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Morning Bell 11 October

Grady Wulff
October 11, 2022

US markets continued to decline on Monday, with the tech-heavy Nasdaq hitting its lowest point in two years led by a sharp sell-off in chip stocks, amid a policy change by President Biden to limit US companies from selling advanced semiconductor and other equipment to China. Tech stocks have also been hit hard lately from their relatively high valuations and the rising cost of borrowings. The Dow Jones industrials index closed just 0.05% lower, the S&P500 lost 0.75% and the Nasdaq fell 1.04%. Stocks extended on last week’s sell-off after JP Morgan warned that the US would likely slump into a recession in 2023 and that it may not just be a mild economic contraction as some economists have projected.

Over in Europe, the global sell-off continued amid growing concerns over economic growth and tightening monetary policy ahead of key inflation data due out next week. Investors are also keeping a close eye on escalations in tension between Russia and Ukraine as the war in the region has intensified in recent days. Germany’s DAX closed Monday’s session flat, the French CAC lost 0.45% and, in the UK, the FTSE100 also ended the day down 0.45%.

On the commodities front, the price of most commodities across the board are down, with brent crude oil trading 2.14% lower at US$95.86 per barrel, natural gas is down 3.5% to US$6.5 per Million British Thermal Units, coal is down 3.75% to US$385 per ton, gold is down 1.54% at US$1668.14 per ounce and iron ore is trading flat at US$98 per ton.

What to watch today:

  • Ahead of the local trading session in Australia, the ASX futures are anticipating a 0.18% rise at the opening bell despite the negative start to the week overseas. It could be a difficult session today for oil and gold stocks amid a decline in the price of oil and gold overnight.
  • On the economic data front today, we will be keeping a close eye on Westpac Consumer Sentiment data for October and NAB Business Confidence data for September which will both be released this morning, giving an insight into business and market conditions from a business and consumer perspective.
  • Stocks going ex-dividend today include Turners Automotive Group (ASX:TRA) and Reece (ASX:REH). If you have been thinking about these stocks it might be worth considering buying in today as stocks going ex-dividend generally trade lower on the ex-dividend date.

Trading Ideas:

  • Trading Central has identified a bullish signal on Sheffield Resources (ASX:SFX) following the formation of a pattern over a period of 87-days which is roughly the same amount of time the share price may rise from the close of $0.53/share to the range of $0.61-$0.63/share according to standard principles of technical analysis.
  • Trading Central has also identified a bearish signal on Ten Sixty Four (ASX:X64) following the formation of a pattern over a period of 24-days which is roughly the same amount of time the share price may fall from the close of $0.60 to the range of $0.47-$0.49/share according to standard principles of technical analysis.

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