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Morning Bell 14 July

Paulina Peters
July 14, 2022

Our local market ended yesterday’s session higher, rising 0.2% despite mining and energy stocks coming under pressure off the back of subdued commodity and metal prices.

Sectors wise, the majority of the market posted gains, with the consumer discretionary, tech and communication services sectors advancing the most. While the energy sector declined 1.8%.

As for the best and worst ASX200 performers, Megaport (ASX:MP1) was up the most, following a rebound in the tech sector, as well as a bullish broker note out of Goldman Sachs. The broker reiterated its buy rating with a $9 price target. MP1’s last closing price was $6.60, so this implies about 36% share price growth in a year. Qantas’ (ASX:QAN) shares also took off yesterday, lifting 4.3%. This comes as the airline announced it is removing vaccine mandates for international travellers commencing next week and following the drop in oil prices recently which has potentially eased the pressure on jet fuel costs. Now, on the flip side, major oil producer, Woodside Energy (ASX:WDS) saw a drop in its share price, off the back of the fall in oil prices, and other decliners yesterday included Viva Energy Group (ASX:VEA) and Alumina (ASX:AWC).

The most traded stocks by Bell Direct clients yesterday included Whitehaven Coal (ASX:WHC), Rio Tinto (ASX:RIO) and BHP Group (ASX:BHP).

Moving to the US, stocks fell after US inflation came in hotter than expected. The consumer price index increased 9.1% from a year ago during the month of June. This was above the 8.8% expected. So, this inflation reading could push the Federal Reserve into an even more aggressive position at its next meeting later this month. So as for the major benchmarks, the Dow shed 200 points, the S&P500 fell 0.5%, and the Nasdaq was down 0.2%.

What to watch today:

  • The SPI futures are suggesting our market will open slightly lower, down 0.06%.
  • The unemployment rate for June will be released today at 11:30am AEST. It is estimated that 35,000 jobs were added to the local economy last month, which is potentially enough to see the unemployment rate ease to a low of 3.8%. This depends however on the workforce participation rate, which is expected to drop to 66.5%.
  • In commodities, oil prices edged slightly higher after their recent sell-off. The gold price rebounded as the US dollar retreated. And the spot iron ore price trades 4% lower at US107 a tonne.
  • Watch Auckland International Airport (ASX:AIA) and Netwealth Group (ASX:NWL) today. AIA will be giving an update on its monthly traffic, while NWL will be providing a June quarter update.
  • Botala Energy will be debuting on the ASX today. It’s an Australian energy company focused on exploration and development opportunities for natural gas and renewables in Botswana, and it will be trading under the ticker code BTE.

Trading Ideas:

  • Bell Potter have maintained its Hold rating on Bega Cheese (ASX:BGA) with a reduced price target from $4.20 to $3.80. At its current share price of $3.55 this implies 7% share price growth in a year.
  • Trading Central has a bearish signal on Origin Energy (ASX:ORG), indicating that the stock price may fall from the close of $5.45 to the range of $3.50 – $3.90 in the next 146 days according to standard principals of technical analysis.

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