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Morning Bell 12 May

Sophia Mavridis
May 12, 2023

On Wall Street overnight, US equities closed mixed. While the Nasdaq closed the higher, the Dow Jones closed more than 200 points lower, or 0.66%, the fourth straight day of losses, and the S&P500 dropped 0.17%. The major benchmarks were dragged down my Disney shares falling 8% the day after the media giant released its fiscal second-quarter results. The results showed that higher prices helped to narrow Disney’s losses, however subscriber growth was significantly lower. Disney is also taking on impairment charges of US$1.5 to US$1.8 billion, as the company removes more content from its streaming platforms.

Also overnight, the producer price index in the US, which is measuring wholesale prices, increased very slightly by 0.2% in April. This PPI data followed the consumer price index report out earlier this week, which showed that US inflation rose 4.9% from a year ago, which was below expectations.

European markets closed marginally lower, following the Bank of England’s interest rate hike, which was a 25-basis point hike to 4.5%. The announcement is in line with expectations in the UK, and is the 12th consecutive rate increase.

What to watch today:

  • Following global markets overnight, the Australian market is set to open lower this morning, with the SPI futures suggesting a fall of 0.11%.
  • In economic data today, Westpac’s consumer confidence data for May will be out at 11:30am AEST. Consumer confidence is expected to fall by 4.3% this month, after it rose by 9.4% in April to its highest since June last year.
  • As for company announcements to watch out for today, News Corp (ASX:NWS) and REA Group (ASX:REA) are set to release quarterly earnings. And Ampol (ASX:ALD) and QBE Insurance (ASX:QBE) will hold their AGMs today.
  • In commodities,
    • Oil prices are lower, amid persistent demand concerns.
    • Silver has sharply declined, retreating from a 14-month high as concerns of lower industrial demand outweighed the Fed’s dovish outlook.
    • Copper is trading at its lowest level in four months, as low demand outweighed tight supply, and as the reopening of the Chinese economy has not lived up to expectations of a sharper recovery.
    • And iron ore is currently flat, after rebounding from the five-month low touched last week on hopes that demand could pick up in the second quarter.

Trading Ideas:

  • Bell Potter maintains its buy rating on Neuren (ASX:NEU) and have increased their 12-month price target from $13.67 to $16.50. At NEU’s current share price of $13.37, this implies 23.4% share price growth in a year.
  • Trading Central has identified a bearish signal in South32 (ASX:S32), indicating that the stock price may fall from the close of $4.06 to the range of $3.50 to $3.60 over 13 days, according to the standard principles of technical analysis.

Next week, we’ll be bringing you the Morning Bell in written format, while we are travelling for conferences, so keep an eye on Bell Direct’s social media platforms for our market commentary.

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