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Morning Bell 12 May

Paulina Peters
May 12, 2022

The Aussie share market managed to post a small gain of 0.2%, snapping its three-day losing streak. Aussie investors digested the latest consumer confidence data from Westpac showing that confidence was down 5.6% to 90.4 points in May, the measure’s lowest level since August 2020, when COVID lockdowns were hitting Victoria.

So how did the overall market perform? The majority of the industry sectors were in the green.  The healthcare sector led the pack, but it was the financial sector that did come under a bit of pressure, weighed down by a 3.9% drop in NAB’s share price, after the stock traded ex-dividend yesterday.

The best performer was Lifestyle Communities (ASX:LIC), up an impressive 15.1%. This followed some insider buying and a bullish note out by Goldman Sachs, where the broker reiterated its buy rating and $24.65 price target. Other top stocks include City Chic Collective (ASX:CCX) and Life360 (ASX:360). On the other hand, Link Administration (ASX:LNK) closed 15.1% lower to $4.22. During the trading session, the company requested a trading halt, after its shares sank 12%. The company then responded to the ASX query and noted that it was not aware of any material information about its proposed acquisition by Dye & Durham and weren’t aware of any reason for the decline in its share price and elevated trading volumes yesterday.

The most traded stocks by Bell Direct clients yesterday included Macquarie Group (ASX:MQG), Westpac (ASX:WBC) and Galileo Mining (ASX:GAL).

Moving to the US, all three benchmarks closed in the red. The Dow Jones fell over 300 points, the S&P500 down 1.7% and the Nasdaq dropped 3.2%. This comes as investors digested the latest US inflation data. April’s CPI showed an 8.3% jump, which was higher than the 8.1% increase expected by economists polled by the Dow Jones. Now with the annual rate ticking down from 8.5% to 8.3%, it’s still unclear if we’ve seen the peak. Some believe the data could be sign that the Fed is behind the curve in curbing inflation. And following the data release, the 10-year Treasury yield briefly jumped above the 3% mark, however settled at 2.9%.

What to watch today:

  • Following the negative session over in the US, the SPI futures are suggesting that the market is set to open 0.5% lower.
  • This morning, Commonwealth Bank (ASX:CBA) will deliver its third-quarter trading update.
  • Other companies reporting today include mining and infrastructure solutions provider, Orica (ASX:ORI) who will be releasing its half-year profit and announcing its interim dividend. And cloud-based accounting software business, Xero (ASX:XRO) will today be releasing its full-year results.
  • Moving to commodities, the oil price traded higher off the back of supply concerns as flows of Russian gas to Europe fell. The gold price lifted as the US dollar retreated following the latest US inflation data release. And the spot iron ore price traded lower and is sitting at around US$123 a tonne.
  • If you’re a shareholder of Myer Holdings (ASX:MYR), you will receive your fully franked interim dividend of 1.5 cents per share today.
  • Tabcorp (ASX:TAH), Ampol (ASX:ALD) and Sigma Healthcare (ASX:SIG) are holding their AGMs today.

Trading Ideas:

  • Citi have maintained its Buy rating on Ardent Leisure (ASX:ALG) with a price target of $1.96. At its current share price of $1.20, this implies about 63% share price growth in a year.
  • Trading Central has a bullish signal on medical device company, PolyNovo (ASX:PNV) indicating that the stock price may rise from the close of $1.12 to the range of $1.54 – $1.64 in the next 79 days according to standard principals of technical analysis.

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