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Morning Bell 1 June

Sophia Mavridis
June 1, 2023

European markets tumbled as concerns remained over the US debt ceiling bill ahead of the deadline of June 5th. German inflation data will also be out tonight as well as a euro zone flash reading.

Additionally, investors are weighing China’s manufacturing PMI data, that declined for the second straight month and at a faster rate than expected. The STOXX 600 closed the session down 1.1%, with all sectors in negative territory. Auto stocks led the losses, followed by chemicals stocks.

Over in New York, US equities also declined overnight. The Dow Jones fell 0.4%, the S&P500 down 0.6% and the tech heavy Nasdaq also down 0.6%.The close also marked the end of the May trading month, which saw the Nasdaq finish the month 5.8% higher, boosted by artificial intelligence-related stocks. The S&P500 added 0.3% in the month, while the Dow fell 3.5%.

What to watch today:

  • Following global markets overnight, the SPI futures are suggesting our local market will drop 0.18% at the open this morning.
  • In commodities,
    • Oil has sharply fallen, now trading around US$68 a barrel, extending the monthly loss for May to nearly 11%. The decline is due to concerns surrounding a slowdown in demand, mainly from China, the top crude importer. So keep watch of energy producers such as Beach Energy (ASX:BPT) and Santos (ASX:STO).
    • The gold price steadied overnight, so gold shares could have a decent run today. As market volatility leads to increased demand for the safe haven asset, its worth keeping your eye on Evolution Mining (ASX:EVN), Gold Road Resources (ASX:GOR), Regis Resources (ASX:RRL) and other gold stocks.
    • And the price of iron ore is also down, now trading at US$103.50 per tonne, holding close to a six-month low, amid evidence of low demand and strong supply.
  • In economic data, today we’ll receive retail sales data for Retail Sales data for April and Private Capital Expenditure data for Q1.

Trading Ideas:

  • Bell Potter maintain their buy rating on IVE Group (ASX:IGL) with a price target of $3.00. They are the largest integrated marketing communications business in Australia with leading market positions across every sector in which the company operates. The company has been caught up in the recent broad sell-off of retailers following some soft trading updates, such as City Chic and Super Retail, as well as concern around reduced spending. Bell Potter have updated each valuation used in the determination of their price target for market movements and time creep, but overall, there is no change in the $3.00 price target. At the current share price of $2.28, this implies 31.6% share price growth in a year.
  • And Trading Central have identified a bearish signal in Lindsay Australia (ASX:LAU) indicating that the stock price may fall from the close of $1.25 to the range of $1.11 to $1.15 over 31 days, according to the standard principles of technical analysis.

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