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Morning Bell 13 January

Paulina Peters
January 13, 2022

Yesterday the ASX200 lifted 48 points or 0.66% higher, the market’s first gain of the week, boosted by both the energy and tech sectors, which gained 3% and 2% respectively. Also supporting the market was solid gains for commodity prices, as well as Jerome Powell’s testimony that confirmed the Fed would lift rates if needed to check prices.

Nickel Mines (ASX:NIC) led the way, up an impressive 6.5%. This follows the nickel price touching a seven-year high amid the global push towards a greener future, like the push towards electric vehicles. Nickel is a key component in lithium-ion batteries, which are used to generate power for electric vehicles. Another top performer was Afterpay (ASX:APT). The stock gained 4.8% yesterday after the company cleared its final hurdle to be taken over by Block (formerly Square). APT will now officially stop trading on the ASX next Wednesday, the 19th of January, and will commence trading on the NYSE on the 2nd of February. Meanwhile, Domino’s Pizza (ASX:DMP) came under pressure, falling 4.5%. This appears to be driven by an update from its US parent. The pizza giant warned that it’s expecting “unprecedented” food cost increases in 2022, approximately an 8% to 10% rise in its food basket costs, and that’s worrying, as that’s 3-4 times the food inflation experienced in a typical year.

The most traded stock by Bell Direct clients yesterday, were Allkem (ASX:AKE), a lithium carbonate supplier, formed after the merger between Orocobre and Galaxy Resources. Its shares have gained over 25% the past month, underpinned by the hot-running lithium markets. Lithium carbonate prices have increased six-fold since January 2021.

In the US, all three benchmarks rose, with the Nasdaq gaining for the third straight day. This comes as the consumer price index increased 0.5% last month, which was slightly better than expected. And therefore in the 12-months through to December, the CPI has surged 7%, its biggest jump since 1982.

Despite the positive session on Wall Street, the futures as at 8:30am AEDT are suggesting the Aussie share market will open 0.04% lower.

What to watch today:

  • Keep an eye on Crown Resorts (ASX:CWN). Goldman Sachs gave the stock a neutral rating and an $11.03 price target, telling investors to instead buy the shares of its rival Star Entertainment Group (ASX:SGR).
  • Oil prices pushed to two-month highs on tight supply and easing concerns about the potential hit to demand from the Omicron variant.
  • The gold price gained, as the dollar retreated following US inflation being in line with expectations. Spot gold was up 0.2% to $1,825 per ounce.
  • The silver, copper, steel, iron ore and lithium prices are all booming, all up between 1.5%-3%.

Trading Ideas:

  • Citi have maintained their BUY recommendation on shipbuilding and repairing company, Austal (ASX:ASB) with a price target of $3.09. Citi believes the stock remains catalyst rich and are supportive of the new strategies aimed at diversifying pipeline risk. These include adding steel capability and increasing number of programs it contests) and growing support revenue. Austal closed 5% higher yesterday to $1.97, which implies about 57% share price growth in a year.
  • Trading Central has a bullish signal on software company, Whispir (ASX:WSP). This signal indicates that the stock price may rise from the close of $2.60 to the range of $2.64 – $2.72 in the next 30 days, according to standard principles of technical analysis.

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