Between the Bells

The stock market isn’t always smooth sailing, reacting not just to company performance but also to the ever-shifting tides of global events. Geopolitical tensions from ongoing wars to escalating cyber threats, can create uncertainty and market volatility. However, for investors, this doesn’t necessarily translate to negative outcomes. By understanding the risks and focusing on long-term strategies, investors can navigate these choppy waters and position themselves for continued growth.

In this week’s wrap, Sophia covers:  

• (0:28): the importance of long-term wealth building strategies
• (1:07): major geopolitical risks
• (1:22): cybersecurity in the investment landscape
• (1:55): impacts of US-China tensions on markets
• (2:29): why the energy sector is one to watch
• (4:00): the most traded stocks & ETFs by Bell Direct clients
• (4:34): economic data to watch next week.

Wall St closed higher overnight as the S&P 500 and the Nasdaq hit new records. The Dow Jones rose 0.35%, the S&P 500 jumped just over 1% and the tech-heavy Nasdaq rallied over 1.5%. 

Over in Europe, markets closed higher overnight as the European Central Bank’s held its interest rates steady at a record 4% and revised inflation in 2024 to 2.3% from 2.7%. Germany’s DAX finished 0.71% higher, the French CAC gained 0.77% and over in the UK the FTSE100 ended the trading session 0.17% in the green.

Locally yesterday, the ASX200 closed 0.39% higher as the vast majority of sectors finished in the green. Gains were led by the industrial and information technology sectors which rallied by 1.33% and 1.03% respectively. This was slightly offset by the energy sector which lost 1.15% by the closing bell.

What to watch today: 

• The Australian share market is set to open higher, with the SPI futures suggesting a rise of 0.63% at market open this morning.
• On the commodities front this morning,
   
  • Oil is down 0.2% to US$78.97 a barrel as the latest EIA report showed a smaller-than-expected increase in US crude inventories. 
  • Gold is up 0.47% to US$2158 an ounce as investors await key US jobs data on Friday. 
  • And iron ore is trading 1.29% higher at US$117.50 a tonne.

Trading ideas:

• Bell Potter has maintained a speculative buy rating on WA1 Resources (ASX:WA1) with a valuation of $17.65. WA1 is advancing the West Arunta Niobium project which includes the Luni prospect in North-Western Australia. Luni has the potential to be a globally significant Tier-1 asset characterised by its high-grade and scale.
• And Trading Central has identified a bullish signal on Abacus Group (ASX:ABG), indicating that the stock price may rise from the close of $1.16 to the range of $1.25-$1.27 on a pattern formed over 37 days, according to the standard principles of technical analysis.

It was a positive session on Wall Street overnight, with the market turning a corner after a few consecutive losing sessions.  with the Dow Jones up 0.2%, the S&P500 up 0.5% and the Nasdaq up 0.6%. 

European markets also advanced with all major benchmarks closing in the green. 

What to watch today:

• The Australian share market is set to open higher this morning, with the SPI futures suggesting a 0.48% rise at the open. 
• In commodities, 
  • The price of oil is up 1.3%, just over US$79 per barrel, nearing a four-month high after the Energy Information Administration showed a smaller than expected increase in US weekly crude stocks. 
  • Gold is steady, hovering at its record high of US$2,146 an ounce. 
  • And iron ore is flat at US$116 per ton, the lowest since late October. 
• BHP’s share price may trade lower today as the mining giant’s shares are set to trade ex-dividend this morning. Other stocks going ex-dividend today include Rio Tinto (ASX:RIO), South 32 (ASX:S32), Woodside Energy (ASX:WDS) and Viva energy Group (ASX:VEA), just to name a few. 

Trading Ideas:

• Bell Potter maintains a speculative buy rating on Clarity Pharmaceuticals (ASX:CU6) and has increased its valuation to $3.90. The buy rating is maintained as CU6 have a clinical advantage over currently marketed PSMA targeted imaging agents. The stock’s current share price if $2.85, which implies 36.8% share price growth in a year.
• And Trading Central has identified a bullish signal on Metcash (ASX:MTS), indicating that the stock price may rise from the close of $3.76 to the range of $3.99-$4.05, on a pattern formed over 16 days, according to the standard principles of technical analysis.

Wall St fell overnight as Apple shares declined, pulling technology stocks down. The Dow Jones and the S&P 500 lost just over 1% each with the tech-heavy Nasdaq ending the session 1.65% in the red. Apple lost 3% following the release of a report from Counterpoint Research that showed iPhone sales in China plunged in the first six weeks of 2024. 

Other tech stocks such as Netflix and Microsoft also fell by more than 2% each with Tesla following suit, losing 3%.

Over in Europe, markets closed lower as they struggle to find positive momentum with investors awaiting the ECB meeting later in the week. The STOXX600 ended the day down 0.27% with the majority of sectors closing lower with mining stocks falling 0.9% whilst the utilities sector added 1.8%. Germany’s DAX closed 0.1% lower, the French CAC fell 0.3% and over in the UK the FTSE100 closed 0.08% in the green.

Locally yesterday, the ASX200 fell 0.15% with the consumer discretionary and consumer staples sector leading losses down 1.21% and 1.05% respectively. This was offset by the health sector which gained 1% by the closing bell.

What to watch today: 

• The Australian share market is set to open lower, with the SPI futures suggesting a fall 0.26% at market open this morning.
• In terms of economic news, Australian GDP growth data will be released this morning with a forecast of 0.2% growth quarter on quarter, the same as its previous result.
• On the commodities front this morning,
   
  • Oil is trading 0.65% lower at US$78.23 a barrel as uncertainties surrounding interest rates changes in major economies, add to market uncertainty. 
  • Gold is trading 0.7% higher at US$2129 an ounce and iron ore is trading 1.28% lower at US$116 a tonne. 

Trading Ideas: 

• Bell Potter maintains a buy rating on GrainCorp (ASX:GNC) and has an unchanged 12-month price target of $9.30. The buy rating is maintained by Bell Potter as they continue to view the GrainCorp share price as not reflecting the underlying improvement in through the cycle earnings and GrainCorp has a stronger balance sheet position of $350m in net corporate cash.
• And Trading Central has identified a bearish signal in Australian United Investment (ASX:AUI), indicating that the stock may fall from the close of $9.91 to the range of $9.48-$9.56 on a pattern formed over 8 days according to the standard principles of technical analysis.

Wall St closed lower overnight, despite a rally in AI stocks as part of the artificial intelligence boom. The S&P500 lost 0.12%, the Dow Jones fell 0.25% and the tech-heavy Nasdaq ended the trading session 0.41% lower. These losses were pulled back by AI company Nvidia, which soared 18% as the S&P Dow Jones indices revealed it would join the S&P 500 later this month.

Over in Europe, markets closed slightly lower as investors await the European Central Bank meeting. The STOXX600 closed 0.07% lower with most stocks closing in the red including mining stocks which fell 1.24% with tech stocks gaining 0.8%. Germany’s DAX closed 0.11% lower, the French CAC gained 0.28% and over in the UK the FTSE100 closed just over half a percent down.

Locally yesterday, markets closed 0.13% lower as the majority of sectors finished in the red. Losses were led by the health and utilities sector which lost 0.78% and 0.77% respectively. This was slightly offset by the real estate sector which gained 1.34%.

What to watch today: 

• The Australian share market is set to open slightly higher, with the SPI futures suggesting a rise of 0.05% at the open this morning.
• On the commodity front this morning,
   
  • Oil is trading down 1.54% at US$78.13 a barrel after OPEC and its allies agreed to extend voluntary production cuts until the end of June. 
  • Gold is trading 1.62% higher to US$2117 an ounce and iron ore is trading flat at US$117.50 cents a tonne.

Trading Ideas: 

• Bell Potter maintains a buy rating on DroneShield (ASX:DRO) with a 12-month price target of $0.90. The buy rating is maintained by Bell Potter as DroneShield is now a profitable growth company after its first profitable year with an NPAT of $9.3m. The company is also exposed to relevant investment trends, including rising defence expenditure globally, the increasing risk of drones and the role of AI/ML technology.
• And Trading Central has identified a bullish signal in Piedmont Lithium (ASX:PLL), indicating that the stock price may rise from the close of $0.24 to the range of $0.28-$0.30, on a pattern formed over 21 days, according to the standard principles of technical analysis.

Well, it was a positive session on Wall Street, with all three major benchmarks closing in the green on Friday. The tech-heavy Nasdaq surged more than 1%, to an all-time high, surpassing its 2021 record as investors look to tech stocks amid the AI boom. Meanwhile the Dow Jones gained 0.23% and the S&P500 gained 0.8%. 

Locally, the ASX200 ended the week with a 1.3% gain, with the tech sector leading the market, up 8% Monday to Friday. 

What to watch today:

• The Australian share market is set to rise 0.14% at the open this morning. 
• In commodities, 
  • The oil price is up more than 2%, at US$79 per barrel, the highest in four months, driven by expectations that OPEC+ will extend supply cuts. Investors seem optimistic for the upcoming OPEC meeting in March. 
  • The gold price hit a two-month high as the US dollar weakens, as well as lower Treasury yields and hopes of rate cuts. 
  • While iron ore declined 0.8% to US$117.50 per tonne, the lowest since October, amid the downturn in China’s property market.  
• And there are around a dozen companies going ex-dividend today, including Propel Funeral Partners (ASX:PFP), REA Group (ASX:REA), Steadfast Group (ASX:SDF) and Netwealth Group (ASX:NWL). This often sees share prices fall, as investors take their profits. 

Trading Ideas:

• Bell Potter maintains a buy rating on Neuren Pharmaceuticals (ASX:NEU). The company develop drugs targeting disorders of the Central Nervous System. Bell Potters 12-month price target remains unchanged at $27, following the company’s Q4 update. NEU’s current share price if $19.36, so this implies 39.5% share price growth in the year. 
• And Trading Central has identified a bullish signal in Deterra Royalties (ASX:DRR), indicating that the stock price may rise from the close of $5.06, to the range of $5.65 to $5.80 over 33 days, according to the standard principles of technical analysis. 

As we approach the close of the February 2024 reporting season, 346 companies have shared their results, offering a mixed bag of beats, meets, and misses. While investor sentiment has been volatile, with share prices reacting dramatically to both positive and negative news, brokers have been more cautious, issuing slightly more downgrades than upgrades. So, what were the key themes that emerged during the first half that will shape the second half of the year? 

In this week’s wrap, Grady covers:

• (0:53): why Harvey Norman is rallying despite slowdown
• (1:56): which retailers are winning as consumer spending eases
• (2:18): mixed results for Ramsay Healthcare & ResMed
• (3:50): how commodity prices are keeping miners on edge
• (4:33): key themes that will continue into second half of FY24
• (6:28): the most traded stocks & ETFs by Bell Direct clients
• (7:02): economic data to watch next week.

Wall St closed higher overnight as investors shrugged off unfavourable key inflation data to post gains across the key indices which remain in line for a winning month. The inflation data reading came in the form of US core PCE prices which excludes food and energy increasing by 0.4% from the previous month, while rising at an annual rate of 2.8%, indicating inflation in the world’s largest economy remains sticky. GDP growth data was also released on Wednesday, indicating the US economy grew by 3.2% in Q4 which was slightly less than economists were expecting and well below the 4.9% growth recorded in Q3. The Dow Jones ended Thursday’s trading session 0.15% higher, the S&P 500 gained just over half a percent and the tech-heavy Nasdaq rallied 0.84%.

Over in Europe, markets closed slightly higher as investors reacted to key inflation reports. The STOXX600 closed 0.1% higher with construction stocks leading gains, up 1.2% whilst healthcare and food and beverage stocks both fell 0.7%. Germany’s DAX closed 0.44% higher, the French CAC closed down 0.34% and over in the UK, the FTSE100 ended the trading session 0.07% in the green.

Locally yesterday, the ASX200 closed half a percent higher with all but the utilities sector ending the trading session higher. Real estate and the consumer discretionary sectors lead gains up 1.73% and 1.29% respectively whilst the utilities sector fell 0.33%.

What to watch today: 

• The Australian share market is set to open slightly higher, with the SPI futures suggesting a rise of 0.04% at market open this morning.
• On the commodities front this morning,
  • Oil is trading 0.4% lower at US$78.22 cents a barrel as investors await the OPEC+ meeting in March where discussions will be held on the ongoing output cuts. 
  • Gold is trading 0.47% higher at US$2044 an ounce and iron ore is trading 0.84% lower at US$118.50 a tonne following a decline in home sales in China, consequently lowering margins for steel furnaces, meaning input buying declined. 

Trading Ideas: 

• Bell Potter maintains a buy rating on Electro Optic Systems (ASX:EOS) and has increased its price target from $1.60 to $2.30. The buy rating is maintained following strong CY23 results which saw a return to positive EBITDA earlier than was forecasted. The company is currently experiencing substantial price growth and with a reduced cost base, Bell Potter has upgraded their EBITDA margin forecasts to 6%, 10.5% and 12% in CY24, CY25 and CY26, respectively.
• And Trading Central has identified a bullish signal on Perseus Mining (ASX:PRU), indicating that the stock price may rise from the close of $1.75 to the range of $1.93-$1.97, on a pattern formed over 8 days, according to the standard principles of technical analysis.

Wall St has closed lower for the third straight day as investors await Important inflation data coming out later in the week. The Dow Jones lost 0.06%, the S&P500 dropped 0.17% and the tech-heavy Nasdaq ended the trading session 0.55% lower.

Over in Europe, markets closed lower as cautious investment sentiment continued on from earlier in the week. The STOXX600 closed 0.3% lower with the majority of sectors ending the trading session in the red. Losses were led by technology stocks which lost 1.4%, whilst auto stocks rose by almost 1%. Germany’s DAX gained 0.25%, the French CAC gained 0.08% and over in the UK the FTSE100 closed 0.76% lower.

Locally yesterday, the ASX200 closed 0.03% lower with the consumer staples sector leading losses, down 0.81%. This was offset by the information technology sector which rallied 2.88% by the closing bell. Also yesterday, CPI data for January was released with it staying steady at 3.4%, the same as the previous month, 0.2% lower than the consensus and forecast of 3.6%.

What to watch today: 

• The Australian share market is set to open lower, with the SPI futures suggesting a fall of 0.25% at the open this morning.
• On the commodity front this morning,
  • Oil is trading over half a percent lower at US$78.44 cents a barrel, with the latest EIA report showing a higher-then-expected 4.199 million barrel rise in US crude oil inventories last week. 
  • Gold is trading 0.20% higher at US$2033 an ounce and iron ore is trading flat at US$119.50 cents a tonne. 

Trading Ideas: 

• Bell Potter maintains a buy rating of Cyclopharm (ASX:CYC) and has kept its 12-month price target steady at $3.80. The buy rating is maintained following strong earnings results in which commercial revenue increased by 14%. As well, short term catalysts include the announcement of first patient images from the US and subsequent contract signings of which are at various stages of approval.
• And Trading Central has identified a bullish signal on Abacus Group (ASX:ABG), indicating that the stock price may rise from the close of $1.14 to the range of $1.16-$1.18, on a pattern formed over 19 days, according to the standard principles of technical analysis.

Wall Street reversed morning losses to close mostly higher on Tuesday as investors prepare for the release of key inflation data later this week. The Dow Jones fell 0.25% while the S&P500 added 0.17% and the tech-heavy Nasdaq gained 0.37% on Tuesday. Retail giant Macy’s is up more than 3% during the session after announcing it would close around 150 of its struggling bricks and mortar retail stores following a revenue miss in the prior quarter.

In Europe overnight, markets closed mixed in the region as investors await key inflation data out later this week to determine how key global economies are faring in the high interest rate environment. The STOXX600 reversed Tuesday’s losses to close 0.2% higher, buoyed by mining stocks rising 1.7%. Germany’s DAX ended the day up 0.76%, the French CAC rose 0.23%, and, in the UK, the FTSE100 closed the session virtually flat.

Across the Asia markets, trading was mixed on Tuesday with Hong Kong’s Hang Seng rising just shy of 1% while Korea’s KOSPI index fell 0.83% and Japan’s Nikkei closed flat. China’s CSI 300 index rose 1.2% as shares of Chinese electric vehicle maker Li Auto soared over 22% after the company reported a 2068% increase in net income in Q4 compared to a year ago.

The local market recovered from a morning sell-off to close Tuesday’s session 0.13% higher as a 2.15% surge in consumer staples stocks more than offset losses among real estate and utilities companies. The materials sector was also weighed down yesterday as the big iron ore miners were sold off on the declining price of iron ore.

As the theme goes lately on the local market, reporting season results dominated share market moves yesterday.

Supermarket giant Coles rallied yesterday after releasing a strong first half result including a 3.7% jump in sales revenue to $22.2bn, and the outlook for momentum to continue into the second half with sales up 4.9% during the first 8-weeks of the second half already.

A stronger-than-expected first half result also prompted investors to send shares in Aussie plumbing parts and services company, Reece, rocketing over 18% yesterday. The company revealed a 2.5% rise in sales revenue, a 6% increase in NPAT and declared an interim dividend of 8cps.

Payment service providers like Zip Co and Tyro Payments both posted beats across their respective first half results, however, investors took the opportunity to collect some profits in the days after the results were released as both companies faced turbulence over the last few years during the rising interest rate and uncertain economic environment.

What to watch today: 

• Ahead of the local trading session here in Australia, the SPI futures are expecting the ASX to open the midweek session up 0.28% tracking global gains overnight.
• On the commodities front this morning, oil has rebounded to trade 0.56% higher at US$78.02/barrel, gold is up just 0.06% at US$2032/ounce and iron ore is down 3.24% at US$119.50/tonne.

Trading Ideas: 

• Bell Potter has maintained a buy rating on Cooper Energy (ASX:COE) and has slightly increased the 12-month price target from 16cps to 18cps on the release of the energy exploration and development company’s first half result including EBITDAX and NPAT topping BPe, while statutory NPAT came in at a loss of $91m. Bell Potter’s analyst sees there are promising signs at the company’s Orbost Gas processing plant with production continuing to increase at a time of short-term positive catalysts including higher realised gas prices.
• And Trading Central has identified a bullish signal on GUD Holdings (ASX:GUD) following the formation of a pattern over a period of 8-days which is roughly the same amount of time the share price may rise from the close of $11.14 to the range of $12.30-$12.60 according to standard principles of technical analysis.

The ASX started the week up 0.1% at the closing bell on Monday as investor sentiment was boosted by some strong corporate earnings results and the local index took lead from Wall Street’s record close on Friday. The energy sector weighed on yesterday’s gains following a decline in the price of oil overnight.

The consumer discretionary sector on the other hand was the top performer yesterday as Wesfarmers rose 1.5% while fashion jewellery leader Lovisa rallied a further 4.5% after releasing strong first half results late last week. Kogan.com also surged 23.7% after reinstating its dividend and returning to profitability in the first half of FY24 against challenging headwinds of slowing consumer spend.

Reporting season continued yesterday in the final weeks of earnings results being released locally. 251 companies have reported so far with 91 beating expectations, 93 meeting expectations and 67 missing expectations.

TPG Telecom shares tanked over 10% after the IT internet and communications company reported annual net profit shrunk to $49m from $513m a year earlier amid rising costs.

Endeavour Group was in a similar boat yesterday as investors also hit the sell button after the alcohol and hotels retailer reported its net profit fell 3.6% over the first half due to higher financing costs.

Over in the US today overnight, stocks reversed morning gains to close lower following record setting closes for the Dow and S&P500 on Friday and as investors await the release of key inflation data out in the region later this week. The Dow Jones fell 0.16% the S&P500 dropped 0.38% and the tech-heavy Nasdaq posted 0.13% decline on Monday. On the back of Nvidia’s blockbuster results out last week, investors are assessing whether the AI momentum can last, given economic and inflation risks continue to linger, and later this week when personal consumption expenditures data is released, we will gauge the impact on the AI thematic.

In Europe overnight, markets started the week in mostly negative territory as investors look ahead to key global inflation data out later this week to determine the rate outlook for key economies. The STOXX600 fell 0.4% following a record close last week, weighed down by the mining and utilities sectors. Germany’s DAX rose 0.02% on Monday, the French CAC fell 0.46% and, in the UK, the FTSE100 lost 0.3%.

Across the Asia markets, Japan’s Nikkei 225 extended its rally to a new all-time high on Monday while China markets snapped a 9-day winning streak to close 1.04% lower as investors await the release of key economic data in the region including China’s manufacturing purchasing managers’ index to gauge how economic recovery in the region is faring.

What to watch today:

• Ahead of the local trading session here in Australia the SPI futures are expecting the ASX to open Tuesday’s session down 0.03% tracking global markets overnight.
• On the commodities front this morning, oil has rebounded from Monday’s lows to trade 1.49% higher at US$77.63/barrel, gold is down 0.2% at US$2031.73/ounce and iron ore is up 0.82% at US$123.50/tonne.
• AU$1.00 is buying US$0.65, 98.49 Japanese Yen, 51.70 British Pence and NZ$1.06.

Trading Ideas:

• Bell Potter has maintained a buy rating on NextEd Group (ASX:NXD) but has decreased the 12-month price target on the education services provider following a softer-than-expected first half result including revenue up 36% however NPAT fell and the company withdrew its second half guidance due to significant macro uncertainties across the industry.
• And Trading Central has identified a bullish signal on Capitol Health (ASX:CAJ) following the formation of a pattern over a period of 153-days which is roughly the same amount of time the share price may rise from the close of $0.27 to the range of $0.33 to $0.35 according to standard principles of technical analysis.

Wall Street ended Friday’s session with a record close across the Dow Jones and S&P500 however the tech-heavy Nasdaq fell 0.28%. For the week, the Dow Jones added 1.3%, the S&P500 rallied 1.66% and the Nasdaq rose 1.4%.

On the corporate earnings front, Afterpay parent company Block surged 16% after releasing fourth-quarter results that topped Wall Street estimates. Used car retailer Carvana also soared 32% after announcing it expects retail units to grow for the remainder of 2024.

While the tech juggernaut rally continues on the back of Nvidia’s stellar results released on Thursday, some brokers and industry experts believe there is still room for growth for the big tech stocks over the months ahead.

Over in Europe, markets in the region closed higher on Friday as corporate earnings boosted investor sentiment against the release of some unfavourable economic data. The STOXX600 rose 0.4% on Friday, Germany’s DAX added 0.28%, the French CAC climbed 0.7%, and, in the UK, the FTSE100 rallied 0.28%. Germany’s economy contracted 0.3% in the fourth quarter indicating the deepening of Germany’s economic woes as the country still battles with high inflation. In the UK, consumer confidence dipped in February as high inflation weighs on consumer optimism of an economic rebound in the near future.

Across the Asia markets on Friday, it was a mostly green finish with China stocks rising for a 9th straight session. Fresh property price data in China showed declines in property prices in the region are easing which boosted sentiment for a recovery in China’s struggling property market.

Locally on Friday, the ASX200 rose 0.4% as the tech sector boosted the market with a 1.5% rally on the back of Nvidia’s results and strong growth projections for technology companies for the remainder of 2024.

Aussie Broadband shares soared over 18% on Friday after the internet provider beat forecasts in the first half, while Jumbo Interactive shares rallied 9% after also beating expectations for the first half.

What to watch today:

• Ahead of the local trading session the SPI futures are expecting the ASX to open Monday’s session 0.05% higher, extending the rally of last week into Monday.
• On the commodities front this morning, oil is trading 2.7% lower at US$76.49/barrel, gold is up 0.55% at US$2035/ounce, and iron ore is trading flat at US$122.50/tonne.
• AU$1.00 is buying US$0.66, 98.79 Japanese Yen, 51.70 British Pence and NZ$1.06.
• The local reporting season continues today with Adairs, Endeavour Group, Kogan.com, Nanosonics, TGP Telecom, and Suncorp Group will release results.

Trading Ideas:

• Bell Potter has maintained a buy rating on Accent Group (ASX:AX1) and raised the 12-month price target from $2.35 to $2.50 following the release of the leading fashion retailers’ first half results including beating Bell Potter expectations in gross margins, inventory, net debt and dividends. The first 7 weeks of the second half of FY24 has also started trading on an encouraging note.
• And staying with the retailers, Bell Potter has maintained a buy rating on leading fashion jewellery retailer Lovisa (ASX:LOV) and significantly raised the 12-month price target on the company from $26.50 to $30.70 following the release of the company’s first half results including key beats of expectations for strong gross margins and interim dividend. The second half, like Accent Group, has started on a positive note and the analyst believes the new store run-rate will ramp up into the remainder of the second half.

As we end week 3 of the local reporting season calendar, 159 companies have reported their earning results, with 57 beating expectations, 60 meeting expectations and 42 missing expectations. 22 companies have been upgraded by brokers, while 26 were downgraded, mostly due to slowing earnings growth and cost management inefficiencies across the first half. So, what were the market movers this week? 

In this week’s wrap, Grady covers:

• (0:38): Pilbara Minerals (ASX:PLS) facing industry challenges as lithium prices fall
• (1:42): retail blues with Woolworths’ (ASX:WOW) turbulent week
• (2:38): NAB’s (ASX:NAB) fall in cash earnings but steady share price
• (3:20): why investors disembarked their investment in Qantas (ASX:QAN)
• (5:27): market movements this week
• (6:35): the most traded stocks & ETFs by Bell Direct clients
• (7:03): economic data to watch next week.

Wall St closed mixed overnight as investors reacted to further earnings reports. The Dow Jones and S&P 500 both rose by 0.13% with the tech-heavy Nasdaq ending the trading session down 0.32%.

Over in Europe, markets closed slightly lower as markets failed to gain any positive momentum. The STOXX600 closed 0.2% lower with the majority of sectors ending the trading session in the red. Losses were led by banks which saw a fall of 1% but this was slightly offset by autos which saw a rise of 1.6%. Germany’s DAX and the French CAC both gained 0.29% and 0.22% respectively whilst over in the UK, the FTSE100 lost 0.73%. 

Locally yesterday, the ASX200 closed 0.66% lower with losses led by the consumer staples sector which fell 4.26% by the closing bell. This was offset by the information technology sector which saw a rise of 2.23% by market close.

And in some other big news locally yesterday, Woolworths CEO Brad Banducci stepped down amid a food price review with Amanda Bardwell appointed as the new CEO.

What to watch today:

• The Australian share market is set to open lower, with the SPI futures suggesting a fall of 0.42% at market open this morning.
• On the commodities front this morning,
  • Oil is trading 1.37% higher at US$78.08 cents a barrel as Houthi attacks on commercial vessels crossing the red sea, continue to disrupt supply logistics. 
  • Gold is up 0.08% to US$2025 an ounce and iron ore is trading 3.86% lower as new surveys are showing that new home sales in China have plummeted 34% since January last year.

Trading Ideas:

• Bell Potter maintains a buy rating on Retail Food Group (ASX:RFG) and has kept its 12-month price target steady at $0.13. The buy rating is maintained by Bell Potter as they continue to view RFG’s valuation as undemanding and remain positive on the potential for resilience in the business given lower average transaction values and higher volumes across the majority of the domestic business.
• And Trading Central has identified a bullish signal on SG Fleet Group (ASX:SGF), indicating that the price may rise from the close of $2.65 to the range of $2.98-$3.08 on a pattern formed over 97 days, according to the standard principles of technical analysis.

Over in the US today on this holiday shortened trading week, stocks closed Tuesday’s session lower across the board led by the tech-heavy Nasdaq declining 0.92% on investor fears of overvaluation of the tech juggernaut stocks including Amazon, Microsoft and Nvidia which is set to report after the closing bell. The Dow Jones fell 0.17% on Tuesday while the S&P500 ended the day down 0.6%.

It was a big day for M&A activity in the US on Tuesday as Capital One Financial agreed to purchase Discover Financial Services in an all-stock deal worth $35.3bn, while Walmart announced it will acquire TV maker Vizio for $2.3bn.

In Europe overnight, markets closed mostly lower across the region as investor sentiment fell on fears of a prolonged period before rate cuts both in Europe and over in the US. The STOXX600 fell 0.1%, ending a four-day winning streak, Germany’s DAX lost 0.14%, the French CAC rose 0.34% and, in the UK, the FTSE100 ended the day down 0.12%.

The ASX200 has had a pretty muted week this week with the key index closing Tuesday’s session down 0.08% as a selloff in materials and energy stocks offset the communications services sector rallying 1.5%.

It’s week three and we are in the heart of reporting season locally this February, with 95 companies having reported of which, 36 beat expectations, 33 met expectations and 26 missed expectations.

Australian mining giant BHP also weighed on the local bourse this week after reporting its lowest half-year profit in eight years, with the company blaming its struggling Aussie nickel and some overseas iron ore assets weighed on the first half performance.

Also weighing on local iron ore miners yesterday was mounting concerns over the demand outlook in China as it continues to struggle making material growth progress post pandemic, especially on its struggling property sector front.

On the banking front, Australia’s competition regulator overturned an initial ruling against a merger between ANZ and Suncorp banks yesterday to approve the merger after ANZ and Suncorp successfully appealed the original ruling. The ACCC found the deal would not hurt competition in the home, business or agribusiness lending in Australia, especially as Macquarie continues to go from strength to strength alone in the home lending market, now accounting for 5.3% of the home lending market at the end of 2023. Shares in ANZ fell 2.7% on the news while Suncorp shares rose 5.34% on Tuesday.

What to watch today:

• Ahead of the midweek trading session here in Australia, the SPI futures are expecting the ASX to open down 0.28% following the red run on Wall St overnight.
• On the commodities front this morning, oil has dropped 1.43% to trade at US$77.32/barrel, gold is up half a percent at US$2027/ounce and iron ore is up 1.17% at US$129.50/tonne.
• AU$1.00 is buying US$0.66, 98.22 Japanese Yen, 51.89 British Pence and NZ$1.06.

Trading Ideas:

• Bell Potter has downgraded the rating on Solvar (ASX:SVR) from a buy to a hold and slightly reduced the 12-month price target on the Australian consumer finance company following the release of first half results showing lower profit, the extent of weakness in New Zealand and higher bad debts.
• Trading Central has identified a bullish signal on Eagers Automotive (ASX:APE) following the formation of a pattern over a period of 112-days which is roughly the same amount of time the share price may rise from the close of $14.84 to the range of $16.90 to $17.40 according to standard principles of technical analysis.

Over in the US, Wall Street was closed on Monday due to the Presidents Day holiday, with trading to resume tomorrow.

In Europe overnight, markets closed mostly higher, carrying on the positive sentiment of last week with the STOXX600 closing the day up 0.17% driven by a rally for healthcare stocks. Germany’s DAX bucked the positive start to the week closing the session down 0.15%, while the French CAC ended the day flat and the FTSE100 in the UK rose 0.22% to start the week in the green.

In Asia, markets also closed mostly higher overnight as investors returned from the Lunar New Year holidays and upbeat travel data boosted investor sentiment. Consumer spending in China rose higher than pre-COVID levels across the Lunar New Year holiday according to data out in the region, indicating economic recovery on the consumer front is underway, which prompted China’s CSI300 index to rise 0.5% on Monday. Japan’s Nikkei and Hong Kong’s Hang Seng indices each fell to start the week lower while South Korea’s Kospi rose 1.3%.

The ASX started the week with a gain of just 0.09% on Monday as an afternoon sell off erased most of the gains from earlier in the session with real estate stocks weighing on the key index which offset gains among the miners and banks.

As we head into week three of the local reporting season calendar, so far 82 companies have reported first half results with 30 beating expectations, 31 meeting expectations and 21 missing expectations.

Lendlease was the worst performer in the real estate sector with the company plunging 16% after reporting a $136m loss for the first half and downgrading its return on equity guidance for the remainder of FY24 in results released yesterday.

The insurance providers in QBE and IAG were two key names that missed expectations and were subsequently sold off as investors responded to the weaker than expected results from the two providers.

A2 Milk on the other hand jumped 12.5% on Monday after the dairy distribution company posted stronger revenue and profits in the first half, attributing the strong results to growth in the Chinese market products.

Leading cement producer Boral also rallied 4.6% on Monday after announcing Seven Group has made an offer to buy the remaining 28.4% stake in the company that it does not already own.

What to watch today:

• Ahead of the local trading session here in Australia the SPI futures are expecting the ASX to open Tuesday’s session flat ahead of a busy reporting season calendar today including results out of Ansell, BHP Group, Sonic Healthcare, Baby Bunting, Coronado Global Resources and more.
• On the commodities front this morning, oil is up 0.5% at US$79.57/barrel, gold is up 0.21% at US$2017.35/ounce and iron ore is flat at US$128/tonne.
• AU$1.00 dollar is buying US$0.65, 98.18 Japanese Yen, 51.83 British Pence and NZ$1.06.

Trading Ideas:

• Bell Potter has reduced the 12-month price target on Boral (ASX:BLD) from $6.30 to $6.24 and maintain a hold rating on the leading vertically integrated supplier of construction materials in Australia following the receipt of a takeover offer from Seven Group which is already a majority investor however is proposing, under the new deal, to acquire the remaining 28.4% interest that it does not own. The offer is a combination of cash and scrip and Bell Potter believes the offer proposal appears to be fair.
• And Trading Central has identified a bearish signal on PWR Holdings (ASX:PWH) following the formation of a pattern over a period of 25-days which is roughly the same amount of time the share price may fall from the close of $10.76 to the range of $8.80 to $9.10 according to standard principles of technical analysis.

Wall Street ended a 5-week winning streak across the key indices on Friday with the Dow Jones retreating more than 100 points as investors reassessed the outlook for the Fed to cut rates with anticipation rate cuts will come later than first expected. The S&P500 fell almost half a percent on Friday while the tech-heavy Nasdaq declined 0.82%. For the week, the key indices each posted their first loss in 5-weeks with the Dow losing 0.11%, the S&P500 shedding 0.42% and the Nasdaq declining 1.34%.

Stronger-than-expected Producer Price Index data drove investor concerns for later rate cuts as the PPI reading for January showed wholesale inflation rose 0.3% where economists were polling a 0.1% gain.

The Ten-year Treasury Yield also rose to 4.3% on Friday which added to investor’s hitting the sell button on equities in favour of safer returns through government bonds.

Over in Europe it was a different story on Friday with the key markets closing the last trading session of the week higher prompted by strong economic data indicating resilience in some markets despite the high interest rate environment. The STOXX600 rose 0.6% on Friday, Germany’s DAX added 0.42%, the French CAC closed 0.32% higher and, in the UK, the FTSE100 had the biggest gain of 1.5%. The strength in the UK on Friday was driven by retail sales coming in at month-on-month growth of 3.4% for January which is more than double what economists were expecting and follows a record decline in the December sales reading.

Across the Asia markets on Friday, Hong Kong’s Hang Seng led the gains across the Asia markets on Friday with the key index rising 2.41% while mainland Chinese markets remained closed for the Lunar New Year holidays. Japan’s Nikkei hit a fresh 34-year high, and investors in the region awaited the release of Singapore’s 2024 budget which came out later on Friday.

Locally on Friday, the ASX200 rose 0.7% and climbed 0.2% for the week, boosted by Australia’s resources sector as weakness in the US dollar fuelled a rally for gold, oil, and iron ore prices.

GQG Partners was one of the top performing stocks locally on Friday after the boutique investment manager reported it has already raised a further US$2.9bn in the first 6-weeks of 2024, while QBE and IAG insurers both fell out of favour with investors on Friday after missing analysts’ expectations in the first half.

What to watch today:

• Ahead of the first session of the new trading week, the SPI futures are expecting the local market to open Monday’s session up 0.11% tracking gains on Wall Street from Friday.
• On the commodities front this morning, oil is trading 1.5% higher at US$79.19/barrel, gold is up 0.45% at US$2013/ounce and iron ore is flat at US$128/tonne.
• AU$1.00 is buying US$0.65 cents, 98.08 Japanese Yen, 51.84 British Pence and NZ$1.07 cents.

Trading Ideas:

• Bell Potter has increased the rating on Whitehaven Coal (ASX:WHC) from a sell to a hold rating and maintained the 12-month price target of $7.65/share following the release of the company’s first half results including most metrics meeting Bell Potter estimates and the company also announced a surprise 7cps dividend. The company will also soon become the operator of large Queensland met coal assets, positively shifting the company’s commodity exposure and risk profile.
• And Trading Central has identified a bullish signal on Pilbara Minerals (ASX:PLS) following the formation of a pattern over a period of 21-days which is roughly the same amount of time the share price may rise from the close of $3.71 to the range of $4.06 to $4.14 according to standard principles of technical analysis.

We are now halfway through reporting season, a time when the majority of ASX-listed companies are releasing their financial results, provoking much share price movement across the market. So far this reporting season, 53 companies have reported earnings, with 23 beating market expectations, 19 in line with what analysts anticipated, while 11 missed expectations. 

In this week’s wrap, Sophia covers:

• (0:39): Commonwealth Bank’s (ASX:CBA) fall in net interest margin
• (1:32): how AMP (ASX:AMP) surprised the market this week
• (2:22): why IDP Education (ASX:IEL) is on Bell Potter’s radar
• (3:05): Telstra’s (ASX:TLS) disappointing half year results
• (4:11): market movements this week so far
• (5:46): the most traded stocks & ETFs by Bell Direct clients
• (6:17): economic data to watch next week.

Wall St closed higher overnight as the S&P 500 closed at a record high rising 0.58%, tipping over the 5,000 point mark. The Dow Jones gained 0.91% and the tech-heavy Nasdaq rallied 0.3%

In terms of US stocks, Tesla and Meta both outperformed expectations which saw them rise 6% and 2% respectively.

Over in Europe, markets closed higher as investors continue to react to corporate earnings as they come in. The STOXX 600 closed 0.6% higher with constructions stocks rising 1.1% whilst oil and gas stocks fell 0.9%. Germany’s DAX gained 0.6%, the French CAC rose 0.86% and over in the UK the FTSE100 closed 0.38% higher by market close.

Locally yesterday, the ASX closed 0.77% higher, led by gains in the information technology and real estate sector of 6.81% and 3.36% respectively. This was offset by the energy sector which lost 2.10%.

What to watch today: 

• The Australian share market is set to open higher, with the SPI futures suggesting a rise of 0.94% at market open this morning.
• On the commodities front this morning,
  • Oil is up 2% to US$78.17 a barrel following the release of disappointing US retail sales data, weakening the US dollar. 
  • Gold is up 0.59% to US$2004 an ounce and iron ore is trading flat at US$128 a tonne. 

Trading Ideas:

• Bell Potter maintains a hold rating on Altium (ASX:ALU) and has increased its 12-month price target from $44 to $66.75. The hold rating is maintained following the announcement of a binding scheme implementation agreement with Renesas for the company to acquire 100% of the issued shares in Altium for consideration of $68.50 in cash. The price target has been raised to a modest discount to the offer price to allow for some risk of the scheme not proceeding.
• And Trading Central has identified a bullish signal on Magellan Financial Group (ASX:MFG), indicating that the stock price may rise from the close of $9.32 to the range of $10.60-$10.90, on a pattern formed over 29 days, according to the standard principles of technical analysis.

Wall St closed higher overnight, gaining back losses sustained in it’s previous session. The Dow Jones jumped 0.39%, the S&P 500 closed 0.96% higher and the tech-heavy Nasdaq rallied 1.30%.

In terms of US shares Lyft posted better-than-expected results in the fourth quarter which lead to a 36% jump for the ride-hailing company. 

Over in Europe, markets closed higher as investors react to the latest earnings reports and inflation data coming out of the UK. The STOXX600 closed half a percent higher, led by tech stocks which added 1% with mining stocks losing half a percent. Germany’s DAX closed 0.38% higher, the French CAC gained 0.68% and over in the UK, the FTSE 100 closed 0.75% higher as UK inflation data held steady at 4% year-on-year in January. 

Locally yesterday, markets closed 0.73% lower with the majority of sectors finishing in the red. Losses were led by the information technology and financial sector which lost 1.32% and 1.21% respectively. This was slightly offset by the industrial sector which saw a gain of 0.26% by market close yesterday.

What to watch today:

• The Australian share market is set to open higher, with the SPI futures suggesting a rise of 0.63% at market open this morning.
• In terms of economic data, January unemployment data will be released this morning with a forecast of 4%, up 0.1% from its previous result.
• On the commodities front this morning,
  • Oil is trading 1.71% lower at 76 US dollars and 59 cents a barrel, gold is trading 0.06% lower at 1990 US dollars an ounce and iron ore is trading flat at 128 US dollars a tonne.

Trading Ideas:

• Bell Potter maintains a buy rating on Seven Group Holdings (ASX:SVW) and has increased its 12-month price target from $38 to $44.30. The buy rating is maintained following good results in the first half of FY24 and SVW being market leaders in their respective industry, with scale, brand and industry expertise underpinning commercial advantages that are hard to replicate by competitors.
• And Trading Central has identified a bearish signal on Waypoint REIT (ASX:WPR), indicating that the stock price may fall from the close of $2.47 to the range of $2.18-$2.24, on a pattern formed over 18 days, according to the standard principles of technical analysis.