen and 57.19 British Pence.

Our local market closed 0.8% lower on Friday, dragged down by the real estate, tech and materials sectors, while energy was the only sector to close in the green. It was oil and gas exploration company Karoon Energy (ASX:KAR) that pushed the sector higher, while other stocks that made solid gains included Whitehaven Coal (ASX:WHC), Allkem (ASX:AKE) and Imugene (ASX:IMU). 

 The most traded stocks by Bell Direct clients were IPH (ASX:IPH), Whitehaven Coal (ASX:WHC) and Mineral Resources (ASX:MIN). 

 US equities tumbled following a strong US jobs report that pointed to rate hikes. The US unemployment rate for September declined further, to 3.5%. Now while this was as expected, markets consider what this means for the Fed, and a falling unemployment rate sparks a jump in rates, which weighed on stocks. The 2-year Treasury yield rose 6 basis points. And the three major benchmarks dropped. The Dow Jones closed more than 2% lower, or 600 points. The S&P500 down 2.8% and the Nasdaq sharply fell 3.8%. 

 What to watch today:

• The SPI futures are suggesting the Australian market will drop 0.9% at the open this morning. 

• We may see selling of tech stocks today, following the Nasdaq’s drop of almost 4%. So watch tech companies such as Block (ASX:SQ2) and Xero (ASX:XRO). 

•  In commodities, the price of oil has jumped more than 5%, to a nearly 5-week high, and is trading above US$93 per barrel. OPEC agreed to cut production by 2 million barrels per day, or about 2% of global supply from November. Energy producers will be on watch today, including Santos (ASX:STO) and Woodside Energy (ASX:WDS).Iron ore is trading flat, while the strong US jobs data has put pressure on the gold price, which has dropped almost 1%. So, watch gold miners today. 

Trading Ideas:

• Bell Potter maintain a Speculative Buy rating on Frontier Digital Ventures (ASX:FDV) with a valuation of $1.23. At its current share price of $0.67, this implies 82.2% share price growth in a year. 

• Trading Central have identified a bearish signal in Ten Sixty Four (ASX:X64), indicating that the stock price may fall from the close of $0.60 to the $0.47 to $0.49 over 24 days according to the standard principles of technical analysis.

The Aussie share market soared 5.30% this week (Mon-Thu), amid the global rally. US core inflation rate for September will be released on Thursday.
 
 In this week's wrap, Grady covers:

• (1:59) Why investors find value in lithium and base-metal companies
• (3:55) The winning sector of the week
• (5:08) The biggest news on the All Ords this week
• (5:39) The most traded stocks & ETFs by Bell Direct clients 
• (6:04) Economic news items to watch out for

The local market bucked the overnight sell-off around global markets to close Thursday’s session just 0.03% higher, following the decision by OPEC+ to cut daily oil production in attempt to stabilise prices, which sent local energy shares soaring.

Real Estate stocks took another hit today as interest rates continue to rise, with the latest 0.25% hike announced earlier this week, as the rising rate environment is likely to lead to short-term underperformance in earnings for REIT stocks.

Taking a look at the winning stocks for today’s session, Whitehaven Coal (ASX:WHC) continued its surge, adding 7.17% today, while Pilbara Minerals (ASX:PLS) and Link Administration (ASX:LNK) each added 5.7% and 5.14% respectively.

And on the losing end of the market today, Magellan Financial Group (ASX:MFG) tanked 8% today after the company provided an update for its funds under management for September, showing its FUM continued to decline last month, with retail pulling another $0.4bn and institutions pulling another $3.2bn of funds managed by the embattled fund manager. Kelsian Group (ASX:KLS) and Domain Holdings (ASX:DHG) each also lost more than 3% today.

The most traded stocks by Bell Direct clients today were Whitehaven Coal (ASX:WHC), Brainchip (ASX:BRN) and Mineral Resources (ASX:MIN).

Taking a look at economic data, Australia’s trade balance data for August was released today showing the country’s trade surplus declined again in the month of August to hit $8.324bn, which was well below the market expectations of an increase in trade surplus to $10.1bn, in a sign Australia continues to increase imports compared to exports this new financial year. And the Aussie Dollar is trading slightly stronger against the greenback, up 0.39% with 1 Aussie dollar today buying 65.33 US cents.

Overnight, OPEC+ decided at a meeting yesterday to cut oil production by 2 million barrels per day in a move to ‘stabilise oil prices’. This move will actually help Russia fund its war in Ukraine if a price cap is not imposed on Russian oil and it will also push already high oil prices, higher.

What to watch today:

• Taking a look at global markets, the US markets experienced an early rally before closing the midweek session lower across the key indices with the Dow Jones losing 0.14%, the S&P500 shedding 0.2% and the tech-heavy Nasdaq closing the day down 0.25%. The sell-off on Wednesday ended the US markets’ best two-day streak in more than 2-years. The short-lived rally was ended by ongoing investor concerns over the impact rising interest rates will have on both the economy and markets moving forward.
• Adding to investor fears were warnings made yesterday by the World Trade Centre that high energy costs and rising interest rates would fuel a sharp slowdown in global trade next year.
• The global rally from earlier this week also ended in Europe and the UK overnight with Germany’s DAX losing 1.21% and the French CAC closing just under 1% lower on Wednesday.
• In the UK the FTSE100 also faced a sell-off, closing the midweek session down nearly half a percent.
• New Prime Minister Liz Truss closed her party’s annual conference on Wednesday with a pledge of ‘growth, growth, growth’ for the British economy.
• Looking at commodities, Brent crude, the global benchmark of oil, is up 1.9% to US$93.5/barrel following the decision by OPEC+ to cut oil production, gold is trading 0.52% lower at US$1717/ounce, and iron ore is trading flat at US$98/tonne.
• ASX futures are expecting the local market to follow the overnight global sell-off, anticipating an open down 0.4% on the ASX today.
• On the economic data front for today, Australia’s trade balance data will be released at 10:30am Australian Eastern Daylight time, which will detail whether Australia’s trade surplus continued declining in August. The market is expecting a rebound in trade surplus to $10.1bn.

Trading Ideas:

• Trading central has identified a bullish signal on Brainchip (ASX:BRN) following the formation of a pattern over a 41-day period, which is roughly the same amount of time the share price may rise from the close of $0.91 to the range of $1.26-$1.34 according to standard principles of technical analysis.
• And Trading Central has also identified a bullish signal on Bowen Coking Coal (ASX:BCB) following the formation of a pattern over a 21-day period which is roughly the same amount of time the share price may rise from the close of $0.35 to the range of $0.46-$0.48 according to standard principles of technical analysis.

The ASX’s rally extended into the midweek session with the key index closing 1.74% higher today, buoyed by another surge in technology stocks. The only sector to end today’s session lower was consumer staples stocks, which ended the day down just 0.04%.

The big four banks rallied today after all four passed on the RBA’s latest 0.25% rate hike to customers on a variable interest rate loan. CBA also raised its savings rates for customer with Netbank Saver, GoalSaver and YouthSaver accounts.

 Taking a look at the winning stocks of the session, Telix Pharmaceuticals (ASX:TLX) soared almost 12% today despite no price sensitive news out of the biopharmaceutical company today. Hub24 (ASX:HUB) also jumped 9.7% today amid the surge in technology stocks. Block Inc (ASX:SQ2) rounds out the top three winners for today’s session, as the fintech company ended the day up just under 7.5%.

 Block Inc rounds out the top three winners for today’s session, as the fintech company ended the day up just under 7.5% on the back of a strong session on the Nasdaq overnight for Block shares in addition to a bullish broker note out of Deutsche Bank.

On the losing end of the market, Sayona Mining (ASX:SYA) tumbled 7.8% despite announcing it has launched a Pre-feasibility study for the Moblan lithium project, targeting further expansion of its Quebec lithium base, with the PFS expected to be complete by May 2023. Ramelius Resources (ASX:RMS) fell 4.8% today and Sims (ASX:SGM) lost 3.5%.

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

 Final retail sales data for August was released today showing sales rose 0.6% for the month which was in-line with market expectations. A number of Federal Reserve policymakers spoke today, with each pushing the case of the need for the Fed to continue acting aggressively in raising interest rates in the US to cool inflation.

Taking a look at global markets, overnight in the US the three key indices are trading sharply higher just after midday in the US with a few more hours of trade left for Tuesday’s session. The Dow Jones, Nasdaq and S&P500 are each up over 2% today so far. Job Openings in the US fell 10% in August which is a sign the tight labour market is starting to cool.

In the UK, the FTSE100 jumped 2.57% on Tuesday extending the rally in the region after Britain’s decision to ditch part of a controversial tax-cut plan and cool expectations for aggressive central bank rate hikes which returns some confidence to investors.

What to watch today:

• Over in Europe, Germany’s DAX soared 3.78% and the French CAC had the biggest gain of 4.24% on Tuesday.
• The local market soared 3.75% yesterday after the RBA’s interest rate hike came in lower than the markets had expected. And in true big bank style, Nab was the first to pass on the full 0.25% rate hike to its variable loan customers, but is ‘constantly reviewing’ the rate hike for its term deposit clients.
• Taking a look at commodities, Brent crude oil prices have fallen 25% over the September 2022 quarter to US$86/bbl, the lowest level since Russia’s invasion of Ukraine. Concerns of slowing economic growth and China’s ongoing pursuit of zero COVID-19 cases remain, underpinning a weak short-term demand outlook for crude oil. An OPEC+ meeting is scheduled this Wednesday; reports suggest the organisation will consider cutting daily production rates by 1MMbbl/day (around ~1% of world supply) to “stabilize prices” which has seen brent crude oil up more than 4% this week, trading at US$91.457/barrel. Iron ore is trading flat at US$98/tonne, gold is up 1.37% at US$1722.46/ounce, and natural gas is trading 5.82% higher.
• ASX futures are expecting the local market to open sharply higher by 1.4% amid the global rally and to extend on yesterday’s surprise RBA rate hike decision-fuelled rally locally.
• On the economic data front for today, there is no local data released today however overseas in the US investors will be eager to see America’s trade balance data for August to determine whether the world’s largest economy continued importing more than it exported for that month, with the market expecting a slight improvement on the trade deficit to -US$67.7bn.

Trading Ideas:

• Trading Central has identified a bullish signal on QBE Insurance (ASX:QBE) 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 $11.79 to the range of $12.80-$13.10 according to standard principles of technical analysis.
• Trading Central has also identified a bullish signal on Sigma Healthcare (ASX:SIG) following the formation of a pattern over a period of 16-days which is roughly the same amount of time the share price may rise from the close of $0.68 to the range of $0.77-$0.79 according to standard principles of technical analysis.  

A good day on the ASX today with the local market soaring on the back of the global rally overnight and of course the RBA’s surprise interest rate hike of just 0.25% or 25 basis points which was below the expected 0.5% rise markets were anticipating.

RBA treasurer Jim Chalmers said despite the rate hike being less than expected, the 25 basis rate rise won’t make it much easier for Australians. In true big bank style, NAB has already announced it will raise its variable lending rates by 0.25% in response to the RBA’s rate hike today, passing on the full interest rate rise to customers. As a result of the lower-than-expected rate hike, the local market soared to close the session up 3.75% with every sector ending the day in positive territory.

A surge in technology stocks led the market gains today as tech stocks are heavily reliant on borrowings to build their businesses in the growth stage, therefore the RBA’s announcement of the rate hike coming in under expectations gives some borrowing relief for technology stocks.

Investors piled into emerging lithium producer Sayona Mining today after the company announced it is fast-tracking plans to move downstream in Quebec, with the launch of a pre-feasibility study by Sayona Quebec to consider the potential for lithium carbonate production at the North American Lithium Operation.

Lithium stocks across the board rallied today following the release of the Industry Department’s latest quarterly Resources and Energy report outlining that 75% of the world’s lithium consumption goes into rechargeable batteries and EV sales expected to grow tenfold over the next decade which places Australia, the world’s biggest exporter of lithium, in a good position to produce 46% of the world’s lithium supply. Lake Resources (ASX:LKE) led the ASX200 gains today, jumping 14.5%, while Pilbara Minerals (ASX:PLS) added 12.31%.

And on the losing front, it was just Lottery Corp (ASX:TLC) on the ASX200 that posted a slim loss of 0.24% today.

The top traded stocks by Bell Direct clients today were BetaShares Geared Australian Equity Hedge Fund (ASX:GEAR), Pilbara Minerals (ASX:PLS), and ANZ (AXS:ANZ).

On the economic data front, US JOLTs job openings for August data will be released overnight, while local investors will be anticipating the release of Australia’s trade balance data for August which is out on Thursday to see whether the country’s export surplus continued declining for the month.

The US Market has started the new month and quarter on an upbeat note as weaker than expected manufacturing data prompted investors to rethink how aggressive the Fed’s upcoming interest rate hikes will be as the economy is starting to show small signs of slowing. The Dow Jones industrial Index posted the biggest gain of 2.66% at the Closing Bell, while the tech-heavy Nasdaq closed 2.3% higher, and the S&P500 added 2.6%.

 US government bonds also rallied sharply on the first trading day of the fourth quarter with the yield on the 10-year Treasury note sliding 0.18 percentage points as it’s price rose. Lawmakers in Russia’s lower House of Parliament have unanimously approved moving forward with absorbing full Ukrainian territories captured into Russia despite battlefield setbacks and a lack of control over the four new areas. Ukrainian President Volodymyr Zelensky has vowed to retake all land seized from his nation.

Watch to watch today:

• The new month rally extended into Europe with Germany’s DAX adding 0.8%, and the French CAC lifting 0.55% to start the new month.
• Over in The UK, the FTSE100 followed the global rally but investors were less confident, with the UK’s key index closing Monday’s session just 0.22% higher.
• The rally was fuelled by new UK Prime Minister Liz Truss saying the UK economy needs a reset and has pledged to prioritise ‘aspiration, enterprise and growth’. Ms Truss’ government also scrapped plans to reduce taxes on the UK’s higher earners.
• Taking a look at commodities, Brent crude settled 4.08% higher at US$88.61/barrel, gold is trading 2.43% higher at just under US$1700/ounce, but iron ore is down almost 3% at US$98/tonne.
• Ahead of the local trading day, ASX futures are expecting the Australian market to open sharply higher by 1.58% buoyed by the global rally overnight.
• On the economic data front, investors will be keeping a close eye on the RBA’s interest rate decision for Australia’s cash rate this month which is out at 1:30pm eastern daylight savings time today. New home loans and building permits data for August are also released today which will give an insight into the country’s building and property market for August.

 Trading Ideas:

• Bell Potter has maintained a buy rating on Cogstate (ASX:CGS) and increased its price target on the neuroscience technology company from $1.95/share to $2.20/share driven by a modest decline in weighted average cost of capital due to decreased risk associated with future earnings, FDA regulatory approval and CMS imbursement and the evolving clinical trial execution of the Eisai strategy involving its ‘Dementia Ecosystem’.
• And Trading Central has identified a bearish signal on Ridley Corp (ASX:RIC) following the formation of a pattern over a 33-day period, which is roughly the same amount of time the share price may fall from the close of $1.99 to the range of $1.70-$1.76 according to standard principles of technical analysis.