Between the Bells

US markets snapped a two-session losing streak, to close higher across the three key indices, led by the Nasdaq rallying more than 2% on Wednesday as oil prices and rate concerns eased, which cooled investor fears over continued high inflation. Stocks rallied after Federal Reserve Vice Chair Lael Brainard reaffirmed the Fed will do what it takes to control the country’s inflation, while also noting the risks of going too far. US trade balance data for July came in overnight, with imports continuing to outweigh exports, as the trade balance in the world’ largest economy regained some ground to a deficit of US$70.7 billion from $80.9 billion in the month prior.

 Over in Europe, Russian President Vladimir Putin caused a sell-off in stocks after threatening to cut back grain exports from Ukraine and said Moscow could extend its rations of natural gas exports and cut off oil flow if the west goes ahead with a planned price cap on Russian crude. Putin’s comments on grain sent global wheat prices up 4%. Stocks were also sold off as investor concerns over a recessionary outlook continue to grow. The FTSE100 fell almost 1%, the DAX added just 0.3% and the CAC closed just 0.02% higher.

 What to watch today: 

• On local shores, the ASX futures are anticipating the market to open just under half a percent higher today, to recover from yesterday’s sharp sell-off.
• In commodities, crude oil is trading 6% lower overnight, natural gas is down 3.5%, gold is 1.3% lower and iron ore is trading down 1.5%.
• In economic data, investors will be keeping an eye on RBA Governor Philip Lowe’s speech to gain an insight into just how aggressively the RBA will continue to raise interest rates in the future. Australia’s trade balance data is also out today, with the market expecting a trade surplus of $14.5 billion, down June’s surplus above $17.6 billion. Investors will be hoping the data boosts mining stocks today, following a sharp sell-off yesterday, after China’s trade balance showed demand fell nationally and internationally for iron ore, copper and gold.

 Trading Ideas:

• Trading Central has identified a bullish signal on software company Nuix (ASX:NXL), amid a pattern forming over a 17-day period. The bullish signal indicates that over this same period the stock price could climb from the close of $0.69/share to between $0.81-$0.85 / share according to standard principles of technical analysis.
• Bell Potter has initiated coverage of medicinal cannabis company Cronos Australia (ASX:CAU) with a buy rating and a price target of $0.60 per share with the expectation that momentum observed for Cronos in FY22 will continue into FY23 and translate into strong revenue and earnings growth.

Investor sentiment was dampened today in the wake of the RBA’s 50-basis point interest rate hike, GDP data showing the Australian economy grew 0.9% in the June quarter and the price of oil tumbling 2%, which caused a sell-off in energy stocks. The market closed the midweek session down 1.42%, dragging the index down more than 10.6% over the last 52-weeks.

The story of the session was Australia’s economy or GDP growing 0.9% in the June quarter and 3.6% for the year, driven by the boom in resource exports and high household consumption. The high consumer household spending, which jumped 2.2% in the quarter, indicates the full impact of RBA rate hikes are yet to fully be felt by consumers, with the biggest increases in spending done at cafes, restaurants and on transport services. The overall GDP data came in relatively in-line with market expectations.

Today’s winning stock was ResMed (ASX:RMD), which jumped 4.23% after Morgans placed an Add rating on the stock with a price target of $37.08 per share, based on the sleep treatment company’s positive long term growth outlook. Virgin Money (ASX:VUK) also rallied 3.3% today, while Fisher & Paykel Healthcare (ASX:FPH) added just over 3%.

Energy stocks faced a sharp sell-off today as the price of oil and natural gas prices are down around 2% each in the aftermath of Russia announcing Nord Stream 1 would be offline indefinitely, OPEC placing a price cap on Russian oil and China’s COVID zero goal hurting demand. Viva Energy Group (ASX:VEW) fell more than 6.5% today, while New Hope Corporation (ASX:NHC) and Beach Energy (ASX:BPT) lost 4.9% and 4.5% respectively. The session’s worst performing stock was Chalice Mining (ASX:CHN), which fell more than 13% despite no price sensitive news released by the company today. Qantas (ASX:QAN) shares also took a hit today after the ACCC found the cheapest domestic airfares were 56% more expensive in August than the four months prior, travellers faced record delays and the number of flights cancelled surged to three times the long-term average in July.

The top traded stocks by Bell Direct clients today were Whitehaven Coal (ASX:WHC), the BetaShares Geared Australian Equity Hedge Fund (ASX:GEAR), and Fortescue Metals Group (ASX:FMG).

On the economic calendar US trade balance data is released tonight while local investors will be keen to hear RBA Governor Philip Lowe’s speech tomorrow to look for any signs on how aggressively the RBA will continue to raise interest rates moving forward, following the rate hike yesterday

US equities tumbled in what was a volatile trading session, as trading resumed overnight following the Labor Day national holiday. Wall Street continued its broad sell-off. The Dow closed over 170 points lower, or 0.6%. The S&P500 fell 0.4% and the Nasdaq closed 0.7% lower, notching its seventh day of losses, its longest since 2016. 

 The Institute of Supply Management PMI came in stronger than expected. However, investor sentiment has been dampened lately, amid hawkish comments from the Fed, who show no signs of easing up aggressive interest rate hikes.  Also, the court battle between Tesla CEO Elon Musk and social media company Twitter is scheduled for today. In London, shares responded favourably to the news of the new Prime Minister Liz Truss. 

 Following the RBA’s cash rate hike yesterday, the national currency has struggled to gain momentum, with one Aussie dollar buying just 68 US cents.

 What to watch today:

• The SPI futures are suggesting the Australian market will open 0.54% lower this morning. 
• In economic data, today the GDP Growth Rate for Q2 will be released at 11:30am AEST. Year-over-year, the growth rate is expected to rise from 3.3% to 3.5%. 
• On the commodities front: 
  • Crude oil has slipped more than 2% overnight, amid weaker demand fears and the prospect of rising interest rates, despite OPEC agreeing to cut crude supply by 100,000 barrels per day in October in a bid to prop up oil prices.
  • Iron Ore is trading more than 3% higher at US$101 per tonne
  • Gold is trading flat at US$1,700 per ounce.

 Trading Ideas: 

• Bell Potter have re-initiated coverage on Starpharma (ASX:SPL), a Melbourne-based biotech company focussed on dendrimer technology.  The broker has a Speculative Buy rating on the stock with a $1.00 valuation. At its current share price of $0.58, this implies 72.9% share price growth in a year. 

Trading Central have identified a bullish signal in Ecograf (ASX:EGR), indicating that the stock price may rise from the close of $0.44 to the range of $0.52 to $0.56, over 16 days, according to the standard principles of technical analysis. 

The story of the day was the RBA raising the official cash rate by a further 50 basis points for September, taking the rate from 1.85% to 2.35%, which was in line with market expectations. The RBA also said it is committed to continue raising the cash rate.

The market rallied in the first hour of trade before turning lower and closing the session down 0.4%. Investors sold out of financial stocks today in anticipation that the big banks will pass on the full interest rate hike to customers.

Lithium stocks performed well today after a number of broker upgrades including Macquarie reiterating its ‘outperform’ rating on Allkem (ASX:AKE), while Jefferies lifted its price targets on IGO (ASX:IGO), Pilbara Minerals (ASX:PLS) and Allkem (ASX:AKE). The rally in lithium stocks was led by Core Lithium (ASX:CXO) surging almost 10%. Other winning stocks for today’s session were Lake Resources (ASX:LKE) which added 9.55%, Paladin Energy (ASX:PDN) which jumped 7.8%, and Pilbara Minerals (ASX:PLS) which closed the session up just over 7%.

And on the losing front, Breville Group (ASX:BRG) led the losses today falling almost 5%, Incitec Pivot (ASX:IPL) shed 3.66% and GrainCorp (ASX:GNC) ended the day down 2.9%.

 The top traded stocks by Bell Direct clients today were Commonwealth Bank (ASX:CBA), Pilbara Minerals (ASX:PLS), and Whitehaven Coal (ASX:WHC).

In economic news, Australia’s current account balance was also released today. The nation’s current account surplus jumped to $18.3 billion in the second quarter which fell short of market expectations of $20.8 billion, but a major increase from a fall to $2.8 billion in the previous quarter. The increase in the current account for the second quarter was driven by higher commodity prices.

Tonight, the US will have its first trading session of the week with investors keeping a close eye on if the sell-off from last week will continue into the new trading week.

On the economic data front, US Global Services PMI is out tonight, in addition to ISM Non-Manufacturing business activity, PMI and Employment for the month of August with the market expecting a decline across each of these metrics from the month of July. Locally, investors will be awaiting GDP data out tomorrow for the second quarter to see if Australia’s economy continued to grow during the most recent period. The market is expecting growth of 1%, up 0.2% from the first quarter.

The US market was closed overnight for the labour day national holiday, but across the sea in Europe, markets closed lower as investors questioned economic risks in the region, reignited by concerns about the energy supply from Russia.

What to watch today:

• Despite the negative session in Europe, the SPI futures are suggesting that the ASX200 will open 0.2% higher.
• The big focus today is the RBA’s September cash rate decision, where it’s widely expected the central bank will increase rates for the fifth consecutive month. Consensus is expecting another 50 basis point hike, which would take the official cash rate from 1.85% to 2.35%. So stay tuned for the announcement at 2:30pm AEST.
• In commodities:
  • Oil prices jumped, extending gains as it was confirmed that OPEC will cut production targets by about 100,000 barrels per day from October.
  • The gold price traded flat at US$1,709 an ounce, as investors remained cautious of the US Federal Reserve’s rate hike path following a mixed jobs data report. The report showed that US employers hired more workers than expected in August, but moderate wage growth and a rise in the unemployment rate suggest that the labor market is starting to loosen.
  • The spot iron ore price traded 1% lower to US$98 a tonne.
• There are nearly 30 stocks going ex-dividend today, including BlueScope Steel (ASX:BSL), CSL (ASX:CSL), Nickel Industries (ASX:NIC), Northern Star Resources (ASX:NST) and Origin Energy (ASX:ORG). So, we may see the share prices of these stocks decline today as investors take their profits.
• If you hold Magellan Financial Group (ASX:MFG), Bell Financial Group (ASX:BFG) or GWA Group (ASX:GWA) you will receive your dividend payment today. 

Trading Ideas:

• Goldman Sachs has retained its Neutral rating on Telstra (ASX:TLS) with a price target of $4.40. Goldman Sachs has been reviewing the telco giant and hasn’t seen enough yet to upgrade its shares. At its current share price of $3.89, Goldman Sach’s price target of $4.40 implies about 13% share price growth in a year.
• Trading Central has a bearish signal on The Reject Shop (ASX:TRS) indicating that the stock price may fall from its close of $4.20 to the range of $3.67 - $ 3.77 in the next 33 days according to standard principals of technical analysis.  

The Australian market rebounded from last week’s loss to start the trading week in positive territory, ending Monday’s session up 0.34%.

 ASX-listed oil stocks had investors piling in today after the G-7 agreed to impose a price cap on Russian oil to reduce Russia’s revenue from the key commodity used toward funding its war in Ukraine. Russia responded by saying it will stop selling oil to countries that set price caps which fuelled the rally for energy stocks today with Beach Energy (ASX:BPT) soared more than 5% during the session, while Woodside Energy (ASX:WDS) added more than 3% and Santos (ASX:STO) rallied almost 3%.

 The price of oil also jumped over 2% today extending gains as investors anticipate possible moved by OPEC+ producers to cut output and support prices at a meeting later today.

 The winning stocks for today’s session were Coronado Global Resources (ASX:CRN) up 7.5%, and Whitehaven Coal (ASX:WHC) up 6.5%, as investors also piled into coal mining stocks today on the back of the price of coal soaring to a near-record high US$435 per tonne. And on the losing front, Imugene (ASX:IMU) took the biggest hit today, tumbling more than 8% despite no price sensitive news released by the biotech company today. Pointsbet Holdings (ASX:PBH) continued its decline today, shedding 6.4% and Life360 (ASX:360) was also in the firing line of investors today, with its share price closing the day down almost 5%.

 The most traded stocks by Bell Direct clients today were Pilbara Minerals (ASX:PLS), Whitehaven Coal (ASX:WHC), and Commonwealth Bank (ASX:CBA).

 Taking a look at economic data released today, ANZ job ads data for the month of August showed Australia’s tight labour market continues as the number of job ads posted in the month increased 2%. In Australia at present, there are more jobs than job seekers and the latest job ads data for August is further evidence that the labour shortage crisis is far from over. Data for new vehicle sales in August was also released today, showing August was the best month for new car sales since 2017, signalling demand for vehicles continues to outweigh supply. Electric vehicle sales for the month reached a record 4.4% of all new vehicles sold.

 The US market will be closed overnight for the labour day national holiday. Locally, investors will be eagerly awaiting the release of the RBA’s latest interest rate decision for September, which is out tomorrow.

The Australian market closed 0.25% lower on Friday and etched out its second straight week of losses, shedding 3.88% over the last 5 trading days in the indexes worst trading week since June. The materials sector plunged more than 10% for the week as a major lockdown in China weighs on investor sentiment toward the sector, as investors fear iron ore demand from China will weaken following the lockdown. Mineral Resources (ASX:MIN) fell 6.23% on Friday, Lake Resources (ASX:LKE) 6.17%, and Sandfire Resources (ASX:SFR) dropped almost 5% to end the week.

Investor fears of demand weakening have been the determining factor for investments in materials stocks over the last week, despite some of the mining giants like BHP Group (ASX:BHP) reporting strong FY22 results last week.

Despite the turbulent session on Friday, investors piled into Life360 (ASX:360) despite no price sensitive news released by the company on the last trading day of the week. Investors also bought into GPT Group (ASX:GPT) on Friday and Clinuvel Pharmaceuticals (ASX:CUV) rose 2.3% after releasing strong FY22 results.

On the losing front, investors sold-out of NOVONIX (ASX:NVX) on Friday with the battery materials and tech company diving more than 8% as investors respond to the company’s FY22 results including the full-year loss deepening to $71 million.

The most traded stocks by Bell Direct clients last week were Boral (ASX:BLD), BHP Group (ASX:BHP) and Core Lithium (ASX:CXO).

Over in the US, markets closed lower on Friday despite a morning rally on Wall Street. The Dow Jones and S&P500 each fell 1%, while the Nasdaq lost 1.3%. Stocks rallied in the morning as the US labour department issued a strong jobs report for august, showing payrolls rose 315,000 for the month as companies continue hiring in the tight labour market, while unemployment ticked higher to 3.7% as more people look for work. The sharp sell-off in afternoon trade came as investor sentiment changed to believe the strong jobs report won’t cause the feds to act any less aggressively toward tackling inflation for the foreseeable future. Over in Europe, the key markets rallied with the FTSE adding more than 1.8%, the Dax soaring 3.3% and the CAC jumping 2.2%. The G-7 rolled out a plan to cap the price of Russian oil on global markets as part of a set of sanctions aimed at limiting Russia’s revenue from oil sales without cutting off oil supply from Russia completely which would send global oil prices soaring.

What to watch today:

• ASX futures are expected to open 0.23% lower on the back of the sell-off on Wall St on Friday.
• Taking a look at commodities, crude oil is trading just under 1% higher this morning, natural gas is down 4.07%, gold is up just under 1% while iron ore is trading down more than 1%.
• On the economic data front, final retail sales data for July is released today in addition to ANZ Job ads for August.
• Investors will also be keeping a close eye on the RBA’s interest rate decision for September which is released tomorrow as well as Australian GDP for Q2 out on Wednesday, followed by Australia’s trade balance data out on Thursday.

Trading Ideas:

• Trading Central has identified a bullish signal on CSL Limited (ASX:CSL) based on a pattern forming over a 25-day period which is roughly the amount of time the new price target will be achieved in the range between $314/share-$319/share from the close of $295.99/share, according to standard principles of technical analysis.
• Bell Potter has maintained its rating on Genetic Signatures (ASX:GSS) to a speculative hold rating but downgraded its price target to $1.20/share from $1.25/share based on challenges anticipated to be faced in FY23 including regulatory approval by the FDA for its Enteric Protozan kit expected in Q2 FY23.

The Aussie share market tumbled 3.64% this week (Mon-Thu) partly due to Wall Street’s lead. 336 companies have reported results to the market and we analyse the scorecard. 
 
 In this week's wrap, Grady covers:

• (0:32) How the energy & materials sectors performed in August 
• (2:01) Why investors sold-off REIT stocks
• (2:39) The key takeaways from this reporting season 
• (3:29) The a2 Milk Company (ASX:A2M) leading the gains 
• (4:50) The most traded stocks & ETFs by Bell Direct clients

In New York overnight, shares turned around, regaining some of the week’s losses. The Dow and the S&P500 ending the first day of the month on a high note, with investors looking forward to the US jobs report for August. Meanwhile, the Nasdaq dropped 0.3%, posting a 5-day loosing streak, which was last seen for the Nasdaq in February. All three major averages however, are on track to finish the week lower. And the 2-year US Treasury yield topped 3.5%, which is the highest level since November 2007. This weighed on weigh sensitive growth stocks.

What to watch today:

• The SPI futures are suggesting our local market will edge higher this morning, set to rise 0.29% at the open.
• In commodities,
  • Crude oil has dropped almost 4%, as US recession concerns and a weakening demand outlook have overshadowed concerns over tight supply.
  • Gold is also trading lower, hovering at its lowest in 6 weeks, pressured by the Fed’s commitment in fighting inflation with aggressive policy tightening.
  • Iron ore is also in the red, trading at levels not seen in nearly 10 months. Power cuts for Chinese manufacturers has lowered capacity for steel production and demand for steel inputs.
• Watch the share price movements of biotechnology company Imugene (ASX:IMU), which is set to publish its earnings results today, as well as Catalano Seafood (ASX:CSF) which is set to hold its AGM today.

Trading Ideas:

• Bell Potter maintain their Buy rating on DGL Group (ASX:DGL). The company published its FY22 results: Underlying EBITDA was up 59% year-over-year, in-line with Bell Potter’s estimates. Factoring in their expectations for FY23, the broker has lowered their price target from $3.50 to $2.15. At DGL’s current share price of $1.84, this implies 16.8% share price growth in a year.
• Trading Central have identified a bearish signal in Regis Healthcare (ASX:REG), indicating that the stock price may fall from the close of $2.03 to the range of $1.68 to $1.74, over 10 days according to the standard principles of technical analysis.

The Australian market posted a 2.02% loss on the first trading day of the new month, closing at its lowest level since late July. Every sector aside from consumer staples stocks ended the day in negative territory as the broad market sell-off continued locally in response Wall Street suffering through its worst August since 2015.

 Economic data on the housing front released today also weighed on investor sentiment, with home loans issued for July falling 7% to $19.05 billion, which well exceeded the market expectation of a 3% fall. Building CaPex and private CaPex also fell for the second quarter in data out today, down 2.5% and 0.3% respectively.

 On the stocks front, Endeavour Group (ASX:EDV) was one of the winning stocks today despite the market sell-off amid a rally for consumer staples stocks today. The a2 Milk Company (ASX:A2M) also jumped more than 2% today after Bell Potter upgraded the premium dairy company’s shares to a buy rating with a price target of $6.35 per share on the belief that its FY22 results came in ahead of expectations and that strong earnings growth can be seen to continue through to FY26.

 On the losing front, Pointsbet Holdings (ASX:PBH) continued to be sold-off sharply today with the share price falling more than 15% during the session as investors continue punishing the online sports betting company for its FY22 results released yesterday.

 The most traded stocks by Bell Direct clients today were Nickel Industries (ASX:NIC), BHP Group (ASX:BHP), and the BetaShares Australian Strong Bear Hedge Fund (ASX:BBOZ).

 As for what to watch overnight, initial jobless claims in the US for last week will be released, with the market expecting an increase to 246,000.