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Morning Bell 1 February

Paulina Peters
February 1, 2022

Yesterday, the Aussie share market closed 0.24% lower to 6,971 points in what was a choppy session for the benchmark index. For the month of January, the ASX200 posted a 6.3% loss, its biggest monthly drop since COVID-19 first hit nearly two years ago.

Looking at sector performance, the market was mixed. The tech sector managed to post an impressive gain of 3.7%, while the financials and consumer staples sectors fell the most.

On the ASX200 stock leader-board, six tech stocks led the gains, all enjoying a boost following Wall Street’s strong session on Friday. Afterpay’s parent, Block (ASX:SQ2) jumped 8.1% to $161.41, that’s its biggest one-day gain since it began trading on January 20, but still lower than its opening price of $176.63. Meanwhile, Ansell (ASX:ANN) took a 14.3% hit to its share price following an underwhelming trading update where the company blamed declining demand for single-use gloves and a margin crunch for the profit downgrade. Citi maintained its BUY recommendation on the stock but has reduced its price target to $37.50 (from $45.50). And another stock coming under pressure was NIB Holdings (ASX:NIB) and that comes after JP Morgan slashed its price target by 12% to $6.10.

As for the most traded stocks by Bell Direct clients yesterday, there were several ETFs that made the top ten. These included the BetaShares A200 and NDQ, Vanguard’s VAS and VGS, as well as ETF Securities’ Battery Tech & Lithium ETF (ASX:ACDC). Also gaining traction yesterday was Rio Tinto (ASX:RIO). Its share price came under pressure amid a renewed focus on the miner’s unresolved royalty dispute with Traditional Owners.

Moving to the US, tech stocks boosted both the Nasdaq and S&P500, while the Dow managed to gain about 400 points. Netflix and Spotify surged more than 10% and 12% respectively following upgrades from Citi, who cited last month’s pullback as an attractive time to buy. And Tesla also gained 8% on Monday after Credit Suisse upgraded the stock.

Today, the futures are suggesting the Aussie share market will open 0.26% higher this morning.

What to watch today:

  • The key focus will be on the RBA as it meets for the first time this year. While a rate rise isn’t expected, the RBA could hint that one is nearer than it previously thought. Economists are expecting that the RBA will end its monetary stimulus, upgrade its economic forecasts, and potentially bring forward its interest-rate guidance during this meeting. Also out today, is preliminary retail sales for December.
  • Reporting season wise, Credit Corp (ASX:CCP) will be releasing its half year results. Consensus expects the company will deliver NPAT of $42.7m and an interim dividend of 38 cents per share. Other stocks reporting include Centuria Industrial REIT (ASX:CIP) and Vulcan Energy Resources (ASX:VUL).
  • In commodities, the oil price continues to rise, trading close to US$90 a barrel, off the back of both political tensions and a supply shortage. The gold price also rose, despite expectations for interest rate hikes by the Federal Reserve. The lithium price is trading up 2.7%. And the spot iron ore price is trading nearly 6% higher to US$143 a tonne.

Trading Ideas:

  • Bell Potter has maintained its speculative BUY recommendation on leading Australian producer of goat dairy products, Bubs Australia (ASX:BUB) with an increased price target of $0.70 (previously $0.65). BUB closed 5.62% higher yesterday to $0.47, which implies nearly 50% share price growth in a year.
  • Trading Central has a bullish signal on PointsBet (ASX:PBH). This signal indicates that the stock price may rise from the close of $4.86. The balance between buyers and sellers, recently dominated by the bears, is evening out. So, we may see higher prices ahead.

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