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Morning Bell 12 July

Paulina Peters
July 12, 2022

Our local market started the new trading week with a loss of 1.1%, with the majority of the industry sectors in the red. The materials and tech sector felt the most pressure, as investors braced for a US inflation reading, as well as domestic jobs update later this week.

Looking at the ASX200 leaderboard, EML Payments (ASX:EML) fell a massive 25% after its chief executive Tom Cregan exiting the fintech group with no explanation. NOVONIX (ASX:NVX), Costa Group Holdings (ASX:CGC) and Domino’s Pizza (ASX:DMP), were all hit with bearish broker notes, while lithium company Lake Resources (ASX:LKE) plunged 6.3%, following revelations that the stock is now being heavily shorted off the back of its CEO’s resignation last month and pessimistic projections for lithium demand. On the flip side, the best performers yesterday included New Hope Corporation (ASX:NHC), Imugene (ASX:IMU) and Suncorp Group (ASX:SUN).

The most traded stocks by Bell Direct clients yesterday, there were multiple financial stocks like three of the big four banks, as well as Bank of Queensland (ASX:BOQ), and mining stocks like BHP Group (ASX:BHP) and Allkem (ASX:AKE).

In the US, equities fell on Monday as investors prepare for big company earnings reports and US economic data, including consumer prices, retail sales and factory output due out later in the week, which will give an indication of the extent to which inflation has peaked, as well as how inflation is impacting businesses. The Dow Jones shed 165 points, the S&P500 fell 1%, while the Nasdaq broke its five-day winning streak, down 2.3%

What to watch today:

  • Despite Wall Street losing some ground overnight, the SPI futures are suggesting our market is set to open 0.28% higher.
  • Economic news wise, we’ll get an update on business confidence for June, which slowed to 6 points in May, down from 10 previously. If the confidence indicators underperform today, we could see the Aussie dollar respond with losses.
  • Moving to commodities, oil prices pulled back overnight, following concerns about rising COVID cases in China. The gold price also came under pressure, off the back of a stronger US dollar. And the spot iron ore price trades at US115 a tonne.
  • Stocks going ex-dividend today include Metcash (ASX:MTS) and Sunland Group (ASX:SDG), which will likely cause these stocks to trade lower today as investors take their profits.

Trading Ideas:

  • Bell Potter have transferred analyst coverage on EROAD (ASX:ERD). The rating on the stock has been maintained as a Buy however with a reduced price target, from $3.40 to $2.75. Bell Potter remain positive on the company and its outlook. At its current share price of $2.00, this implies 37.5% share price growth in a year.
  • Trading Central has a bearish signal on AGL Energy (ASX:AGL), indicating that the stock price may fall from the close of $8.26 to the range of $7.60 – $7.75 in the next 16 days according to standard principals of technical analysis.

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