united malt group

The Aussie share market advanced 2.4% (Mon-Thu), driven by the materials sector jumping 5.04%, amid increasing commodity prices. Utilities and energy stocks also jumped over 3% each. The ASX200 felt some relief this week, after a few weeks of turbulence, as investor fears of a global banking crisis eased when regulators and industry bodies stepped in to support crumbling banks. 
 
 In this week's wrap, Grady covers:

• (3:10) The outlook for oil prices 
• (3:30) Stocks Bell Potter are bullish on
• (4:24) The best performing stocks in the ASX200
• (5:57) The most traded stocks & ETFs by Bell Direct clients
• (6:35) Four economic news items to watch out for 

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.

US equities had a positive run overnight, ahead of the US midterm elections, as well as key inflation data on deck over the next few days. Tonight, the midterm election will determine which party will control Congress, which currently, the House is controlled by Democrats. And on the economic front, investors are waiting on the consumer price index report out on Thursday. Stocks hit session highs in afternoon trade. The Dow Jones gained more than 400 points or 1.48%, the S&P500 gained 1.1% and the Nasdaq closed 1% higher. 

In Europe the STOXX600 closed 0.3% higher, Germany’s DAX up 0.6%, the French CAC down 0.5% and in the UK the FTSE100 gained 0.9%. 

What to watch today:

• Following the strong sessions in overseas markets, the Australian market is set to rise 0.6% at the open this morning, if you’re going by the SPI futures. 
• Watch the share price movements of James Hardie Industries (ASX:JHX) and SSR Mining (ASX:SSR), as both companies are set to release a quarterly report today.
• AGMs today include Bendigo and Adelaide Bank (ASX:BEN), Inghams Group (ASX:ING), Sims (ASX:SGM), and Lottery Corporation (ASX:TLC). 
• In commodities, oil is hovering at levels last seen in August, as investors weigh tight supply again a negative outlook for demand. The gold price has now steadied, following a 3% rally to 4-week highs in the previous session, after government officials backed rumours of China’s reopening. And iron ore has jumped 4.7% higher, rebounding from the three-year low of US$81.50 it hit on November 1st. Iron ore is now trading at US$89, amid hopes that China will transition away from its zero-COVID policy. So watch iron ore miners today like Champion Iron (ASX:CIA), BHP (ASX:BHP), Rio Tinto (ASX:RIO), Fortescue Metals (ASX:FMG) or Mineral Resources (ASX:MIN). 
• In economic data, today at 10:30am AEDT, Westpac will release its data on consumer confidence for November and NAB will release its data on business confidence for October. 

Trading Ideas:

• Bell Potter maintain a buy rating on United Malt Group (ASX:UMG) and have lowered their price target to $3.90. At its current share price of $3.10, this implies 25.8% share price growth in a year. 
• Bell Potter also maintain a buy rating on EROAD (ASX:ERD) and lowered their price target to $2.50. At its current share price of $1.20, this implies over 100% share price growth in a year.

The ASX200 closed just 0.07% in the green, after earnings results from Appen (ASX:APX) and Credit Corp (ASX:CCP) disappointed investors. APX’s shares dropped after reporting a worse half than forecasts, as underlying earnings and revenue fell, while CCP’s shares dropped after reporting “challenging conditions”. Also yesterday, the RBA announced a further 50 basis point rise to the cash rate, now at 1.85%. This was in line with expectations, so we didn’t see any large impacts from the announcement. The market was trading a little lower leading up to the RBA’s announcement at 2:30pm, but then rose in afternoon trade, following the news. 

The consumer discretionary sector, consumer staples and tech advanced the most, while real estate and materials declined.

The best performing stock was BNPL company Zip (ASX:ZIP) which gained 15% yesterday, and it was followed by the a2 Milk Company (ASX:A2M) and St Barbara (ASX:SBM). The worst performing stock was United Malt Group (ASX:UMG), after the company downgraded its FY22 guidance.  

The most traded stocks by Bell Direct client yesterday were the BetaShares Australian Strong Bear Hedge Fund (ASX:BBOZ), Whitehaven Coal (ASX:WHC) and Rio Tinto (ASX:RIO).

European shares were in the red, as investors track risk-off sentiment globally and whether last month’s rally has any further to go. Corporate earnings also remained a core driver of individual share price movement with shares such as BP and Ferrari publishing results. The STOXX 600 closed 0.2% lower, with financial services stocks falling 1.7%. Most sectors were in negative territory, however we did see oil and gas stocks gain.

US equities were also lower, for the second day, amid more hawkish commentary from the Federal Reserve. The Dow Jones fell 1.2% or just over 400 points, weighed down by disappointing earnings from Caterpillar. The S&P500 closed 0.7% lower. And the Nasdaq fell 0.2%, however the index did see a 19% jump in Uber shares following its corporate earnings release. Stocks were also reacting to comments made by the Chicago Fed President Charles Evans, who said he hopes the central bank can raise its benchmark interest rate by half a percent. So note, there is no Fed meeting in August – the next Fed interest rate decision will be at the end of September.

What to watch today:

• Following the negative run the US, the Australian market is set to fall 0.16% at the open this morning, going by the SPI futures.
• In commodities, oil is trading lower with continued worries around tight supply, that has more than offset worries over an economic slowdown. Investors are also awaiting OPEC’s meeting, for any indication of a further boost in crude supply. Gold is currently falling, however did see a big jump, hovering at its highest levels in four weeks, as a falling dollar and Treasury yields supported bullion demand. And iron ore is recovering from what was a seven-month low of US$100 a tonne, after news of declining steel inventories in China.
• Watch the share price movements of BWP Trust (ASX:BWP), SSR Mining (ASX:SSR), Pinnacle Investment Management Group (ASX:PNI), and Genworth Mortgage Insurance Australia (ASX:GMA). Those companies will be reporting their earnings results today.

Trading Ideas:

• Bell Potter maintain a Buy rating on United Malt Group (ASX:UMG), after the company downgraded its FY22 guidance. Estimated EBITDA guidance has been downgraded from $115-140 million to $100-108 million, and the main drivers of this are in the processing division, with continued margin pressure from higher barley prices and continued delays in customer shipments. Bell Potter say the export data demonstrated a recovery in malt trade flows from the largest producing regions and a general bottoming in implied malt-barley premiums, and that they view these as precursors to a recovery in earnings. The broker has also relooked at their

It was a wild session overnight on Wall Street after the Bitcoin price plunged causing Tech shares to come under pressure. 

Despite Wall Street’s fall, the Aussie share market is set to open slightly higher, with the futures suggesting the market will lift 0.06%.  

What to watch today:

• Unemployment data will be released this morning, with the market expecting the unemployment rate to hold at 5.6%, the lowest rate since April 2020. Given the expiry of JobKeeper and seasonal adjustment factors, it’s believed that there is a higher-than-usual risk of an unexpected outcome in this jobs result. 
• Company results out today include Auckland International Airport (ASX:AIA), Infratil (ASX:IFT), Serko (ASX:SKO), United Malt Group (ASX:UMG) and Webjet (ASX:WEB). 
• Today, Eagers Automotive (ASX:APE) and G8 Education (ASX:GEM) hold their AGMs.
• The Oil price dropped more than 3% off the back of renewed demand concerns as COVID-19 cases in Asia rise, and fears of rising inflation continue.
• The Gold price retreated as the dollar and US Treasury yields rose. 
• The most traded stocks by Bell Direct clients yesterday: Macquarie (ASX:MQG), Vanguard Australian Shares Index ETF (ASX:VAS) and ANZ Bank (ASX:ANZ).

Trading ideas:

• Bell Potter has increased artificial intelligence company, Appen’s (ASX:APX) price target by 8% to $14.25, which is an 8% premium to the share price and they maintain its Hold recommendation. 
• Bell Potter have updated their view on Helloworld Travel (ASX:HLO), reducing their price target from $2.60 to $1.95, and its Hold rating remaining unchanged. 
• Vita Group (ASX:VTG), Aurelia Metals (ASX:AMI) and Talga Group (ASX:TLG) are all giving off bullish charting signals according to Trading Central.  

The ASX200 is eyeing a gain of 0.1% at the open.

Tesla will be welcomed to the S&P500 in December, its shares gained 8% on this news.

What to watch today:

·       Following the rally on Wall Street, you might expect buying today in tech, travel, tourism, gambling and bank stocks.

·       Aristocrat (ASX:ALL), ALS (ASX:ALQ) and United Malt Group (ASX:UMG) report results today.

·       Seven Group Holdings (ASX:SVW) and Cromwell Property Group (ASX:CMW) hold their AGMs today.

·       New home sales data and wage price growth is out today for October.

Local trading ideas:

·       Afterpay (ASX:APT) had its Buy rating upgraded by Bell Potter with a new $140 price target, implying 38% upside in a year from yesterday's close of $95.93. Afterpay held its AGM yesterday noting November is on track for a record month, without giving any details of what that looked like.

·       Adacel Technologies (ASX:ADA), which controls 21% of the world’s airspace traffic management through their technology, had its Buy rating and price target upgraded by Bell Potter to $1.05, implying 50% upside in a year from yesterday's close of $0.78.

·       Suncorp (ASX:SUN), Element 25 (ASX:E25) and Jumbo Interactive (ASX:JIN) are all showing bullish charting signals according to Trading Central.