Between the Bells

An uncertain week continues on Wall Street. The three major benchmarks closed higher overnight. It was a slow session however with traders a bit hesitant to make big moves. Traders are cautious ahead of Friday night in the US, when we’ll receive a monthly update on inflation which of course is highly anticipated as inflation is currently one of the key drivers of markets. And on Friday Jerome Powell, the head of the central bank will also deliver a speech, which could have an impact on the market’s performance next week. 

What to watch today:

• The SPI futures are suggesting the Australian market will rise 0.48% at the open this morning. 
• In commodities, 
  • The price of oil is trading almost 2% higher and crude futures have hit the highest levels in three weeks, due to the concerns about tight supply. Crude oil is still down about 25% from the peak in June, as monetary tightening we’re seeing globally right now is creating concerns of an economic slowdown, which would dampen consumption as major central banks stem demand with rate hikes. Watch Santos (ASX:STO) and Woodside Energy (ASX:WDS) today. 
  • Gold is trading higher, moving away from the near 4-week low reached earlier in the week,
  • Iron ore has rebounded, regaining some of its earlier losses.
• Reporting season wise, travel stocks will be on watch, with a few big travel names set to publish earnings, including Air New Zealand (ASX:AIZ), Flight Centre (ASX:FLT), and Qantas (ASX:QAN). And other big names reporting today include South32 (ASX:S32), Pilbara Minerals (ASX:PLS), Ramelius Resources (ASX:RMS) and Woolworths (ASX:WOW). Company results continue to be the main driver for price movements this month, based on if earnings are above or below expectations. 
• Companies going ex-dividend today, which may cause their prices to fall as investors take their profits include Baby Bunting (ASX:BBN), Codan (ASX:CDA), Deterra Royalties (ASX:DRR), JB Hi-Fi (ASX:JBH) and REA Group (ASX:REA).  

Trading Ideas:

• Bell Potter maintain a Speculative Buy rating on De Grey Mining (ASX:DEG), which is due to release the Pre-Feasibility Study on its 100%-owned Mallina Gold Project in the current quarter. The broker’s valuation is $1.80, and at DEG’s current share price of $0.93, this implies 93.5% share price growth in a year. 
• Trading Central have identified a bullish signal in Champion Iron (ASX:CIA), indicating that the stock price may rise from the close of $5.34 to the range of $6.10 to $6.25 over 36 days, according to the standard principles of technical analysis. 

The Australian market posted its first positive close for the week today, with the ASX200 closing the session up 0.52%.

The energy sector led the gains today as investors piled into the sector following its solid performance in Europe and the US overnight. 

Paladin Energy (ASX:PDN) was the winning energy stock today, gaining more than 8% at the closing bell despite no price sensitive news released by the uranium miner today.

Some of the key winners and losers today were WiseTech Global (ASX:WTC) which surged more than 10% during the session following the release of impressive FY22 results including underlying NPAT soaring 72% and the signing of 5 new rollout deals for its CargoWise software including UPS. 

Iluka Resources (ASX:ILU) also soared just under 10% today after releasing half-year results including NPAT rocketing 186%, a 25cps interim dividend and mineral sands revenue jumping 30%. 

On the losing front, EML Payments (ASX:EML) tumbled more than 10% today after the payments technology provider announced its Sentenial business has identified recent fraudulent activity that could result in losses up to $7.9m. 

Nanosonics (ASX:NAN) also fell more than 5% today following the release of the company’s full year results yesterday.

On the economic front today new home sales in the US fell by almost 13% for July while locally, the RBA’s head of domestic markets Jonathan Kearns, said the climate crisis is a significant issue for the economy and society.

The most traded stocks by Bell Direct clients today were: BetaShares Geared Australian Equity (Hedge Fund) (ASX:GEAR), BHP Group (ASX:BHP), NOVONIX (ASX:NVX), and Whitehaven Coal (ASX:WHC). 

As for what to watch overnight, investors will be keeping a close eye on US GDP data for the second quarter released tomorrow to determine whether the world’s largest economy is in recession territory, as well as initial jobless claims in the US which will reveal if the labor market in the US is continuing to cool.

The local market closed lower for the second straight session, down 1.2% to close below 7,000 points for the first time in two weeks. Shares were lower after a number of companies reported soft results, including Endeavour Group (ASX:EDV) and online retailer Kogan (ASX:KGN). 

Sectors wise, only the energy and utilities sectors posted gains, while the rest of the market was deep in the red, with the consumer staples sector experiencing a hefty 3.8% drop.  

Altium (ASX:ALU) jumped 20% higher after impressing the market with its FY22 results that beat expectations. The software company reported a 23% increase in revenue and an EBITDA margin of 36.7%, and its NPAT grew 57%. Meanwhile, the worst performer was Endeavour Group (ASX:EDV) after its disappointing report card. 

The most traded stocks by Bell Direct clients yesterday included IDP Education (ASX:IEL), the BetaShares Geared Australian Equity Hedge Fund (ASX:GEAR) and BHP Group (ASX:BHP). 

In the US, all three benchmarks fell again for the third session as investors brace for the Federal Reserve Chairman Jerome Powell’s remarks at Jackson Hole on Friday. And European markets also closed lower as investors monitored the rise in oil prices and the August flash PMI which showed that business activity had contracted for the second straight month. 

What to watch today:

• Despite Europe and the US closing lower, the ASX200 is expected to open 0.22% higher if you go by the SPI futures. 
• Confession season continues to be the key focus today with lots of companies reporting. Some to keep an eye on include Coles (ASX:COL), Domino’s Pizza (ASX:DMP), Iluka Resources (ASX:ILU) and WiseTech Global (ASX:WTC). 
• In commoditiesOil prices rebounded strongly as Saudi Arabia hinted the idea at a possible output cut. 
• The gold price rose for the first time in six sessions as the US dollar and Treasury yields fell following weak US business activity data. 
• The spot iron ore price trades at US$105 a tonne. 
• Stocks going ex-dividend today include: Telstra (ASX:TLS), SG Fleet Group (ASX:SGF) and Pact Group (ASX:PGH).  
• A new company debuting on the ASX today is Heavy Rare Earths, an Australian mineral exploration company. It will be trading under the ticker code HRE.
• If you hold Janus Henderson Group (ASX:JHG) you will receive your dividend payment today.  
• Fisher & Paykel Healthcare (ASX:FPH) and Straker Translations (ASX:STG) will be holding their AGMs today. 

Trading Ideas:

• Bell Potter have downgraded its rating on Nanosonics, from a Hold to a Sell with a price target of $4.05. Nanosonics has rallied hard off its lows from earlier this year, however, investment arithmetic is stretched. In Bell Potter’s view a material portion of the valuation is attached to prospective revenues from products yet to obtain regulatory approval let alone commercial validation. At its current share price of $4.68, this implies about -14% share price growth in a year. 
• Trading Central has a bullish signal on foreign exchange company OFX Group (ASX:OFX) indicating that the stock price may rise from its close of $2.66 to the range of $3.45 – $3.60. That’s a rise of around 30-35% and it’s forecasted to occur in the next 33 days according to standard principals of technical analysis.  

Our local market came under pressure yesterday, closing 1% lower. It was a sea of red, with all eleven industry sectors declining. Leading the losses was both the consumer discretionary and tech sectors, after a number of company announcements as well as speculation of aggressive US policy tightening to control inflation. 

The best performing stock was NIB Holdings (ASX:NIB), after the private health insurer released its full year results, which showed a 7.2% increase in revenue, but a decline in its net profit, however the decline was slightly ahead of estimates. Other top performers included EML Payments (ASX:EML), Pilbara Minerals (ASX:PLS) and Telix Pharmaceuticals (ASX:TLX). Meanwhile, Adbri (ASX:ABC) tumbled 17% after wet weather disruptions and rising fuel and energy prices impacted its profits. 

Some of the most traded stocks by Bell Direct clients yesterday included BHP Group (ASX:BHP), the BetaShares Australian Strong Bear Hedge Fund ETF (ASX:BBOZ) and aerial imagery technology business Nearmap (ASX:NEA). 

In the US, all three benchmarks started the new trading week in the red after renewed fears of aggressive rate hikes returned to Wall Street. Consumer discretionary, communication services and tech stocks were hit the hardest. So we saw the Dow tumble more than 600 points, experiencing its worst day since June. The S&P500 was down 2.1% and the Nasdaq fell 2.6%.

What to watch today:

• Following the US, the SPI futures are suggesting that our market will follow with a fall of 0.6% at the open. 
• Companies reporting their earnings today include: AMA Group (ASX:AMA), Alumina (ASX:AWC), Boral (ASX:BLD), Breville (ASX:BRG), Estia Health (ASX:EHE), Monadelphous (ASX:MND) and HUB24 (ASX:HUB).

In commodities:

• Oil prices traded flat following the Saudi energy minister stating that OPEC could cut production to confront market challenges. 
• The gold price declined as the US dollar rallied and as the looming interest rate hikes dented bullion’s appeal. 
• The spot iron ore price is trading flat at US$104 a tonne.
• Some stocks going ex-dividend today include: intellectual property services group IPH (ASX:IPH), Domain Holdings (ASX:DHG) and Qualitas (ASX:QAL). 
• If you hold Transurban Group (ASX:TCL) you will receive your dividend payment today.  
• Testing, inspection and certification business ALS (ASX:ALQ) will be holding its AGM today. 

Trading Ideas:

• Potter have maintained its Buy rating on Accent Group (ASX:AX1) and have increased its price target from $1.90 to $2. At its current share price of $1.71, this implies about 17% share price growth in a year. 
• Trading Central has a bearish signal on Dexus (ASX:DXS) indicating that the stock price may fall from the close of $9.01 to the range of $8.56 - $8.64 in the next 33 days according to standard principals of technical analysis.  

The local market closed just 1 point higher on Friday but gained just over 1% for the week led by the materials sector jumping more than 3.4% for the week. The energy sector had its best session in months with energy stocks boosted by the passing of the US Inflation Reduction Act last week.

Investors piled into Santos (ASX:STO) on Friday with the energy giant jumping more than 6% a day after releasing its first-half results including NPAT surging over 300% and revenue up 85%. Whitehaven Coal (ASX:WTC) also added over 6% on Friday while New Hope Corporation (ASX:NHC) and BHP Group (ASX:BHP) each gained over 4% during the session. 

On the losing front, TPG Telecom (ASX:TPG) took the biggest hit on Friday, tumbling more than 12% after the telco giant released first half results that were uneventful including service revenue coming in flat, average revenue per user up just 1%, and EBITDA down 5.3%. Inghams (ASX:ING) also fell over 9% and PointsBet (ASX:PBH) lost over 6.5%. 

The most traded stocks by Bell Direct clients last week were IPH Limited (ASX:IPH), Worley (ASX:WOR) and Domino’s Pizza (ASX:DMP). 

Over in the US, all three key indices closed lower on Friday. Investors took the latest minutes as the Fed being more hawkish about its approach to tackling inflation in the world’s largest economy, and fear another aggressive interest rate hike will follow in the September FOMC meeting.

What to watch today:

• The ASX is expected to open lower following a turbulent session on Wall Street on Friday.
• We are set for another bumper earnings season this week with over 115 companies set to report including Qantas (ASX:QAN), Ampol (ASX:ALD) and the Star Entertainment Group (ASX:SGR).
• In commodities, oil has rebounded from last week’s dip to trade 0.3% higher this morning, iron ore is trading flat, natural gas is up just under 1% and gold is trading more than half a percent lower.
• Economic news wise, investors will be keeping a close eye on US GDP data out later in the week to see whether the world’s largest economy continued to contract into a recession or rebounded to growth in the second quarter to ease recession fears currently plaguing the market. 

Trading Ideas:

• Trading Central has identified a bullish signal on Red Dirt Metals (ASX:RDT) indicating the stock price may rise from the close of $0.49 to the range of $0.61-$0.63 over the next 48 days which was the amount of time the pattern took to form according to the standard principles of technical analysis.
• Bell Potter has reduced its target share price on Inghams Group (ASX:ING) to $2.90 following the release of the poultry group’s FY22 results including elevated costs and adverse sales mix.
• Trading Central has a bearish signal on Adairs (ASX:ADH) with a target price range of $1.65-$1.85, down from the close of $2.55, which may be achieved over the next 40 days according to standard principles of technical analysis. 

We're excited to welcome Grady Wulff, our new Market Analyst at Bell Direct. Grady and the Market Analyst team are dedicated to bringing you daily insights to support you in your investment journey. 
 
 In her first weekly wrap, Grady covers:

• (0:42) Why the energy sector is in the spotlight
• (2:07) An update on reporting season
• (2:42) Consumer staples stocks outperforming
• (2:55) Bell Potter's energy stock picks
• (3:34) The most traded stocks & ETFs by Bell Direct clients
• (4:00) The latest unemployment reading

Our local market yesterday closed 0.2% lower. The tech sector declined the most among the 11 sectors, while utilities also weighed down on the market. On the other end, energy and healthcare stocks advanced. And it was one of the busiest days of earnings results so far, with a long list of companies reporting. 

On the ASX200, we saw intellectual property group IPH (ASX:IPH) shares soar 16%, following news that the company has agreed to acquire Smart & Biggar, which is a leading Canadian intellectual property firm. Blackmores (ASX:BKL) shares fell 10% and it was the worst performing stock yesterday. While Blackmores reported a rise in profit and revenue, it also warned about rising costs and supply chain issues. 

The most traded stocks by Bell Direct clients were CSL Limited (ASX:CSL), Lake Resources (ASX:LKE), ResMed (ASX:RMD) and BHP Group (ASX:BHP).

US equities gained overnight, with all three major benchmarks closing slightly higher. The Dow was up 0.6%, while the S&P500 and the Nasdaq both gained 0.2%. And European stocks also closed higher after a choppy session, amid continuing market caution over the inflationary outlook. The STOXX 600 was up 0.3% by the close. 

What to watch today:

• The Australian market is set open slightly higher, with the SPI futures suggesting a 0.3% rise at the open this morning. 
• In commodities, the price of oil is on the rise, now moving further away from the 6-month lows reached earlier in the week, as falling US crude inventories more than offset the concerns around a global economic slowdown. Gold prices have steadied, however have fallen for three straight sessions, with the latest US Fed policy meeting minutes being released, which emphasised the need to keep up rising rates. And iron ore is trading lower with an extended downturn in demand for industrial inputs in China. 
• Some companies set to publish results today include AGL Energy (ASX:AGL), Cochlear (ASX:COH), Cleanaway Waste Management (ASX:CWY), Healius (ASX:HLS), Inghams (ASX:ING) and Newcrest Mining (ASX:NCM). 

Trading ideas:

• Bell Potter maintain a Speculative Buy rating on Telix Pharmaceuticals (ASX:TLX) after the company reported its results. Bell Potter have lowered their valuation from $9 to $8.65, and at its current share price of $6.63 this implies 30.5% share price growth in a year. 
• Trading Central have a identified a bearish signal in Adairs (ASX:ADH) indicating that the stock price may fall from the close of $2.55 to the range of $1.65 to $1.85 over 40 days according to standard principles of technical analysis. 

Yesterday, our local market posted its third straight day of gains, closing 0.3% higher, with consumer staples and consumer discretionary stocks advancing the most, while the healthcare sector declined the most, weighed down by a 1.3% fall in CSL’s share price after its results release yesterday.

The biggest gainer yesterday was Challenger (ASX:CGF), with the stock regaining some of its losses after its tumble on Tuesday, following its results release. Its gain yesterday was likely off the back of broker upgrades from both Citi and Morgans. Meanwhile, one of the biggest decliners was Magellan Financial Group (ASX:MFG) after investors were not impressed by the company’s full-year earnings for FY2022. 

The most traded stocks by Bell Direct clients yesterday included Worley (ASX:WOR), Lake Resources (ASX:LKE), Santos (ASX:STO) and CSL Limited (ASX:CSL). 

In the US, all three benchmarks closed lower, with the Dow Jones snapping its 5-day winning streak. Investors were assessing the latest retail data, as well as the minutes from the Federal Reserve. The central bank suggested that there are more rate hikes in the pipeline, but the pace could slow. And in Europe, markets pulled back and the latest CPI data was released, which showed that UK inflation had risen to another 40-year high in July, as food and energy prices continue to surge.  

What to watch today:

• Following the negative sessions over on Wall Street and in Europe, the SPI futures are suggesting that our market will follow with a fall of 0.18% at the open. 
• The all-important unemployment rate for July will be released today, and it’s expected to remain unchanged at 3.5%.
• There are a number of companies releasing their earnings results today. These include: Auckland International Airport (ASX:AIA), Blackmores (ASX:BKL), Evolution Mining (ASX:EVN), Iress (ASX:IRE), Orora (ASX:ORA) and Transurban Group (ASX:TCL). 
• In commodities, the crude oil price rose as US crude stockpiles fell. The gold price was trading in the red, following the release of the minutes from the US Fed meeting. And the spot iron ore price currently trades at US$108 a barrel, down about 2.7% this week.
• Stocks going ex-dividend today include QBE Insurance Group (ASX:QBE), Insurance Australia Group (ASX:IAG), MyState (ASX:MYS) and GPT Group (ASX:GPT).
• Accounting software business, Xero (ASX:XRO) will be holding its AGM today. 

Trading Ideas:

• Bell Potter have maintained its Buy rating on consumer lending company, Money3 Corporation (ASX:MNY) with a reduced price target from $3.22 to $2.90. Money3 recently released its financial year results. At first glance, the results were a good set of figures showing good growth in profitability, with NPAT up 31.6%, which was slightly better than the guidance. The loan book was up 22.0% and whilst this is impressive, it fell short of the previous guidance. At its current share price of $2.42, this implies 19.8% share price growth in a year. 
• Trading Central has a bullish signal on Goodman Group (ASX:GMG) indicating that the stock price may rise from the close of $21.06 to the range of $24.70 - $25.50 in the next 74 days according to standard principals of technical analysis.  

The Australian market had a solid session on Tuesday, with the key index closing the day at a 10-week high. The materials sector led the charge, closing the day more than 1.66% higher on the back of mining giant BHP (ASX:BHP) releasing record results for FY22, which in-turn caused OZ Minerals (ASX:OZL) shares to lift 1.3%. Gains in the materials sector were dampened though by Lake Resources (ASX:LKE) tumbling over 8%.

Life360 (ASX:360), a stock recommended by Bell Potter as one to watch in FY23, soared almost 5.5% yesterday after also releasing strong half year results including monthly active users topping 42 million and subscription revenue lifting 88%. Investors sharply sold-off Challenger (ASX:CGF) shares after the investment management firm released FY22 results including a 57% decline in annual profit. 

Lake Resources (ASX:LKE) and Core Lithium (ASX:CXO) also fell over 8% and 7% respectively yesterday and were two of the most traded stocks by Bell Direct clients during the session, alongside Betashares Australian Equities Strong Bear Hedge Fund (ASX:BBOZ) and Amcor (ASX:AMC).

Taking a look at Wall Street overnight, the key US indices closed mixed with the Dow Jones and S&P500 boosted into positive territory by strong earnings results released by Walmart and Home Depot indicating consumer spending could remain strong. The tech-heavy Nasdaq however closed the session in the red. US Industrial production data for July released yesterday showed the world’s largest economy’s value of production output rebounded for the month to 0.6% which was double what markets were expecting. US building permits for July also beat consensus for July with 1.674 million issued over the month, but new house starts in the US fell to 1.44 million in data released yesterday. Over in Europe, the Stoxx, FTSE, DAX and CAC each closed marginally higher on Tuesday but are struggling to build on the strong momentum from last week’s rally.  

What to watch today:

• Locally today, investors will be awaiting FY22 results released by specialty biotech company CSL (ASX:CSL) and oil and gas giant Santos (ASX:STO).
• On the commodities front, Crude Oil continues its decline, down more than 2.55% this morning, iron ore is also down more than 3%, natural gas is up over 7% and gold is trading just under 1% lower this morning.
• Australia’s wage price index data for the second quarter is out today and investors will be keeping a close eye to see if the forecasted 0.1% growth was achieved in the quarter.

Trading Ideas:

• Trading Central has a bullish signal on Catapult Group International (ASX:CAT) after detecting a ‘Head and Shoulders Bottom’ chart pattern formed over 84-days which is roughly the period in which the target price range of $1.44 to $1.54 per share may be achieved according to standard principles of technical analysis.
• Trading Central has identified a bearish signal on retail group Adairs (ASX:ADH) following the detection of a ‘Continuation Wedge’ chart pattern forming. The bearish signal indicates the stock may fall from the close of $2.52 per share to the range of $1.55 to $1.70 per share. The pattern formed over 42-days which is roughly the period in which the target price may be achieved, according to standard principles of technical analysis.

Our local market closed 0.5% higher with the real estate and consumer discretionary sectors in the lead, while energy and financials were in the red. 

Beach Energy (ASX:BPT) dropped the most on the ASX200 yesterday, after reporting its results. Although revenue jumped, the oil and gas producer reported a lower-than-expected production outlook, which disappointed investors. On the other hand, mining stocks Core Lithium (ASX:CXO), Champion Iron (ASX:CIA) and Lake Resources (ASX:LKE) closed with strong gains. 

The most traded stocks by Bell Direct clients were BHP Group (ASX:BHP), Bowen Coking Coal (ASX:BCB) and Telstra (ASX:TLS). 

Overseas, investors monitored market reactions to weak Chinese economic data. China’s industrial output and retail sales data for July missed expectations. Also, China’s central bank cut rates unexpectedly, raising concern over China’s economic recovery. However, European markets still managed to close marginally higher, while US equities rallied as investors prepared for a big week of retail earnings. Wall Street started the session lower with declines in energy and financials, however later rebounded into positive territory as consumer staples, consumer discretionary and communication services moved higher. All three major benchmarks closed in the green. 

What to watch today:

• Following US equities, the SPI futures are suggesting the Australian market will rise 0.32% at the open this morning. 
• In commodities, oil has tumbled to an almost six-month low as industrial production figures in China missed expectations, as China is a top oil importer. This added to the news of OPEC’s expectations of a decline in oil demand and supply increases. So today keep watch of energy producers such as Santos (ASX:STO) and Woodside Energy (ASX:WDS). Gold and iron ore are also trading in the red. 
• Watch the share price movements of these company’s reporting their earnings results today: Life360 (ASX:360), BHP Group (ASX:BHP), EML Payments (ASX:EML), Goodman Group (ASX:GMG) and James Hardie Industries (ASX:JHX). 
• Stocks that are set to go ex-dividend today include Computershare (ASX:CPU), Genworth Mortgage Insurance (ASX:GMA) and GQG Partners (ASX:GQG). Remember that this often sees share prices fall, as investors take their profits. 

Trading Ideas:

• Bell Potter maintain their Buy rating on Beach Energy (ASX:BPT). The company reported EBITDA and NPAT both below Bell Potter’s expectation, however, have a strong, fully funded energy production growth outlook. Bell Potter’s have lowered their price target to $2.30, and at its current share price of $1.64, this implies 40% share price growth in a year. 
• Trading Central have identified a bearish signal in Alumina (ASX:AWC) indicating that the stock price may fall from the close of $1.53 to the range of $1.32 to $1.36 over 21 days, according to the standard principles of technical analysis.