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Morning Bell 1 July

Bell Direct
July 1, 2024

Wall street ended the last trading day of the US first half in negative territory despite US inflation data indicating inflation is easing in the US alongside the release of better-than-expected consumer sentiment figures. The S&P500 fell 0.41%, the Nasdaq lost 0.71% and the Dow Jones ended the day down 0.12%. US inflation data for May slowed to its lowest rate in more than three years with the Fed’s preferred measure of inflation, the Personal Consumptions Expenditures price index rising just 0.1% on April and 2.6% from the prior year.

Over the first half of 2024, the tech-heavy Nasdaq soared 18.1% as the AI movement boosted investor appetite for the high growth tech sector. The S&P500 rose 14.5% over the first half to record territory, and the Dow Jones rose just 3.8% over the first 6-months.

Over in Europe, markets closed mostly lower on Friday as investors assessed the release of key inflation data in the region and around the world. The STOXX600 fell 0.24% on Friday, Germany’s DAX rose 0.14% while the French CAC fell 0.68%, and in the UK, the FTSE100 ended the day down 0.19%. On Friday, fresh economic data released showed French and Spanish inflation eased in June while the UK posted economic growth of 0.7% for the first three months of the year.

Asia markets closed modestly higher on Friday led by Japan’s Topix index rallying 0.57% to a 34-year high on upbeat economic data. Japan’s Nikkei rose 0.64% on Friday, Hong Kong’s Hang Seng rose 0.01% and South Korea’s Kospi index ended the day up 0.49%.

Headline inflation for Tokyo rose to 2.3% in June while the country’s industrial production rose 2.8% MoM in May which beat economists’ expectations. The readings provide Japan’s central bank room to tighten its monetary policy as its currency has plunged to a multi-decade low.

What to watch today: 

  • Locally on the last trading session of FY24, the ASX200 rose 0.1% to finish the financial year up 7.8%. The rally on Friday was driven by the banks and tech stocks rising before the US inflation print was released later after market close.
  • Insurance Australia Group soared 7.2% on Friday after outlining two significant deals have been signed including one with US-listed Berkshire Hathaway for reinsurance protection, and the company also reaffirmed profit guidance to be at the upper end of guidance ranges for FY24.
  • Elsewhere, burrito giant Guzman Y Gomez (ASX:GYG) fell 7.5% on Friday, marking its worst one-day performance since debuting on the ASX.
  • Adore Beauty (ASX:ABY) shares tumbled 5.85% on Friday after the company announced the acquisition of Ikou, a wellness and skincare brand, for $25m.
  • Ahead of the first trading session of the new financial year, the SPI futures are anticipating the ASX to open the day down 0.45% carrying negative sentiment from Wall Street on Friday into the new local trading week.
  • On the commodities front this morning oil is trading 0.09% lower at US$81.56/barrel, gold is down 0.06% at US$2325/ounce and iron ore is flat at US$106.51/tonne.
  • The Aussie dollar has slightly strengthened to buy 67 US cents, 107.40 Japanese Yen, 52.86 British Pence and 1 New Zealand dollar and 10 cents.

Trading Ideas:

  • Bell Potter has increased the 12-month price target on De Grey Mining (ASX:DEG) from $1.76 to $1.82 and maintain a speculative buy rating on the gold miner after the company announced it has received Credit Approved Term sheets from a syndicate of domestic and offshore commercials banks for a proposed $1bn senior debt facility. This will support the construction of its 100%-owned Hemi Gold Project which has an estimated CAPEX of $1.345bn and substantially reduces the financial risk of the company.
  • Trading Central has identified a bearish signal on ARB Corp (ASX:ARB) following the formation of a pattern over a period of 22-days which is roughly the same amount of time the share price may fall from the close of $37.63 to the range of $34.20 to $34.80 according to standard principles of technical analysis.

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