Between the Bells

The Australian market closed Friday’s session sharply lower, down 1.87% with all 11-sectors of the index closing in negative territory, following the Fed’s latest interest rate hike in the US causing investors to flee stocks in favour of cash in markets around the world. The riskier sectors such as consumer discretionary and tech stocks took the biggest hit on Friday, with those two sectors closing the session down 4.44%.

The winning stocks on Friday were New Hope Corporation (ASX:NHC), Whitehaven Coal (ASX:WHC) also extended its green-run of late and Rio Tinto (ASX:RIO) closed Friday almost 2% higher. On the losing side, Block (ASX:SQ2) formerly known as Square fell almost 9% on Friday amid the tech and growth stock sell-off, while Xero (ASX:XRO) and Arena REIT (ASX:ARF) also each lost 7.8% and 6.8% respectively.

The most traded stocks by Bell Direct clients on Friday were Macquarie Group (ASX:MQG), Terracom (ASX:TER) and the Vanguard Australian Shares Index ETF (ASX:VAS).

Overseas, the US markets were sharply sold off on Friday as investors continue responding to the Fed’s latest 0.75% interest rate hike. The Dow Jones closed at a new 52-week low, down 1.62%, the Nasdaq lost 1.8% and the S&P500 fell 1.72%. Bond yields jumped last week around the world as a result of rising interest rates, which signals a warning of market distress as higher bond yields create more capacity for funds that may otherwise go into the stock market. The Bank of England also raised the UK’s interest rate by 0.5% to 2.25% to tackle the UK’s worst bout of inflation in 40-years. As a result, the FTSE100 and UK markets were sold off, with the FTSE100 closing Friday’s session down almost 2%. Germany’s DAX closed the last trading session of the week also down 1.97% and the French CAC took the biggest hit, down 2.28% on Friday.

What to watch today:

• Ahead of the local trading day, markets are expecting a sharp 1.25% decline upon open as investor sentiment is dampened by rising interest rates around the world.
• The stock going ex-dividend today is IMDEX Limited (ASX:IMD), 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.
• Taking a look at commodities, global recession fears have caused commodity prices to plunge with crude trading at an eight-month low, down 5.7% around US$78.74 per barrel, brent is down 4.15% at US$86.71 per barrel, gold is down 1.6% lower at US$1643 per ounce, while iron ore is up 0.5% at US$101 per tonne.
• There is no economic data released today but US durable goods orders for August is out on Tuesday while New Home Sales data in the US for August is released on Wednesday.

Trading Ideas:

• Trading Central has identified a bullish signal on Technology Metals Australia (ASX:TMT) following the formation of a pattern over a period of 69-days indicating the stock price may rise over this same amount of time from the close of $0.35 per share to the range of $0.48 to $0.52 according to standard principles of technical analysis.
• Bell Potter has downgraded its price target on Catapult Group (ASX:CAT) to $1.10 from $1.00 but maintains a hold rating on the global sports analytics company amid downgraded revenue forecasts over the coming financial years as well as market movements and lower expected top line growth.

US equities closed in the red for the third straight day, as mounting fears that the Federal Reserve’s aggressive rate hikes will push the economy into a recession. The session put the major averages on pace to close the week with losses. The Dow Jones closed 0.35% lower, the S&P500 down 0.8% and the Nasdaq down 1.4%. Investors have been selling stocks following another rate hike from the Fed on Wednesday night. Bond yields surged again – the yields on the 10-year and 2-year Treasury notes notching fresh multiyear highs, hitting their highest levels since February 2011 and October 2007 respectively. 

 European stocks ended the day lower, after central banks in Switzerland and the UK, announced interest rate hikes. The Bank of England raised interest rates by 50 basis points, its seventh consecutive hike.

 What to watch today:

• The Australia market is set to fall 0.26% at the open this morning.
• In commodities, oil is trading higher, recovering from two consecutive sessions of losses, as hopes of higher Chinese demand and geopolitical tensions, more than offset global growth worries. Gold is in the red, sliding back towards the lowest levels in over two years. And iron ore has dropped to its lowest in nearly 10 months. 
• Watch the share price movements today of Chalice Mining (ASX:CHN), which is set to release its earnings results today, and of Suncorp (ASX:SUN), which is set to hold its AGM today. 
• Stocks going ex-dividend today include Vita Life Sciences (ASX:VLS) and Vulcan Steel (ASX:VSL). 

 Trading Ideas:

• Citi maintain a Buy rating on building products and services company Brickworks (ASX:BKW). The company’s financials beat market consensus, with underlying profit rising by 159% on last year. While uncertainty is rising in the macro-outlook, Citi note that Brickworks management are confidence of growth with the property business in FY23. BWK’s current share price is $21.69. If BKW meets the Citi price target of $26, it will return approximately 20%.

The local market dipped to a two-month low during today’s session before closing the day down 1.56% at a new 20-day low of 6700.20 points. The key index was weighed down by the materials, real estate and utilities sectors each falling more than 2% today, however every sector ended the midweek session in negative territory as investor sentiment was dampened by the global market sell-off overnight ahead of the Fed’s interest rate decision out tomorrow.

 Coal miners have been on a run this week, none more so than Whitehaven Coal (ASX:WHC), with the company’s shares surging to a record high $9.16 during today’s session. Investors piled in after the coal miner issued a notice of AGM to its shareholders which includes two resolutions seeking shareholder approval to extend the company’s share buy-back programme. For the year, WHC reported WHC is on-track to complete the 1st buy-back ahead of its AGM, where it will seek further approval for an on-market buy-back and an off-market buy-back, which if approved will give the board authorisation to acquire up to 240m shares in aggregate.

 Looking at the best performing stocks today, Washington H Soul Pattinson jumped almost 5% today after releasing FY22 results including cash flows from investments up 93%, net asset value up 71.6% and group regular profit after tax up 154.4%.

Viva Energy (ASX:VEA) shares also rose 4.56% today, while Whitehaven Coal added almost 4%. On the losing side, Imugene (ASX:IMU) tanked 8% today despite announcing that its first patient has been dosed as part of intravenous cohort 1 in the Phase 1 MAST study evaluating the safety of novel cancer-killing virus CF33-hNIS (VAXINA). Sayona Mining (ASX:SYA) and Charter Hall (ASX:CHC) also each fell more than 5% today.

 The most traded stocks by Bell Direct clients today were Whitehaven Coal (ASX:WHC), Block (ASX:SQ2), and Argosy Minerals (ASX:AGY).

 On the economic data front, at 4am Australian eastern time tomorrow the Fed’s latest interest rate decision will be released, which has caused investor confidence to slump this week as markets are torn between expecting a 0.75% and 1% rate hike. Later tomorrow, the Bank of England will release its interest rate decision for the UK, with the market expecting a rise to 2.25% from the current 1.75%.

Taking a look at the markets overnight, in the US it was a choppy session that ended lower across the key indices as investor confidence slumped ahead of the release of the Fed’s interest rate decision out on Wednesday US time, Thursday our time – the Dow Jones closed Tuesday’s session 1.65% lower, the S&P500 lost 1.62% and the tech-heavy Nasdaq shed almost 1.5%. US housing momentum also fell for a ninth straight month in August as US mortgage rates climbed.

The sell-off continued over in the UK and Europe with the FTSE100 losing 0.61% on Tuesday, while Germany’s DAX fell more than 1% and the French CAC shed 1.35%.

What to watch today: 

• Locally, the RBA’s meeting minutes released yesterday boosted investor confidence that the RBA is a global outlier in pushing ahead with a slower rate of interest rate hikes, a move that other central banks are not even considering yet. Investor sentiment was dampened in recent weeks after US inflation data revealed US CPI remains red hot and above market expectations, prompting the fed to likely introduce a 100 basis point or 1% rate hike on Thursday at the conclusion of the FOMC meeting.
• Energy, materials and utilities stocks led the market rally yesterday, with New Hope Corporation (ASX:NHC) soaring almost 9% after releasing stellar FY22 results including NPAT soaring over 1100%.
• Onto the commodities front, the price of commodities are down across the board today Trevor with, Crude oil trading 1.5% lower around 84 US dollars a barrel, Brent is trading, around 90 US dollars a barrel so nearly 2% lower, Iron ore is trading, 1.5% lower at 100 US dollars a tonne and Gold continues its slump, trading down 0.75% at 1663 US dollars an ounce.
• Ahead of the local trading session today, the ASX futures are expecting the market to open sharply lower around 1.45%, again following the global sell-off overnight.
• Stocks going ex-dividend today include Capitol Health (ASX:CAJ), Countplus (ASX:CUP), ADBRI (ASX:ABC), Cleanaway Waste Management (ASX:CWT) and Cochlear (ASX:COH). 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 news out today however investors will still be awaiting the release of the Fed’s interest rate decision which is out at 4am eastern time tomorrow morning.

Trading Ideas:

• Trading Central has identified a bullish signal on Webjet (ASX:WEB) following the formation of a pattern over a 16-day period which is the same amount of time the stock price may rise from the close of $5.43 to the range of $6.15 to $6.35, according to standard principles of technical analysis.
• Bell Potter has downgraded its price target on Imugene (ASX:IMU) to $0.36 per share from $0.45 and has a speculative buy rating on this stock. The price target downgrade follows Bell Potter identifying the need for the company to raise capital to support its clinical trial programs through the issuing of 400m new shares at $0.20 per share. Bell Potter also notes the company is executing quite a few trials over the next year where investors will be keeping a close eye on the results to determine just how valuable the company’s biotechnology operations are.

The local market recovered from the recent inflation-related sell-off today, sharply rising 1.29% to close the session in positive territory, driven by a surge in energy, materials and utilities stocks today amid the rising price of commodities. Crude was up 0.34% today and natural gas rose 1.6%.

 The story of the day was IDP Education (ASX:IEL) entering a binding agreement to acquire 100% of student placement agency Intake Education for up to $83m. Intake is a leading student placement agency with global operations and brings to IDP Education three decades of industry leadership in the UK-bound international education sector. Following the announcement, shares in IDP Education rose 2.66%. 

 Andrew Forrest’s Fortescue Metals Group (ASX:FMG) also revealed plans to execute a US$6.2b capital investment by 2030 to eliminate fossil fuel risk and reduce operating costs by US$818m per year, in another step for the company to achieve real zero terrestrial emissions across its iron ore operations by 2030.

New Hope Corporation (ASX:NHC) added almost 9% after releasing FY22 results today including revenue up 143.5% and NPAT soaring 1,138.8% to $983m. The company also announced a fully franked 31 cents per share final dividend and a 25 cents per share special dividend. Brickworks (ASX:BKW) also added 5.75% today and Mineral Resources (ASX:MIN) jumped 5.26%.

 On the losing side, Abacus Property Group (ASX:ABP) took the biggest hit today, closing the session down 2.21%, while Telix Pharmaceuticals (ASX:TLX) and AMP (ASX:AMP) also lost over 2% each.

 The top traded stocks by Bell Direct clients today were Whitehaven Coal (ASX:WHC), New Hope Corporation (ASX:NHC), and the BetaShares Geared Australian Equity Hedge Fund (ASX:GEAR).

 In economic data, investors will be awaiting the release of the US Fed’s interest rate decision for September which is out at 4am AEST on Thursday morning.

The three US benchmarks closed higher to start the new trading week ahead of the Federal Reserve’s two-day policy meeting set to kick off on Tuesday. The Dow Jones jumped nearly 200 points and the S&P500 and Nasdaq both closed around 0.7% higher. Yields also pushed higher. The 10-year Treasury yield hit as high as 3.51%, its highest level in 11 years. Across the sea in Europe, markets closed mixed, as investors await the Fed’s decision.

What to watch today:

• The SPI futures are suggesting that the ASX200 will open 0.82% higher after Wall Street’s positive session.
• In economic news, today the latest minutes from the RBA’s most recent Board meeting will be published. 
• Core Lithium (ASX:CXO) is expected to release its annual results this week, so keep an eye on this lithium stock. 
• In commodities:
  • Oil prices lifted slightly higher as worries of tight supply outweighed fears that global demand could slow. The crude oil price currently trades around US$86 a barrel. 
  • The gold price traded flat as the US dollar and Treasury yields rose. 
  • The spot iron ore price traded nearly 3% lower to US$101 a tonne. Keep watch of iron ore stocks like Fortescue Metals (ASX:FMG) and BHP Group (ASX:BHP).
• If you hold Coronado Global Resources (ASX:CRN) or Shaver Shop Group (ASX:SSG) you will receive your dividend payment today.  

Trading Ideas:

• Bell Potter have maintained its Buy rating on neuroscience technology company, Cogstate (ASX:CGS), and have reduced its price target from $2 to $1.95. Its technologies provide rapid, reliable, and highly sensitive computerised cognitive tests to replace costly and error-prone paper assessments. At its current share price of $1.46, Bell Potter’s price target of $1.95 implies about 34% share price growth in a year.
• Trading Central has a bearish signal on AGL Energy (ASX:AGL) indicating that the stock price may fall from its close of $6.97 to the range of $6.00 - $6.20, in the next 8 days according to standard principals of technical analysis.

The local market see-sawed throughout the first trading session of the week before closing the day down 0.28%, led by a sell-off in utilities and tech stocks, while real estate stocks recovered some losses from Friday’s sharp sell-off.

Looking at the best performing stocks today, Lake Resources (ASX:LKE) recovered some of last week’s losses to close 12.37% higher today after the lithium miner released another update on its Kachi Lithium Project to alleviate investor concerns over the dispute with its project partner Lilac Solutions, with Lake Resources today saying that ongoing work is being done by Lilac and all parties are confident that on-site operations will be successful. Other stocks that investors bought into today included Pilbara Minerals (ASX:PLS) and a number of other lithium producers today as investors pile into the EV-battery metal sector today. Oz Minerals (ASX:OZL) and Sandfire Resources (ASX:SFR) also each added more than 3% today. Investors sharply sold out of Sayona Mining (ASX:SYA) shares today as today is the first day the company trades as part of the ASX200, while Magellan Financial Group (ASX:MFG) fell 5.75% today and Breville Group (ASX:BRG) lost 5.2%. Investors also fled buy now, pay later stocks today, which saw Block (ASX:SQ2) shares tumble 4.46%, as investors speculate an aggressive rate hike from the Fed’s in the US will be announced on Wednesday.

The top traded stocks by Bell Direct clients today were Pilbara Minerals (ASX:PLS), Lynas Rare Earths (ASX:LYC), BHP Group (ASX:BHP), Fortescue Metals Group (ASX:FMG) and Allkem (ASX:AKE).

Taking a look at economic data, tomorrow is the big release day of the RBA’s September meeting minutes which investors have been anticipating to determine whether the RBA really is dovish about the way forward for lower interest rate hikes or whether they will continue to aggressively act to curb inflation.

The Australian market closed sharply lower on Friday, down 1.52% as inflation panic set in causing investor confidence to tumble. Friday’s session was weighed down by a sharp sell-off in energy and materials stocks, but every sector closed the day in negative territory.

The winning stocks on Friday were the Star Entertainment Group (ASX:SGR), which jumped 5.07% higher on ASX, Computershare (ASX:CPU) added 4.42% and Tabcorp (ASX:TAH) rallied just over 4.2% on Friday. On the losing side, Lake Resources (ASX:LKE) recovered almost 1% on Friday but the lithium miner fell 28% for the week as investors sold out after the company revealed it has a dispute over deadline dates at its Kachi Lithium Project with its partner Lilac Solutions. Capricorn Metals (ASX:CMM) was the worst performing stock on Friday, shedding 11.7% followed by Atlas Arteria (ASX:ALX), which lost 9.7% and Sayona Mining (ASX:SYA), which ended the day down 9.4%.

The most traded stocks by Bell Direct clients on Friday were the BetaShares Geared Australian Equity Hedge Fund (ASX:GEAR), Silver Lake Resources (ASX:SLR), and Desert Metals (ASX:DM1).

Over in the US, the inflation related sell-off extended into Friday to close out America’s worst trading week since June. The Dow Jones fell 0.45%, the S&P500 shed 0.72% and the Nasdaq had the biggest fall of 0.9%. Shares in FedEx plunged 21.4% in the company’s worst session ever after the shipments company withdrew its full-year guidance and said it will implement cost-cutting initiatives to navigate softer global shipment volumes as the global market has ‘significantly worsened’. Following the news, shares in rivals UPS and XPO Logistics each dropped 4.5% and 4.7% respectively. The global market sell-off extended into the UK and Europe with the FTSE100 closing Friday’s session 0.62% lower while the CAC and DAX each lost 1.3% and 1.6% respectively.

What to watch today: 

• Locally today, ASX futures are expecting the market to open marginally lower, around 0.03% at 6737 points which is a sharp rise from Friday’s sell-off.
• Stocks going ex-dividend today include Enero Group (ASX:EGG), Service Stream (ASX:SSM), IPD Group (ASX:IPD), and QUBE Holdings (ASX:QUB), 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.
• Taking a look at commodities, crude oil is flat trading around US$85 a barrel, Brent is up 0.99% at US$91.7 a barrel, natural gas is down 6.15% but gold is up 0.7% at US$1675.06 per ounce, and iron ore is down 2.9% to US$101.50 per tonne.
• On the economic data front, investors will be nervously awaiting the release of the RBA meeting minutes for September which are out on Tuesday to determine exactly how dovish the RBA is toward raising interest rates in the future, or whether there are hidden signals that future interest rate rises could be as aggressive as the previous few.

Trading Ideas:

• Trading Central has identified a bullish signal on the Star Entertainment Group (ASX:SGR) following a short-term pattern forming over a period of 15-days which is the same time the upgraded price range between $3.04 to $3.08 may be achieved from the close of $2.90, according to standard principles of technical analysis.
• Bell Potter has initiated coverage on OreCorp (ASX:ORR) with a Speculative Buy rating on this stock and a price target of $0.84 per share following the major de-risking event of the completion of the Definitive Feasibility Study on the company’s prime asset, the Nyanzaga Gold Project, and ahead of the key catalyst of project financing. The NGP is emerging as an attractive, significant scale, new gold project with strong financial performance metrics in a region that is experiencing a resurgence in investment by the world’s largest mining companies.

The Aussie share market declined 0.74% this week (Mon-Thu), as investors fear more aggressive rate hikes. US inflation data for August came in at 8.3%, above market expectations. 
 
 In this week's wrap, Grady covers:

• (0:08) The latest US inflation reading
• (0:54) Two FMCG stocks Bell Potter has its eye on
• (3:18) Why investors are embracing cash ETFs
• (4:00) Material stocks advancing despite market turbulence
• (5:38) The most traded stocks & ETFs by Bell Direct clients 
• (6:08) Two economic news items to watch out for

Our local market closed with a 0.2% gain yesterday, with energy and financials advancing the most. 

On the prospect of the first strike by American railroad workers in 30 years, ASX coal producer’s rallied, lifting the energy sector higher. Coal stocks were the best performers, including Coronado Global Resources (ASX:CRN), New Hope Corporation (ASX:NHC) and Whitehaven Coal (ASX:WHC). Meanwhile, Lake Resources (ASX:LKE) dropped more than 12% yesterday. 

The most traded stocks by Bell Direct clients were Whitehaven Coal (ASX:WHC), Pilbara Minerals (ASX:PLS) and the BetaShares US Dollar ETF (ASX:USD). 

Wall Street extended losses overnight. The Dow Jones closed 0.6% lower and the S&P500 dropped 1.1%, with nine of the eleven industry sectors in the red. The Nasdaq was the worst performer as tech shares declined, down 1.4%. 

What to watch today:

• The local market is expected to slide this morning. The SPI futures are suggesting a fall of 0.73%. 
• In economic data, yesterday the unemployment rate for August was released. It increased to 3.5%. 
• In commodities:
  • Oil has pulled back, trading more than 4% lower, after the US Department of Energy said that its plan of refilling the country’s strategic oil reserves, does not include a trigger price. This announcement has backtracked previous reports that the US would restock the emergency reserves, should prices fall below US$80, removing the potential price floor for oil. 
  • Gold has dropped to levels last seen in April 2020, due to an increasingly strong US dollar. 
  • Iron ore has pulled back, trading down 2.5%. 

Trading Ideas:

• Bell Potter maintain a Buy rating on Select Harvests (ASX:SHV) with a price target of $6.90. At the stock’s current share price of $5.65, this implies 24.1% share price growth in a year. 
• Trading Central has identified a bullish signal in Coronado Global Resources (ASX:CRN), indicating that the stock price may rise from the close of $1.85, to the range of $2.17 to $2.27, over 31 days, according to the standard principles of technical analysis.