Between the Bells

The Australian market see-sawed between positive and negative territory today before closing the first trading session of the week down 0.27%, as a sharp sell-off in technology stocks weighed on the key index amid rising global recession fears among investors. The energy sector was boosted today by an increase in oil prices as OPC+ considers cutting oil production.

 The stocks that led the market gains today were Capricorn Metals (ASX:CMM) which lifted 3.33%, Origin Energy (ASX:ORG) added 2.9% and Iluka Resources (ASX:ILU) ended the day up 2.87%. Biotechnology company Mesoblast (ASX:MSB) also jumped more than 8% today after providing an update on its application to the US FDA, outlining the company has supplied the FDA with ‘substantial new information’ on the use of remestemcel-L in the treatment of children with steroid-refractory acute graft versus host disease. The information was supplied in response to the Complete Response Letter received from the FDA in September 2020 and is a ‘major milestone’ for Mesoblast’s complete response to the FDA.

 And the stocks that weighed down the market, dragging the key index to the negative close today were West African Resources (ASX:WAF) which tumbled 10% today after providing an update on its operations in Burkina Faso to share that following a change in the military leadership in Burkina Faso over the weekend, its staff and contractors are safe, and the company’s Sanbrado Gold Operations continue to operate as normal. The political situation appears to be due to internal disagreement within the Burkina Faso military leadership, with the company saying it is continuing to monitor the situation.

 Core Lithium (ASX:CXO) also declined more than 7% during the session today after the company completed its underwritten Placement of ~97.1m shares at $1.03/share to raise $100m. And Ramelious Resources (ASX:RMS) fell 5.6% today.

 The top traded stocks by Bell Direct clients today were Vanguard Australian shares index ETF (ASX:VAS), Brambles (ASX:BXB) and Macquarie Group (ASX:MQG)

 The dreaded RBA rate decision day is tomorrow, with investors anticipating just how dovish or hawkish the RBA will be when deciding the nation’s interest rate hike for October. Data for New home loans generated in the month of August is also out tomorrow which will give an insight into Australia’s property sector, with the market expecting a decline of 3.5% for the month.

The local market’s rally on Thursday was short lived with the key index closing Friday’s session down 1.23%, down 1.53% for the week, and plunged 7.5% for the month of September amid the global sell-off as recession fears mount in the US. Several policy makers spoke late last week signalling further rate hikes are required for the foreseeable future to cool inflation into the target range.

Nine of the eleven sectors on the ASX closed Friday’s session in negative territory, while Gold mining stocks offset some of the markets sell-off by surging more than 3.5% amid a rise in the price of the precious commodity and on the back of the Bank of England’s decision to buy $65bn pounds worth of UK government bonds to stabilise the UK pound.

The winning stocks on Friday were Capricorn Metals (ASX:CMM) which added 8.70%, Silver Lake Resources (ASX:SLR) jumped 7.27% and Regis Resources (ASX:RRL) lifted just under 7%. 

On the losing front, Carsales.Com (ASX:CAR) took the biggest hit on Friday, ending the day down 7.8% amid sliding investor sentiment in tech and growth stocks. Cochlear (ASX:COH) also shed 6.6% despite no price sensitive news released by the medical device company, and Wisetech Global (ASX:WTC) fell 5.6% also due to the broad tech sell-off and on the back of global shipping volumes declining, showing slowing growth for the sector Wisetech operates in.

The most traded stocks by Bell Direct Clients on Friday were BetaShares Geared Australian Equity Hedge Fund (ASX:GEAR), Macquarie Group (ASX:MQG) and New Hope Corporation (ASX:NHC).

What to watch today:

• Overseas on Friday, the global market sell-off continued, with US stocks recording the longest run of quarterly declines since the GFC in 2008. The Dow Jones industrial index and the tech-heavy Nasdaq closed out the third quarter with their heaviest losses of the year, down 1.7% and 1.5% respectively, while the S&P500 notched out its third straight quarterly loss, ending Friday’s session down 1.5%. Investor sentiment has been increasingly dampened of late following the Fed Reserve’s aggressive rate hikes in attempt to cool the nation’s red-hot inflation, that remains stubbornly high.
• Over in Europe, new data released shows the Eurozone inflation rate hit 10% in September as Russian efforts to slim the regions gas supplies drove energy prices higher. Despite European markets ending Friday’s session higher, with Germany’s DAX up 1.16% and the French CAC adding 1.5%, the pan-European STOXX600 had it worst performing month since June, declining 7.8% over September as global markets struggle to overcome investor fears of slowing growth and possible recession.
• The Bank of England intervention-fuelled rally cooled on Friday with the FTSE100 closing Friday’s session just under 0.2% higher for the day amid the global sell-off. Retail stocks in the UK were hardest hit, with Next Chief Executive Simon Wolfson offering some support for the UK government’s tax cut policies, but told the Standard he fears the borrowing costs they will incur.
• Ahead of the local trading day today, the ASX futures are expecting the market to open just 0.08% higher to start the new month in positive territory.
• Taking a look at economic data, investors will be anticipating the release of the RBA’s latest interest rate decision out on Tuesday to determine if the central bank really is committed to lower interest rate hikes, or whether the latest set of aggressive global interest rate hikes will prompt the RBA to follow suit.
• On the commodities front, crude oil has plunged 1.88% to trade at US$79.70/barrel, Brent is down 2.1% to trade at US$85.35/barrel, Gold is trading just 0.01% higher at US$1660.52/ounce while iron ore is down almost 3% at US$98/tonne.
• And to start the new trading week off, let’s dive into some trading ideas for your consideration.

Trading Ideas: 

• Trading

Investors are steering clear of the real estate sector around the world. Locally, the Aussie share market declined 0.3% this week (Mon-Thu), despite the rally later in the week. Energy stocks took a hit as commodity prices plunged with many seeing a buying opportunity.

 In this week's wrap, Grady covers:

• (0:13) What happened to REIT stocks this week
• (2:59) The ASX dipping to a three-month low
• (3:44) Why energy stocks took a hit
• (4:09) The biggest news on the All Ords this week
• (4:41) The most traded stocks & ETFs by Bell Direct clients 
• (5:09) Two economic news items to watch out for

As recession fears continue, there was a broad market sell-off overnight. In the US, the sell-off was led by Apple, which dropped after a major investment bank downgraded the tech giant. This saw the Nasdaq tumble 2.8%, while the Dow Jones dropped 1.5% and the S&P500 closed with a new low for the year, down 2.1%. The major averages are on track for a losing week and a month of losses, with the Nasdaq leading the months losses, down 9% for September. 

What to watch today:

• Following US equities overnight, the SPI futures are suggesting our local market will drop 0.34% at the open this morning. 
• And following the Nasdaq’s sharp drop, keep watch of ASX-listed tech stocks today, as they may mirror the overnight sell-off. 
• Today continue to watch AGL Energy (ASX:AGL), after yesterday announcing it’s fast tracking its exist from coal. 
• In commodities, oil is trading lower, so watch energy producers such as Beach Energy (ASX:BPT) and Woodside Energy (ASX:WDS). The price of gold edged higher overnight, which may boost gold miners such as St Barbara (ASX:ASB) and Newcrest Mining (ASX:NCM), while iron ore is trading flat. 
• And we may see the price of Nick Scali (ASX:NCK) fall, as the stock is set to go ex-dividend today. 

Trading Ideas:

• Bell Potter maintain a Speculative Buy rating on Boss Energy (ASX:BOE), after the company reported full year 2022 results, ahead of Bell Potter’s expectations at the NPAT level, and in-line with their EBITDA estimates. They’ve increased their valuation from $3.32 to $3.51. At BOE’s current share price of $2.35, this implies 49.4% share price growth in a year. 
• Trading Central have identified a bullish signal in Medibank Private (ASX:MPL), indicating that the stock price may rise from the close of $3.52 to the range of $3.85 to $3.93 over 22 days, according to the standard principles of technical analysis.

The local market followed the global overnight rally to close the second last trading session of the week up 1.44%, driven by a surge in energy and materials stocks. Every sector of the local market closed in positive territory today as investor sentiment both locally and globally is boosted by the Bank of England’s promise to buy $65bn pounds of sterling bonds to stabilise the UK’s bond market. Energy stocks led the markets higher today following the European Union’s renewed push for further sanctions on Russian commodities, and the subsequent sharp rise in commodity prices earlier today.

A number of big announcements were released today that impacted specific company share prices, including Premier Investments releasing FY22 results including record dividends and a strong start to FY23 with sales up globally by 46% already.

AGL Energy (ASX:AGL) also announced today it is fast tracking its exit from coal by closing Australia’s biggest-emitting power plant 10-years earlier than previously planned which is expected to reduce AGL’s annual greenhouse gas emissions from 40 million tonnes to net zero on achieved target closure.

Taking a look at the best performing stocks today, Premier Investments soared 14.6% today on the release of strong FY22 results, Coronado Global Resources (ASX:CRN) also added more than 8% and De Grey Mining (ASX:DEG) finished the session 6.7% higher. On the losing front, IRESS (ASX:IRE) hand plunged 17% today after downgrading its full-year profit guidance due to ‘macro conditions’, with the company now expecting profit for the financial year to be between $166m-$170m, down from the original guidance of $177m-$183m. Bega Cheese (ASX:BGA) fell 1.41% today and Karoon Energy (ASX:KAR) declined 1.4%.

The most traded stocks by Bell Direct clients today were New Energy Solar (ASX:NEW), BetaShares Geared Australian Equity hedge fund  (ASX:GEAR) and Whitehaven Coal (ASX:WHC).

On the economic data front, the release of early indication CPI data for August out showing the country’s inflation rate is expected to rise 7% in the year to July and 6.8% to August. The information released provides an early indication of September quarter CPI inflation that will be published later in October. The largest contributors to inflation in August were new dwelling construction up 20.7% and automotive fuel up 15%. The slight fall in inflation from July to August is mainly due to a decrease in prices for automotive fuel. The 6.8% rise for August shows the country’s inflation is not accelerating.

 The Australian market reversed early gains on Wednesday to close the midweek session 0.5% lower, as investor concerns over the RBA further tightening Australia’s monetary policy were enhanced after stronger-than-expected retail sales were reported for August, up 0.6% to $34.88 billion. The higher-than-expected retail sales support the case for the RBA to raise interest rates by another 0.5% at the next meeting on Tuesday. Tech stocks took the biggest hit on Tuesday, declining 1.6% as a sector while Utilities rose almost 2%.

 The winning stocks for the midweek session were Coronado Global Resources (ASX:CRN), which added 5.9%, while Ramelius Resources (ASX:RMS) jumped 5.4% and Whitehaven Coal (ASX:WHC) extended its rally, adding another 3.9%. On the losing end of the market, Telix Pharmaceuticals (ASX:TLX) plunged 15.40% after the biopharmaceutical company announced a big blow to its global expansion with the company withdrawing its Marketing Authorisation Application for its Illucix drug in Europe based on regulators requesting additional Chemistry, Manufacturing and Control data which Telix says cannot be delivered within the prescribed review timeframe. Investors also sold out of Core Lithium (ASX:CXO) shares yesterday as investors may be taking profit from the company’s surge of 175% over the last year.

Imugene rounded out the bottom three stocks for Wednesday, ending the day down 5.3%.

 The most traded stocks by Bell Direct clients yesterday were the BetaShares Geared Australian Equity (Hedge Fund) (ASX:GEAR), Silver Lake Resources (ASX:SLR) and South32 (ASX:S32).

 Overseas, it was a positive day across most major markets following a move by the Bank of England to put a floor on UK assets overnight. The BoE is stepping in to buy $65 billion pounds of sterling bonds to stabilise the UK bond market, with investors confident that the UK government can pay back their debt, after the new government’s tax cut promise triggered the biggest sell-off in decades. The FTSE100 ended the midweek session up 0.3%. Over in New York the three key indices posted strong gains on Wednesday amid the recovery in the British pound, while retail investors remain interested in Apple and Tesla shares. The Nasdaq posted the greatest gain of 2.05%, while every sector of the S&P500 closed higher with the index adding 1.97%, and the Dow Jones rallied 1.88%.

Germany’s DAX and the French CAC also followed suit, each adding 0.36% and 0.19% respectively. The European Union is proposing a new set of sanctions against Russia. The package would affect $7 billion Euros of Russian exports and would ban the sale of new technologies to Russia and they’d also start paving the way for an international price cap on Russian oil.

What to watch today:

• Commodities have sharply rebounded overnight following the European Union’s proposed new sanctions on Russia, with the price of Crude oil rocketing 4.31%, while Brent is up 3.21% at US$89.04 per barrel, Natural gas is 3.31% higher and gold is up almost 2% at US$1660.50 per ounce.
• Ahead of the local trading day, ASX futures are anticipating the market to bounce back from its red-close on Wednesday to trade sharply higher by 1.52% at the opening bell on Thursday amid boosted sentiment in markets around the world.
• The stocks trading ex-dividend today are Link Administration Holdings (ASX:LNK), Sigma Healthcare (ASX:SIG), and Energy One (ASX:EOL), which could be a good opportunity to buy in if you have been thinking about these stocks as stocks going ex-dividend generally trade lower on the ex-dividend date.
• On the economic data front, today there is no local data released however investors will be awaiting the release of US initial weekly jobless claims to gain insight into America’s tight labour market. A number of Fed officials also deliver speeches today which could sway investment decisions on Thu

US markets were mixed overnight following a number of Federal Reserve policymaker speeches showing an increased appetite for further rate hikes even at the risk of throwing the economy into a recession. The Dow Jones industrial index ended the session down 0.43% and the S&P500 lost 0.21% to hit a two-year low, but the tech-heavy Nasdaq posted a gain of 0.25%. Over in London, stocks on the FTSE 100 were knocked down by rate rise worries as the central bank may look to raise rates further to support the hammered British pound, with the index closing the session down 0.52%. The global market sell-off extended into Europe with Germany’s DAX and the French CAC declining 0.72% AND 0.27% respectively on Tuesday.

What to watch today:

• Russia’s rationing of natural gas and energy commodity withdrawal to Europe continues to fuel concerns over an energy crisis in the region, which led to a rally for local energy sector on Tuesday especially for coal producers. Russia’s moves to ration and withdraw commodities from Europe have caused countries in the region to invest more in coal to keep the electricity on in the region as winter fast approaches. ASX-listed coal mining and energy stocks have benefitted from the growing energy crisis in Europe by signing commodity supply deals.
• Taking a look at the turbulent commodity prices, over the last few days we’ve seen a rebound with brent crude oil now trading 2.6% higher around US$86.2 per barrel, coal is up 0.64% around US$438 per MT, but natural gas is down 3.14%. The recent dive in gold prices eased overnight as the dollar rally took a breather, with the price of the precious metal trading 0.66% higher at US$1,632 per ounce.
• Ahead of the local session today, the ASX futures are expecting the local market to follow the global sell off, anticipating a 0.68% decline when the market opens.
• Stocks going ex-dividend today include Myer Holdings (ASX:MYR) and Cedar Woods Properties (ASX:CWP). 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.
• There is no local economic data set to be released today, but over in the US New Home Sales data for August was released overnight at a 5-month high of 685K for the month, which is an increase of 28.8% on July and beat market expectations of 500K.

Trading Ideas:

• Bell Potter has initiated coverage of DroneShield (ASX:DRO) with a Speculative Buy rating on this stock and a price target of $0.24 per share, for the reasons that Bell Potter believes DRO is well placed to capitalise on favourable macroeconomic conditions accelerating structural growth in the market, with the strong sales pipeline identified by the company demonstrating long-term demand. The rating and price target are also based on the fiscal support DRO receives from the Australian government’s $270 billion funding for domestic defence, comprehensive product offering by the company and opportunity for growth in adjacent markets.
• Trading Central has identified a bearish signal on Orora (ASX:ORA) following the formation of a pattern over 334 days which is roughly the roughly period the of time in which the target price range between $1.95 and $2.15 may be achieved, according to standard principles of technical analysis.

The local market took no lead from Wall Street’s overnight sell-off, as the ASX closed Tuesday’s session 0.41% higher, led by a rally for materials stocks, which boosted the key index to a positive close.

Oil and gas giant Santos (ASX:STO) today announced it received a binding conditional offer from Papua New Guinea’s national oil and gas company, Kumul Petroleum to acquire an additional 5% project interest in PNG LNG for asset value of US$1.4 billion, including a proportionate share of project finance debt of approximately US$0.3 billion. Should the deal be approved, Kumul Petroleum will own 22% of PNG LNG while Santos’ shareholding will drop to 37.5%. Shares in Santos (ASX:STO) rose 1% today.

MetalsGrove Mining (ASX:MGA) skyrocketed 61% today after announcing significant lithium pegmatite potential has been identified at the company’s Upper Coondina Lithium Project in Western Australia during pre-drilling surface mapping at the site.

A rally for coal miners today was due to ongoing concerns of a European energy crisis as the continent faces a shortage of gas and coal following Russia’s energy commodity withdrawals and rationing since earlier this year. Whitehaven Coal (ASX:WHC) and New Hope Corporation (ASX:NHC) each added over 6% today.

Taking a look at the best performing stocks today, BrainChip (ASX:BRN) jumped 7.23%, Megaport (ASX:MP1) added almost 7% and Pilbara Minerals (ASX:PLS) shared climbed just over 6%. And the stock hit the hardest by investors selling out today was Core Lithium (ASX:CXO), which fell more than 5.5% despite the company releasing a business and drilling update today including the Finniss operations uncovering first spodumene Ore in September and the BP33 exploration having high-grade spodumene bearing pegmatite intersected in multiple holes. Fisher and Paykel Healthcare (ASX:FPH) also lost almost 5% today while Ramsay Healthcare (ASX:RHC) fell 3.5%.

The most traded stocks by Bell Direct clients today were Whitehaven Coal (ASX:WHC), New Energy Solar (ASX:NEW) and the BetaShares US Equities Strong Bear Hedge Fund (ASX:BBUS).

Taking a look at economic data, US durable goods orders data for the month of August is out tonight, with the market expecting a decline of 0.4% after a decline in orders for transport equipment weighed down US durable goods orders in July.

US new home sales for August data is also out at midnight tonight, giving an insight into the current condition of the property market in the US amid the Fed’s aggressive interest rate hike strategy to curb the country’s inflation.

Trading overnight was quite volatile for the first session of the week in New York. US equities were sold off towards the end of the day and all three major averages closes in the red. The Dow Jones fell into bear market territory, down 1.1%. It’s down approximately 20% from its closing high on the 4th of January. The S&P500 notches a new closing low for 2022, declining 1.03% to 3,655; that’s below its June closing low of 3,666. And the tech heavy Nasdaq dropped 0.6%. 

What to watch today: 

• Despite the risk-off sentiment across global equity markets this week, the SPI futures are suggesting that the Australian market will rise 0.26% at the open this morning. 
• Commodities however are a sea of red: 
  • Oil prices have dropped almost 3% to a near 9-month low, amid concerns that monetary tightening by central banks worldwide would dampen energy demand and derail global growth. 
  • Gas, copper, zinc and nickel are all trading lower. 
  • The price of gold hit its lowest level since April 2020, due to a rallying US dollar and surging Treasury yields. However, iron ore has notched slightly higher, trading up 0.5%. 
• Companies set to release their earnings results today include Core Lithium (ASX:CXO) and De Grey Mining (ASX:DEG). 
• The ASX (ASX:ASX) is set to hold its AGM today. 

Trading Ideas:

• Bell Potter maintain a Speculative Buy rating on Clarity Pharmaceuticals (ASX:CU6) with a price target of $1.00. At its current share price of $0.65, this implies 53.8% share price growth in a year. 
• And Trading Central have identified a bearish signal in Newcrest Mining (ASX:NCM), indicating that the stock price may fall from the close of $15.76 to the range of $14.80 to $15.10, over 16 days according to the standard principles of technical analysis. 

The Australian market dipped to a 3-month low during today’s session amid global recession fears, oil prices diving and the US dollar surging to a fresh-peak. The ASX200 closed the first trading session of the week down 1.6%.

The ASX was also sold-off as the UK pound nosedived to a new record low US$1.035 on the promise of new tax cuts in the UK’s mini-budget as investors fear a surge in government borrowing to pay for the huge tax cuts.

The energy sector which is leading the gains in 2022, was hit hard today with the sector experiencing its worst session since March 2020, as oil prices continue to plunge. The price of brent is down a further half a percent today at US$85.76 per barrel, while crude oil is down 0.54% at US$78.31 per barrel today. Whitehaven Coal (ASX:WHC) led the losses on the energy sector, down 11% today, wiping off some the coal producers’ recent gains.

The winning stocks today were Nanosonics (ASX:NAN), Megaport (ASX:MP1) and REA Group (ASX:REA), which are part of the technology sector that gained more than 1% today. And on the losing side, New Hope Corporation (ASX:NHC) took the biggest hit today, diving almost 15%, followed by Costa Group (ASX:CGC) plunging just over 14% today after the company announced it is back on the hunt for a new CEO just 18-months after Sean Hallahan will step down with effect from today, September 26, 2022, just 18-months after the biggest leadership change in ASX history.

The most traded stocks by Bell Direct clients today were Whitehaven Coal (ASX:WHC), Argosy Minerals (ASX:AGY), and BHP Group (ASX:BHP).

On the economic data front, it’s a slow week for the release of any economic data that will come as a slight relief for investors who have been very responsive to crucial economic data that has been released of late.