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Morning Bell 1 May

Sophia Mavridis
May 1, 2023

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.

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