finance report

The Australian market is set to start the week higher, after Wall Street ended last week with all three major benchmarks rallying. The Dow Jones had its best month since January, gaining 250 points, while the S&P500 closed 0.8% higher and the Nasdaq up 0.7%. 

What to watch today:

• This morning, the SPI futures are suggesting that our local market will rise 0.74% at the open. 
• In commodities, 
  • Oil has advanced almost 3%, regaining earlier losses, after prospects of a global economic slowdown hurting energy demand, weighed signs of tightening supplies. 
  • Gold is also in the green as heightening global economic uncertainties and a weaker US dollar lifted demand for the safe-haven asset. 
  • Iron ore has fallen a further 2.8%, now trading around US$105 per tonne, the lowest since early December, as a demand downturn from steelmakers risked the oversupply of iron ore. 

Trading Ideas:

• Bell Potter maintains their Buy rating on Perpetual (ASX:PPT), after the company’s Q3 update showed Funds Under Management in the asset management business increased to $210 billion, a 4% increase over the quarter based on the proforma PPT Assets Under Management of $93.7 billion after the inclusion of $110.2 billion of Funders Under Management from Pendal. Bell Potter says that they believe the shares were heavily sold off in late 2022 over fears of continued outflows and doubts about the achievability of the merger. They have increased their 12-month price target by 3% to $30.60, and at PPT’s current share price of $24.53, this implies 24.8% share price growth in a year. They expect the shares to perform well as investors realise the value being created in the combined business. 
• Bell Potter also maintain a Buy rating on Telix Pharmaceuticals (ASX:TLX), following the recent quarterly report which delivered a 20% beat against Bell’s revenue targets, FY23/24 revenues are upgraded by 24% and 29% respectively, along with large increases to earnings. Bell Potter’s price target has been upgraded by 55% to $14.00, and at the stock’s current share price of $10.15, this implies 37.9% share price growth in a year. 

US equities kicked off earnings week on a positive note, with all three major benchmarks making gains overnight, in fact, all three benchmarks closed 0.3% higher. US financials will be in focus this week with the Bank of America reporting tonight and Morgan Stanley reporting on Wednesday. Investors have been keeping a close eye on the banking sector after the collapse of Silicon Valley Bank last month. 

European markets closed mixed. Germany’s Dax, France’s CAC and the STOXX 600 were all lower, while the FTSE 100 rose just 0.1% by the close. 

What to watch today:

• The Australian market is set to open 0.23% lower this morning, according to the SPI futures. 
• BHP’s (ASX:BHP) takeover of OZ Minerals (ASX:OZL) was approved yesterday and will be finalised in early May. In December last year, OZ Minerals announced that it had entered a Scheme Implementation Deed with BHP. The implementation date is May 2nd, when BHP will pay $26.50 per OZL share as the Scheme Consideration, and OZ Minerals will pay $1.75 per OZL share as a fully franked special dividend. 
• In economic data, today the RBA’s meeting minutes will be released at 11:30am AEST, which will provide some insights into the meeting when the central bank decided to hold the cash rate steady for the first time in 10 months. And attention this week will be on China’s gross domestic product report on Tuesday and UK CPI numbers on Wednesday. 
• In commodities, 
  • The oil price is trading over 2% lower, as concerns mounted that further rate hikes from the Fed will hurt growth even more. However, also note that GDP growth data for China that is due to be released tomorrow, which should offer some relief for a fall in oil demand. 
  • Gold is 0.4% lower as investors continue to assess the monetary policy outlook. 
  • Iron ore is trading flat. 
• Auckland International Airport (ASX:AIA) and Hub24 (ASX:HUB) are set to release quarterly reports today, so keep watch of those share price movements today. 

Trading Ideas:

• Bell Potter have initiated coverage on Brickworks (ASX:BKW) with a buy rating. BKW is a building materials and property developer. Bell Potter says that on face value, the company looks reasonably priced relative to listed peers, however, a high presence of equity accounting masks what is relatively low-cost exposure to a residential housing recovery, with BKW’s core Building Products business trading at an approximately 11% discount to the peer group. Bell Potter’s price target is $27.00. At the stock’s current share price of $23.56, this implies 14.6% share price growth in a year. 
• Trading Central have identified a bullish signal on Core Lithium (ASX:CXO) indicating that the stock price may rise from the close of $0.93 to the range of $1.12 to $1.16 over 17 days, according to the standard principles of technical analysis. 

Wall Street closed mixed overnight with the Dow closing 0.2% higher, while the S&P500 closed 0.3% lower and the tech-heavy Nasdaq fell more than 1%. The Nasdaq dropped for the third straight session as investors shifted away from growth stocks amid signs that the US economy is weakening. The losses also followed weak eco data, where the latest ADP private payrolls report showed slowing job growth in March. 

European markets were also mixed, with the FTSE 100 the only index to close in positive territory. Germany’s Dax, France’s CAC and the Stoxx 600 were all lower. So it seems that investors uncertainly has resurfaced this week, over the global economy outlook. 

What to watch today:

• The SPI futures are suggesting the Australian market will open just 0.1% lower this morning. 
• Watch Santos (ASX:STO)’s share price today, as the oil and gas producer is set to hold its AGM. 
• Brickworks (ASX:BKW) is set to go ex-dividend today. 
• In commodities:
  • Oil is trading slightly lower, after being on the rise this week off the back of OPEC’s production cut announcement. 
  • Gold is steady at its highest levels in a year, around US$2,020 an ounce, as weak US data fuelled expectations that the Fed may not need to tighten further in the coming months to prevent a recession. 
  • Iron ore is at its lowest level since mid-January as the concerns continue of the low demand at the start of China’s peak construction season. 
• In economic data, Balance of Trade data for February will be out at 11:30am AEST. The last time this data was announced, Australia’s trade surplus declined to $11.69 billion in January, from a downwardly revised $12.99 billion in December, with exports rising less than imports. 

Trading Idea:

• Bell Potter maintains a Buy rating on IPD Group (ASX:IPG), a leading distributor of electrical equipment and industrial digital technologies. They have increased their price target from $3.50 to $4.00. The broker says that IPD is set for two consecutive years of approximately 15% volume growth. Their EPS changes across FY23-25 estimates are +4-6% and they say the company has a large future runway of replacement demand as incentives behind the electrification of buildings infrastructure, transport and logistics sectors continue to evolve. 

In New York overnight, the Dow Jones closed 300 points higher or 0.98%, to begin April’s trading. The S&P500 saw its fourth straight day of gains, closing 0.37% in the green, while the Nasdaq closed 0.3% lower. US investors showed resilience despite an oil output cut from OPEC.

Oil prices notched their biggest gain in nearly a year after OPEC announced it was cutting output by more than 1 million barrels per day. The cuts begin in May and run until the end of this year. Saudi Arabia have said that it was a “precautionary measure” targeted toward stabilising the oil market. Oil is current trading 6.28% higher at US$80.42 per barrel. This announcement complicates the outlook for inflation and interest rates, as investors had been betting that easing price pressures would give central banks room to pause the current tightening cycle. So, energy shares will be on watch today; some include Beach Energy (ASX:BPT), Woodside Energy (ASX:WDS) and Santos (ASX:STO). 

Also in commodities, natural gas has hit its lowest level since September 2020, pressured by weak demand due to high temperatures and ample inventories. The price of gold is steady, while iron ore has rebounded on expectations of strong demand as China enters the spring construction season. 

What to watch today:

• The Australian market is set to open just 0.06% higher this morning, if you’re going by the SPI futures. 
• In economic news, the RBA will announce its next cash rate decision. The Commonwealth Bank and Westpac have forecast the RBA will pause hiking the cash rate this month, and hold it at 3.6%, only to increase again in May, while NAB and ANZ predict a further 0.25% hike today. 

Trading Ideas:

• Trading Central have identified a bullish signal in Link Administration (ASX:LNK) indicating that the stock price may rise from the close of $2.13 to the range of $2.51 to $2.59 over 44 days, according to the standard principles of technical analysis. 

Wall Street extended gains into a third straight session on Friday and the US market posted a second straight quarter of gains despite turbulence during the three-month period around the unfolding of a potential global banking crisis. On Friday the Nasdaq rose 1.7%, the Dow Jones added over 400 points and the S&P500 rose 1.4%. Sentiment in the US was boosted last week by US core personal consumption expenditures price index, the Fed’s preferred measure of inflation, coming in below expectations at 4.6% in yet another sign inflation has peaked in the US. For the quarter the tech-heavy Nasdaq soared 17.6% as investors regain appetite for growth stocks, while the Dow Jones rose 0.4% and the S&P500 added 7.4%.

Over in Europe markets closed higher again buoyed by headline inflation cooling to 6.9% in March from 8.5% in February, a preliminary report showed. Germany’s DAX added 0.7%, the French CAC added 0.81% and, in the UK, the FTSE100 rose 0.15%. For the quarter, the STOXX600 added 7.05% despite a few weeks of banking turmoil.

The ASX ended Friday’s session up 0.78% driven by a 1.88% rise in materials stocks, while healthcare stocks added 1.09% in the last trading session of the week. For the week, the key local index rose 3.20% as global fears of a banking crisis continued to ease.

What to watch today:

• The strength overseas for the last quarter drives the SPI futures to anticipate the ASX to open 0.63% higher to start the new trading week and month.
• On the commodities front oil is trading 6.77% higher at US$80.87/barrel after OPEC oil producers announced a surprise cut in oil output to support market stability following the recent dive in oil prices. Saudi Arabia is cutting its output by 500,000 barrels per day while Iraq is cutting by 211,000 barrels per day, among other countries making cuts to output. Gold is trading down 0.73% at US$1965.73/ounce and iron ore is up almost 0.8% at US$127/tonne.
• The Aussie dollar is buying US$0.67, 88.93 Japanese Yen, 54.89 British Pence and NZ$1.07.

Trading Ideas:

• Bell Potter has downgraded its rating on The A2 Milk Company (ASX:A2M) from a buy to a hold, and reduced the price target on the dairy company from $7.65 to $6.80 following the company’s infant formula producer, Synlait Milk (ASX:SM1), downgrading its earnings guidance and pushing out its expected GB registration in China. Bell Potter sees the balance dates between A2M and SM1 don’t align, as well as cost of goods sold being expected to rise in FY24.
• Trading Central has identified a bearish signal on TPG Telecom (ASX:TPG) on the 25th of March, following the formation of a pattern over a period of 20-days which is roughly the same amount of time the share price may fall from the close of $4.81 to the range of $4.47 to $4.55 according to standard principles of technical analysis.

The rally on Wall Street continued overnight as investor fears of a regional and global banking crisis continued to ease as President Biden urged federal regulators to take up a set of reforms to safeguard the banking system.

Weekly jobless claims in the US increased by 7000 to 19,800, in yet another sign the Federal Reserve’s aggressive interest rate action to tackle inflation in the US is starting to take effect. The rise in jobless claims is also another sign the fed could begin easing its rate hike stance. The Dow Jones closed 0.43% higher on Thursday while the S&P500 added 0.57% and the tech-heavy Nasdaq rose 0.73%.

Over in Europe, markets continued to rally as investor fears of a banking crisis also continued to ease in the region. UBS shares jumped 3.4% again on Thursday as investors responded to the news of Sergio Ermotti retaking his position as CEO ahead of the Credit Suisse takeover. Germany’s DAX added 1.26%, the French CAC added 1.06% and, in the UK, the FTSE100 rose 0.74%.

Locally yesterday, the ASX jumped 1.02% joining the global rally as banking crisis fears ease, with technology stocks leading the gains yesterday as the sector closed up 1.7%. Materials and Financial stocks also felt some relief yesterday following a week of turbulence in these respective sectors.

What to watch today: 

• Ahead of the local trading session here in Australia the SPI futures are anticipating the local market to open 0.53% higher, extending on the global rally from the past 2-sessions.
• Taking a look at commodities, crude oil is trading almost 2% higher at US$74.37/barrel, gold is up 0.81% at US$1979.94/ounce and iron ore is also up 0.8% at US$125.50/tonne. 
• Stocks trading ex-dividend today include Harvey Norman (ASX:HVN), and Russell Investments High Dividend Australian Shares ETF (ASX:RDV). If you’ve been thinking about these stocks, it might be worth considering buying in today as stocks trading ex-dividend generally trade lower on the ex-dividend date.
• The Aussie dollar is buying US$0.67, 89.05 Japanese Yen, 54.89 British Pence and NZ$1.07.

Trading Ideas:

• Bell Potter has downgraded its price target on Synlait Milk (ASX:SM1) from $3.20 to $2.55 but maintain a buy rating on the company as the dairy company faces a few unknowns in the current environment including whether it can deliver acceptable returns on the new Pokeno nutritionals customer, as well as successfully navigating A2 Milk’s new-GB registration in China. The company also faces higher costs of production due to the volume uplift for the new Pokeno customer.
• Trading Central has identified a bullish signal on Regis Resources (ASX:RRL) following the formation of a pattern over a period of 26-days which is roughly the same amount of time the share price may rise from the close of $2.00 to the range of $2.17 to $2.21 according to standard principles of technical analysis. 

A number of Australian economists are now expecting a 25-basis point rate hike in April following the release of Australian retail sales data for February indicating a rise of 0.2% for the month or 6.4% from February 2022, on the back of a 1.8% rise in January. The retail data shows consumers are still spending despite the increasing cost of living pressures down under, with $35.14bn spent last month. Department stores had the biggest increase in monthly turnover, while household goods retailing remained flat which isn’t great news for the likes of Temple & Webster (ASX:TPW) and Nick Scali (ASX:NCK).  UBS though, is adamant the RBA won’t hike rates at next week’s meeting but will instead hike by 25-basis points in May. Australia’s consumer price index or inflation data is out today for February which will give a greater insight into how successful the RBA’s monetary tightening policy has been to date and will give the RBA a better idea of whether a pause or hike is most appropriate at next week’s interest rate meeting.

Locally yesterday, the ASX rallied 1.04% led by a surge in energy stocks, with the sector jumping over 4%. Lithium mining and production companies felt some much-needed relief yesterday following a recent sell-off amid declining demand outlook. The reason for yesterday’s boost in lithium stocks was due to lithium giant Liontown Resources (ASX:LTR) announcing it had received and rejected a takeover offer from Abermale, the world’s largest lithium producer, in a deal worth $5.5bn on the grounds of the offer substantially undervaluing Liontown and its assets. The announcement sent shares in Liontown soaring 68.5%.

Over in New York, Wall St had a mixed session on Tuesday as rising bond yields placed pressure on high-growth technology stocks. The yield on the 2-year U.S. Treasury note climbed back above 4%, which makes future profits for growth companies, less attractive as higher rates mean that earnings years from now are worth less today. The Dow Jones ended Tuesday’s session down 0.12% while the S&P500 lost 0.16% and the tech-heavy Nasdaq took the biggest hit ending the session down almost half a percent.

In Europe overnight, investor concerns over the unfolding banking crisis in the region led to a muted trading day across the key markets in Europe. Germany’s DAX closed up just 0.09%, the French CAC added 0.14% and, in the UK, the FTSE100 rose just 0.17%.

What to watch today:

• Ahead of the local trading session the SPI futures are anticipating the local market will open 0.37% lower to start the midweek trading session.
• On the commodities front, oil has advanced 1.10% to trade at US$73.6/barrel amid supply concerns held after a legal dispute halted around 400,000 barrels a day of oil exports from the Ceyhan Port in Turkey this week. Gold is up 0.84% at US$1973/ounce and iron ore is flat at US$122.50/tonne.
• The Aussie dollar is buying US$0.67, 87.58 Japanese Yen, 54 British Pence and NZ$1.07.

Trading Ideas:

• Bell Potter has downgraded its rating on United Malt Group (ASX:UMG) from a buy to a hold and have significantly increased the price target on the company from $4.25 to $5.00 following the company announcing it has entered into a process and exclusivity deed with Malteries Soufflet for the takeover of UMG in a deal worth $1.5bn. Bell Potter sees the takeover offer and subsequent share price rise by 30% after the announcement well exceeds Bell Potter’s passive valuation for UMG and therefore justifies the downgrade to a hold from a buy rating.
• Trading Central has identified a bullish signal on AMP Limited (ASX:AMP) following the formation of a pattern over a period of 27-days which is roughly the same amount of time the share price may rise from the close of $1.06 to the range of $1.17 to $1.19 according to standard principles of technical analysis.

Following a volatile trading session overnight, US equities closed higher, as investors bet that the Federal Reserve may be nearing the end of its rate hiking cycle. The Dow and the S&P500 rose 0.2% and 0.3% respectively, while the Nasdaq closed just over 1% higher, as tech stocks outperformed. 

European markets were lower as the Bank of England joined the Fed in hiking rates. The UK central bank announced another 25-basis point rise and the Stoxx 600 closed down 0.2%. The banking sector led losses throughout the session. Construction and oil and gas stocks also declined, while tech stocks rallied in Europe as well. 

What to watch today:

• The broad tech rally made way to renewed selling in regional banking stocks, which sees the SPI futures suggesting the Australian market will drop 0.55% at the open this morning. 
• Technology stocks may follow the Nasdaq’s rally, with investors reducing their bets on the Fed’s next hike, and as US Treasury yields decline. Tech stocks are sensitive to interest rates, so this saw tech hit the hardest as the Fed consecutively raised rates. Therefore, the turn lower in rates this month is causing investors to rotate back into tech stocks. And this may have a positive impact on ASX-listed tech shares today. 
• In commodities: 
  • Oil has dropped once again, weighed down by weak global sentiment. 
  • The price of gold is trading over 1.2% higher and has reached its highest level in one year, at US$1,993.90 per ounce, as investors continued to digest the Fed’s March meeting and risks to the global banking system. 
  • Iron ore has tumbled, currently trading 2.8% lower at US$123.50 per tonne, the lowest level in over a month. The iron ore price has been pressured by weaker demand from steel producers and increased control of speculatory prices. There have also been reports indicating that China will cut its domestic steel output by 2.5% this year. That would mark the third consecutive annual decline and of course China is one of the top producers. 

Trading Ideas: 

• Bell Potter have upgraded their recommendation on Eagers Automotive (ASX:APE) from a Hold to a Buy, with a price target of $15.25, where the total expected return is over 15%. A potential catalyst to support the upgrade on the leading automotive retailer, are increased sales of BYD vehicles over the coming months, following the joint venture of Eagers Automotive and BYD, which is an electric car dealership.  
• And Trading Central have identified a bullish signal on PWR Holdings (ASX:PWH) indicating that the stock price by rise from the close of $9.65 to the range of $12.20 to $12.70 over 27 days, according to the standard principles of technical analysis. 

The Federal Reserve has announced a further 25 basis point rate hike, and although this was widely expected, the US stock market declined with all three major benchmarks closing around 1.6% lower. The Fed also acknowledged turmoil in the banking sector could slow the already fragile economy, which share US bank shares slide. 

What to watch today:

• The SPI futures are suggesting that our local market will drop 0.74% at the open this morning, following Wall Street’s lead. 
• In commodities: 
  • The oil price continues to regain last week’s losses, after data out from the US Energy Information Administration showed a surprise build in US crude stocks and large draws in other fuels like gasoline. Also, the US oil benchmark is 5% higher this week, as the Treasury Secretary Janet Yellen said the government would be willing to take further action to protect deposits. Watch ASX energy shares today. 
  • The price of gold over 1.5% higher and is heading toward a one-year high, as investors weighed on the Fed’s dovish tone in its policy decision. This may see gold miners rise, such as Regis Resources (ASX:RRL), Newcrest Mining (ASX:NCM), Northern Star Resources (ASX:NST) or Evolution Mining (ASX:EVN). 
  • Iron ore has dropped more than 1%, extending the retreat from the nine-month high hit last week, amid increased control of speculatory prices and curbs for major steel producers.  
•  Watch the share price movements of Brickworks (ASX:BKW) which is set to release an earnings report today. 

Trading Ideas:

• Bell Potter maintains a Buy rating on EROAD (ASX:ERD) with modest downgrades to their forecasts post the company’s guidance u[date provided late last month and their investor day held this week. Bell Potter have decreased their price target, down 32% to $1.50, after updating each valuation used in the determination of their price target for the forecast changes, as well as market movements and time creep. The $1.50 target is still an over 100% premium to the current share price of $0.64. 
• Trading Central have identified a bullish signal in AGL Energy (ASX:AGL), indicating that the stock price may rise from the close of $7.07 to the range of $7.30 to $7.36 over 22 days, according to the standard principles of technical analysis. 

The global banking crisis took an historical turn this morning with investment bank, UBS, agreeing to buy Credit Suisse Group in a deal worth $4.5 billion to restore investor confidence in the global banking sector. The crisis worsened on Friday after a fourth bank, the First Republic bank, received a US$30 billion lifeline from a group of big banks including Goldman Sachs and Bank of America, after customers began withdrawing their deposits from First Republic bank amid the collapse of SVB. Shares in First Republic Bank tumbled 33% on Friday to close the week down 72%. On Friday, the Dow Jones closed 1.2% lower, the S&P500 fell 1.1% and the Nasdaq closed down 0.74%. For the week though the Nasdaq rose 4.41% as investors bet on technology and growth stocks ahead of the FOMC meeting this week.

Over in Europe, markets closed lower on Friday as investors digest the fallout from Credit Suisse accepting financial help to stabilise the banking system. Germany’s DAX fell 1.33% on Friday while the French CAC lost 1.43% and in the UK the FTSE100 shed just over 1%.

In Australia, markets closed 0.42% higher on Friday but 2.1% down for the week as the local index was caught up in the global banking crisis driven sell-off. 

What to watch today:

• In commodities, oil Is trading 2.36% lower at US$66.74/barrel, gold is up almost 3.6% at US$1988.08 and iron ore is flat at US$132/tonne.
• The Aussie dollar has slightly strengthened to buy US$0.67, 88.53 Japanese Yen, 54.89 British Pence and NZ$1.07.
• Ahead of the local trading session the SPI futures are anticipating the ASX to open 1.4% lower as investor sentiment continues to ride on the unfolding global banking crisis.
• Stocks trading ex-dividend today include HUB24 (ASX:HUB), Adairs (ASX:ADH), and Duratec (ASX:DUR). If you’ve been thinking about these stocks it might be worth considering buying in today as stocks trading ex-dividend generally trade lower on the ex-dividend date.

Trading Ideas: 

• Bell Potter has downgraded its price target on Synlait Milk (ASX:SM1) from $4 to $3.20 but maintain a buy rating on the company. The downgrade in price target comes after the company downwardly revised FY23 NPAT expectations relative to market expectations ahead of its 1H23 result. NPAT guidance has been downwardly projected to now be $15-$25m NZ dollars, which is much lower than Bell Potter’s expectations of a forecasted NZ$35.8m and consensus expectations of NZ$50m. Major drivers of the change in NPAT forecast from the company have been attributed to order deferrals from major IMF customers, inflationary cost pressures, lower milk production and higher working capital costs.
• Trading Central has identified a bearish signal on Ansell (ASX:ANN), following the formation of a pattern over a period of 40-days which is roughly the same amount of time the share price may fall from the close of $26.14 to the range of $20.90 to $21.80 according to standard principles of technical analysis.

The risks and aftermath of the collapse of Silicon Valley Bank really echoed through markets, with shares ending mostly lower globally. Despite governments taking action to maintain confidence in the banking system, we saw global markets under pressure overnight. The news has also provoked question of whether the Federal Reserve will deliver a larger rate hike of 50-basis points this month.  

On Wall Street, financials lagged, as stocks in several regional US banks declined. The Dow dropped for the fifth straight day, the S&P500 was also lower, while the Nasdaq gained. And Treasury yields tumbled, helping to lend some support to equities. 

What to watch today:

• Extending these losses, the Australian market is set to drop 1.86% at the open this morning, and that’s according to the SPI futures. 
• In this current market, where are the opportunities? Investors are seeking safety in gold amid the turmoil in the banking sector. The gold price saw a sharp rebound, after hitting its lowest level in over a month, jumping 2.4% higher and it continues to be on the rise. We also know that gold is sensitive to the rates outlook – and the collapse of Silicon Valley Bank has not only divided markets on what the Fed will do with its rate-rising cycle but we’re also awaiting US inflation data out this week. So, keep in mind that higher interest rates lift the opportunity cost of holding non-yielding bullion and vice versa. Bell Potter is bullish on gold at the moment, with buy ratings on Capricorn Metals (ASX:CMM), Regis Resources (ASX:RRL) and Gold Road Resources (ASX:GOR). 
• Looking at other commodities, the oil price has fallen 2.6% amid the broad risk-off day across markets. And iron ore is in the green, approaching an eight month high as investors continue to assess the outlook for Chinese commodities this year. 
• Watch out for Lake Resources (ASX:LKE) today, as the company is set to release its earnings report. 
• News Corporation (ASX:NWS) and Coronado Global Resources (ASX:CRN) are set to go ex-dividend, which may see their share prices fall, as investors take their profits. 

Trading Ideas: 

• Bell Potter have a speculative buy rating on Cluey (ASX:CLU), following the educational technology company’s H1 result and $10.6 million capital raise. Their 12-month valuation has been lowered to $0.50, and at CLU’s current share price of $0.17, this implies 191.5% share price growth in a year. 
• Trading Central have identified a bearish signal in Suncorp (ASX:SUN) indicating that the stock price may fall from the close of $12.36 to the range of $11.90 to $12 over 25 days, according to the standard principles of technical analysis. 

In New York overnight, equities gained in the final hour of trading, as Treasury yields rose. US markets started the week on a positive note, ahead of a busy week of economic news. Important catalysts with week include congressional testimony on Tuesday and Wednesday from Federal Reserve Chair Jerome Powell, who will speak about how the central bank is thinking about inflation and rate hikes going forward. Also, the US awaits their February jobs report out this week as well. 

European markets were flat after modest early-session gains, with mining stocks down the most. 

China has announced a growth target of 5% this year. It’s viewed as a modest target, with Citi analysts announcing it is “disappointing to some investors” and falls short of their expectation. The 5% target is also below last year’s target of around 5.5%, when the country had its zero-covid policy. This saw the Aussie dollar drift lower. 

What to watch today: 

• The SPI futures are suggesting the Australian market will drop 0.26% at the open this morning. 
• The key economic announcement is watch out for today is the RBA’s interest rate decision, so this could see our dollar rise again, as its widely expected the RBA will deliver its 10th straight interest rate hike. The announcement will be at 2:30pm AEDT today, when the cash rate is expected to rise to 3.6%. 
• In commodities, 
  • Oil is rallying, extending gains for the fifth session as a weaker US dollar boosted the appeal of greenback-priced commodities, and offsetting concerns about China’s demand and economic growth targets. So, keep watch of energy producers. 
  • Gold is lower ahead of the US Fed chief testimony, and iron ore is trading flat. 

Trading Ideas:

• Bell Potter maintain a HOLD rating on PWR Holdings (ASX:PWH), a leading provider of customised cooling solutions to the global motorsports and automotive industry. Bell Potter reviewed their forecasts after the release of the company’s H1 results last month, and have made some modest changes, including increasing FY24 and FY25 revenue forecasts and reducing NPAT forecasts. They have decreased their price target by 2% to $10.75 for the earnings changes, as well as market movements and time creep. 
• Bell Potter have upgraded their recommendation on Arafura Rare Earths (ASX:ARU) from a Hold to a Speculative BUY. Their valuation remains unchanged at $0.72, which at ARU’s current share price of $0.55, implies 32% share price growth in a year. 

Equities closed higher in New York, as traders ignored concerns over higher interest rates. The Dow gained more than 400 points or 1.25%, boosted by Salesforce shares rallying 11%, on a strong quarter and forward guidance. The S&P500 trading 0.5% higher, while the Nasdaq was down earlier in the session, however also closed up 0.5%. 

Rates moved higher, with the 10-year note yield trading above 4% and the 2-year note yield reaching levels not seen in over a decade. 

European markets closed in the green, recovering from earlier losses, after the eurozone inflation data came in above expectations. Headline inflation fell to 8.5% in February, from 8.6% the previous month. 

What to watch today:

• The SPI futures are this morning suggesting that Australian market will open 0.31% higher. 
• We may see miners Rio Tinto (ASX:RIO) and BHP Group (ASX:BHP) end the week on a positive note, after their shares on the NYSE pushed higher in late trade overnight. Yesterday, ASX-listed BHP saw its biggest one-day gain in almost 4-months, amid evidence of China’s reopening economy. 
• In commodities, 
  • Oil prices have jumped, as the market weighs hopes for a rebound in Chinese demand, against concerns about further policy tightening from the Fed. So, keep your eye on energy producers today such as Woodside Energy (ASX:WDS) and Beach Energy (ASX:BPT). 
  • Gold has remained steady for three days, amid the prospect of further monetary tightening. 
  • Iron ore is strong, currently trading 1.6% higher with investors optimistic about higher Chinese demand after since the country’s reopening. 
• Stocks that are set to go ex-dividend today are Ampol (ASX:ALD), Nine Entertainment (ASX:NEC) and Treasury Wine Estates (ASX:TWE). Remember, this may see share prices fall, as investors take their profits. 

Trading Ideas:

• Bell Potter maintain a Buy rating on Mincor resources (ASX:MCR), although the company’s H1 2023 results were below Bell’s forecasts. They have reduced their price target by 9% to $1.70, and at MCR’s current share price of $1.27, this implies 34% share price growth in a year. 
• Trading Central have identified a bearish signal in Macquarie Group (ASX:MQG), indicating that the stock price may fall from the close of $184.86 to the range of $174 to $176 over 30 days, according to the standard principles of technical analysis. 

US equities closed in the green overnight, trying to recover some ground after the Wall Street had its worst week of the year. The Dow gained 0.2%, the S&P500 up 0.3% and the Nasdaq rose 0.6%. These moves came as Treasury yields eased, following a jump on Friday. We’re seeing a renewed focus on inflation and again seeing rates driving equities. Investors are also looking ahead to another week in retail earnings. 

European equities were also higher, with all major benchmarks in positive territory. And the European Central Bank has stated that it’ll be hiking rates by another 50 basis points in March, so investors are preparing for that announcement this month. 

What to watch today:

• The Australian market is looking to start the day higher. The SPI futures are suggesting a rise of 0.47% at the open. 
• Reporting season is wrapping up today with the final list of companies set to release their earnings reports today. Some of these companies include DGL Group (ASX:DGL), Mach7 Technologies (ASX:M7T) and Tyro Payments (ASX:TYR). So, with one day to go, this reporting season we’ve seen 268 companies report their earnings. 80 of these beat expectations, 107 were in line with expectations, and 81 companies missed expectations. It’s also been a busy month for brokers – we saw a total of 50 rating upgrades and 38 rating downgrades. 
• Keep watch of the stock going ex-dividend today, as this often sees their share prices fall as investors take their profits. These include Amcor (ASX:AMC), Accent Group (ASX:AX1), Bega Cheese (ASX:BGA), Domino’s Pizza (ASX:DMP), Evolution Mining (ASX:EVN), Origin Energy (ASX:ORG) and Worley (ASX:WOR). 
• In commodities, oil is down, as lingering concerns about a recession-driven demand downturn offset prospects of tighter global supplies. Gold is higher, however still hovering at its weakest level in two months, and iron ore has dropped more than 1.5%, so watch iron ore stocks today. 

Trading Ideas: 

• Bell Potter have a Hold rating on Appen (ASX:APX) and have lowered their price target from $3 to $2.25. The company’s 2022 revenue fell 3% to US$388.5 million, which was slightly below Bell Potter’s forecast of US$393.8 million. Underlying EBITDA fell 39%, but was in line with Bell’s forecast. 
• Bell Potter also maintains their Buy rating on Accent Group (ASX:AX1), after the company beat expectations for H1 and H2 trading has commenced on strong note. AX1 reported EBIT of $81 million, NPAT of $50.7 million and dividends per share of 12cps. 

Overnight in the US, equities advanced higher in a late-day rally, with all three major benchmarks in positive territory. European stocks also moved higher in response to the Federal Reserve’s meeting minutes, which showed that they’re still committed to fighting inflation with interest rate hikes. Equities were in the green, with the STOXX 600, Germany’s DAX and France’s CAC all closing in the green, while the FTSE 100 ended the session lower. 

What to watch today:

• The Australian market is set to open slightly higher this morning, with the SPI futures suggesting a rise of 0.06%. 
• In commodities: 
  • Oil prices are rallying, currently trading around US$75.56 per barrel, ending two days of losses, amid lingering concerns about tight global supplies. Russia has announced its plans to cut oil exports from its western ports by up to 25% in March, exceeding its announced output curbs of 500,00 barrels per day. The market is also expecting China’s oil imports to hit a record high this year, amid rising demand for transportation fuel and as new refineries come online. 
  • US natural gas is trading 8% higher, however remained not far from a 29-month low, as the market monitors demand and weather forecasts, with recent projections pointing to cold-than-expected temperatures. 
  • Iron ore is trading at its strongest level in 8-months, with signs of stronger demand for Chinese construction, grouped with supply concerns. 
  • Gold has held its recent decline, at its lowest in 8-weeks, after the Fed’s meeting minutes shoed that policymakers will continue interest rate hikes. 
• Companies reporting today include Allkem (ASX:AKE), Aristocrat Leisure (ASX:ALL), BWX (ASX:BWX), Brambles (ASX:BXB), Harvey Norman Holdings (ASX:HVN), Link Administration Holdings (ASX:LNK)and Mineral Resources (ASX:MIN). 

Trading Ideas:

• Bell Potter maintain a BUY rating on Eagers Automotive (ASX:APE) after the company reported its earnings. 2022 revenue fell, but was in line with Bell Potter’s expectations. Underlying operating profit before tax grew 1% to $405.2 million and was 3% above Bell’s forecast of $392.4 million. The company provided strong revenue guidance and forecasts were upgraded. Bell Potter’s price target dropped to $15 from $15.50, and at APE’s current share price of $13, this implies 15.4% share price growth in a year. 
• Trading Central has identified a bearish signal in Rio Tinto (ASX:RIO) indicating that the stock price may close from the close of $123.40 to the range of $114.50 to $116.25 over 62 days, according to the standard principles of technical analysis. 

Looking at global markets, the energy sector is underperforming: it’s been the worst performing sector month-to-date in all regions. Weakness in energy equities has coincided with that of energy commodities: all members of the petroleum complex, are down year-to-date, as well as Natural Gas down 41% so far in 2023. Information technology on the other hand, has outperformed everywhere, in particular, the sector’s lead the most pronounced in Canada, where information tech has outperformed their S&P TSX Composite by more than 5% so far this month. 

Overnight, all three US benchmarks closed lower. The Dow closed down 0.1%, making up some ground after losing more than 240 points earlier in the session. The S&P500 down 0.6% and the Nasdaq down 1%. US Treasury yields rose on bets the Federal Reserve has more room to lift rates. The yield on the US 10-year note surged 10 basis points to 3.63%. 

Markets in Europe also fell. The STOXX 600 closed 0.8% lower with all sectors but healthcare and utilities trading in the red. 

What to watch today:

• The SPI futures are suggesting that our local market will open 0.11% lower this morning, after US stocks extended losses. 
• Investors are awaiting the policy decision by the Reserve Bank. It is widely expected that the RBA will lift the cash rate a further 25 basis points and that announcement is scheduled for 2:30pm AEDT today. Also, in economic news, Australia’s Balance of Trade data for December will be out at 11:30am. The last announcement was in November, when Australia saw its largest trade surplus since June.  
• Company earnings to watch out for today: Cettire (ASX:CTT) and Transurban Group (ASX:TCL) will release their half-year results, while Macquarie (ASX:MQG) is set to release their quarterly report. 
• In commodities: 
  • Oil prices are trading 1.6% higher at US$74.55 per barrel. And China’s economy may be looking at a stronger-than-anticipated rebound that will boost demand for crude. 
  • Gold is steady, hovering near its lowest level in a month, amid a general US dollar strength, as stronger-than-expected US jobs data suggested the Fed has more room to hike interest rates. 
  • Iron ore is up 1% at US$126.50 per tonne. 

Trading Ideas:

• Bell Potter maintain a Buy rating on Adrad Holdings (ASX:AHL) and it’s well worth a look at the current share price. The company is profitable, it just reiterated guidance, they have a strong cash position and FY23 PE ratio of less than 10 times. The downside however is that the CEO has announced intention to resign, the earnings outlook this year is flat and liquidity is low. However, Bell Potter haven’t changed to their forecasts. They forecast FY23 revenue and EBITDA of $137.9 million and $16.6 million, consistent with the guidance. They have lowered their price target by 6% to $1.60 and at AHL’s current share price of $1.05, this implies 51.7% share price growth in a year. 
• And lastly, Trading Central have identified a bearish signal in Northern Star Resources (ASX:NST) indicating that the stock price may fall from the close of $12.58 to the range of $11.65 to $11.85 over 24 days according to the standard principles of technical analysis. 

The Federal Reserve has raised the US cash rate by 25-basis points as the market expected at the conclusion of the FOMC meeting overnight. The Fed has now eased rate hikes for a second straight month for the cash rate to sit between 4.5%-4.75% but said it will need to continue raising rates in order to reach a stance of monetary policy that is sufficient to return inflation to the target 2%. Recent favourable economic data including lower consumer spending and slowing economic growth in the US were contributing factors to the Fed’s rate hike decision.

US markets rebounded in afternoon trade to close the day higher as the Fed pulled back its pace of rate hikes. The Nasdaq rose 2% boosted by gains in chipmakers on the back of strong earnings out of Advanced Micro Devices. The S&P500 reversed an earlier loss to close the session up 1.05% and the Dow rose 0.02% at the closing bell.

European markets closed mixed on Wednesday as investors awaited the Fed’s latest interest rate decision which was released after the closing bell in Europe. Germany’s DAX added 0.35%, while the French CAC fell 0.07% and in the UK the FTSE100 fell 0.14%.

Investors expected the 25-basis point rate hike announced by the Fed overnight however will continue to monitor commentary around the decision to gain any insight into what other central banks around the world might do at their respective rate hike meetings over the coming days.

What to watch today:

• On the economic calendar today the Bank of England’s latest interest rate decision will be announced later tonight with the market expecting a 50-basis point rise to 4%.
• The SPI futures are anticipating the local market to open 0.31% higher buoyed by the strong session on Wall St overnight.
• On the commodities front, oil is trading 2.41% lower at US$76.97/barrel, gold is up 1.02% at US$1947.40/ounce and iron ore is down 0.77% at US$129/tonne.
• The Aussie dollar is buying 71 US cents, 91.83 Japanese yen, 57.01 British pence and 1 New Zealand dollar and 10 cents.

Trading Ideas:

• Bell Potter has upgraded its rating and price target on Gold Road Resources (ASX:GOR) to a buy rating and a price target of $1.95 following the release of the company’s fourth quarter results including a revaluation of the company’s listed investments. The company’s 50%-owned Gruyere mine is beginning to yield increasing cash flow and earnings as production expands to greater than 350 thousand ounces per annum. Gold Road Resources also has a 19.99% stake in De Grey Mining (ASX:DEG), owner of the Mallina Gold Project, where 8.5 million ounces of gold have been delineated at the Tier-1 ‘Hemi Mining Centre’.
• Trading Central has identified a bullish signal on The Lottery Corp (ASX:TLC) following the formation of a pattern over a period of 12-days which is roughly the same amount of time the share price may rise from the close of $4.86 to the range of $5.12 to $5.20 according to standard principles of technical analysis.

The local market recovered from the red start to the week in the early hours of trade on Tuesday before falling in afternoon trade to close 0.07% lower as investor optimism was initially boosted by weaker-than-expected retail sales before confidence was dampened by the fact that the lower retail sales will likely have low impact on the upcoming RBA interest rate decision next week. Consumer staples stocks led the market gains today while information tech stocks were sold off amid investor fears of prolonged interest rate hikes to come.

Retail sales for the month of December tumbled 3.9% to $34.47bn despite traditionally being the busiest month of the year for retailers. Department stores were the worst hit with a decline of 14.3%, while clothing, footwear and personal accessory retailing fell 13.1%. The decline in retail sales caused a sell-off in retail stocks like Myer Holdings (ASX:MYR), City Chic Collective (ASX:CCX) and Lovisa (ASX:LOV) today, however has investors now hoping the RBA will ease its rate hike stance at the next meeting next Tuesday.

Software defined networking company Megaport (ASX:MP1) tanked over 24% on Tuesday after releasing a quarterly update including cash from operations was $0.2m, down from Q1 with lower receipts from customers, total net cash flow of minus $11.9m which is a further dive from the minus $9.6m in the prior corresponding quarter, and the company burnt almost $50m in cash from the same period a year earlier to close the quarter with $57.5m in cash.

Infant formula producer Bubs Australia (ASX:BUB) crashed more than 9% yesterday after also releasing a Q2 trading update including group gross revenue down 28% on the PCP to $14.3m driven by gross revenue from the Chinese market down 66% for the quarter amid prolonged lockdowns in the region. International gross revenue for the quarter was strong, boosted by US shipments and the company recently making progress on its journey to gain permanent US regulatory approval.

The winning stocks from today’s session were led by Woolworths (ASX:WOW) jumping 3.77%, while Corporate Travel Management (ASX:CTD) added 2.7% and EVT (ASX:EVT) rose 2.55%. And on the losing end, Megaport (ASX:MP1) took the biggest hit today closing down almost 25%, Sayona Mining (ASX:SYA) fell just under 12% and Allkem (ASX:AKE) closed the day down 7.5%.

The most traded stocks by Bell Direct clients today were Winsome Resources (ASX:WR1), Whitehaven Coal (ASX:WHC) and Mineral Resources (ASX:MIN).

On the commodities front today, oil is down 0.32% at US$77.65/barrel amid rate hike decisions by central banks this week as well as Russian oil exports remaining strong. Gold is down 0.15% today at US$1919/ounce and iron ore is up 4.42% at US$130/tonne.

Further economic data released today included Chinese Manufacturing PMI for January coming in at 50.1 points which was above expectations and growth from December, indicating the Chinese economy is recovering faster than anticipated after the scrapping of the harsh COVID-19 lockdowns.

The Aussie dollar is buying US$0.70, 91.63 Japanese Yen, 57.31 British Pence, and NZ$1.09.

Ahead of the Federal Reserve’s rate decision, US equities closed in the red overnight, pausing the rally we’ve seen in Wall St. Investors are always preparing for the busiest week of the US earnings season. 

The Dow Jones dropped 0.77%, the Nasdaq down 1.96% and the S&P500 down 1.3%. Communications services and information technology were among the biggest laggards in the S&P500, while mega-cap tech stocks such as Meta and Alphabet are down more than 2%. 

Over in Europe, Germany’s DAX, France’s CAC and the STOXX 600 all closed in the red, while the FTSE gained 0.25%. 

What to watch today:

• Ahead of the local trading day, The market is set to open slightly lower this morning, with the SPI futures suggesting a fall of 0.07%. 
• In commodities, the price of oil has dropped 2.25% amid robust Russian exports and persistent fears of the global economic slowdown. Gold is trading just 0.2% lower, while iron ore is flat. 
• There are a few companies set to release their quarterly reports today, including Beach Energy (ASX:BPT), Gold Road Resources (ASX:GOR), Megaport (ASX:MP1), Nickel Industries (ASX:NIC), PointsBet Holdings (ASX:PBH) and Syrah Resources (ASX:SYR). 

Trading Ideas:

• Bell Potter maintain a BUY rating on Alkane Resources (ASX:ALK), an exploration, mining and investment company. The company is an established gold producer and maintains a multicommodity exploration portfolio. 
• Trading Central has identified a bullish signal in Boss Energy (ASX:BOE), indicating that the stock price may rise from the close of $2.63 to the range of $2.82 to $2.88 over 36 days, according to the standard principles of technical analysis. 

The local market ended last week on a 0.23% gain at the closing bell of Friday’s session, driven by a surge in energy and materials stocks on the back of rising commodity prices. Communication services and consumer discretionary stocks came under pressure to close in the red on the last trading session of the week.

Quarterly reports and company trading updates continued dominating market movements last week both locally and overseas and are expected to continue doing so for at least the next few weeks as investors respond to company performance amid challenging market conditions especially in this rising interest rate environment.

The winning stocks from Friday’s session were Pilbara Minerals rising 13% on the back of a strong trading update including a 10% increase in delivered spodumene concentrate on the prior quarter. Whitehaven Coal rallied over 6% on Friday and Fisher and Paykel Healthcare added 4.87% to end the week.

On the losing end, Liontown Resources tumbled over 8%, while Nanosonics fell 6.64% and Pinnacle Investment Management lost 3.76%.

The most traded stocks by Bell Direct clients on Friday were Whitehaven Coal, Rio Tinto and Terracom.

Over in the US on Friday, tech shares led the broad market rally as investors responded to some positive corporate news including Google’s parent company Alphabet cutting 12,000 staff to cut costs as growth in the business slows, which prompted a 5% surge in Alphabet’s share price. Netflix also surged on better-than-expect subscriber data announced in the company’s latest results update. The Nasdaq jumped 2.7%, the Dow Jones added 1% and the S&P500 rallied 1.9% on Friday.

Investors are keeping a close eye on any news around the Fed’s upcoming interest rate meeting from January 31 to February 1 where it is expected the Fed will ease its current aggressive stance on rate hikes to increase the nations’ cash rate by 25-basis points amid signs the economy is beginning to cool.

Markets in Europe rebounded from Thursday’s sell-off driven by weaker-than-expected retail sales out of the US, to close higher on Friday as investors in the region also keep a firm eye on updates out of the Fed ahead of the next policy meeting. Germany’s DAX added 0.76%, the French CAC rallied 0.63% and in the UK, the FTSE100 rose 0.3%.

What to watch today:

• Ahead of the local trading session, the SPI futures is anticipating the ASX to open 0.46% higher, buoyed by the strong session on Wall Street on Friday.
• On the economic data front today, the Bank of Japan policy meeting minutes will be released, which will give investors an insight into the rate outlook in the region following the shock maintenance of the country’s extremely low interest rate of -0.1% at the last policy meeting.
• Taking a look at commodities, oil is trading higher at US$81.64/barrel, gold is down almost 1% at US$1913/ounce and iron ore is flat at US$124.50/tonne.
• The Aussie Dollar is buying US$070, 90.25 Japanese Yen, 56.19 British Pence and NZ$1.08.

Trading Ideas:

• Bell Potter maintain a BUY rating on IVE Group (ASX:IGL), and while there is no change in forecasts, Bell Potter have updated each valuation used in the determination of our price target for market movements and time creep. The price target has increased from $2.60 to $2.75, and at IGL’s current share price of $2.37, this implies 16% share price growth in a year.
• Trading Central have identified a bullish signal in Pilbara Minerals (ASX:PLS) indicating that the stock price may rise from the close of $4.55 to the range of $4.80 to $4.90 over 26 days according to the standard principles of technical analysis.