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Morning Bell 14 September

Grady Wulff
September 14, 2023

Wall Street closed mixed on Wednesday after the highly anticipated inflation reading was released, showing an inflation reading that was hotter than expected. Inflation in the US accelerated for a second straight month to 3.7% in August from 3.2% in July which was above the 3.6% reading markets were expecting. The higher CPI reading was driven by rising energy and fuel costs as well as higher growth in transportation costs. Core inflation which strips out energy and food rose by 0.3% month on month and 4.3% year on year which also slightly exceeded expectations. Investors responded negatively to the rise in core inflation as it provides further support for the Fed to continue raising interest rates. The Nasdaq rose 0.29%, and the S&P500 added 0.12%, while the Dow Jones fell 0.2%. Tech giants including Tesla and Amazon were the key drivers of the rally for the Nasdaq and S&P500 on Wednesday.

Over in Europe, markets closed lower in the region following the hotter-than-expected inflation reading out of the U.S. The STOXX600 fell 0.99% weighed down by retail stocks while Germany’s DAX lost 0.39%, the French CAC fell 0.42% and, in the UK, the FTSE100 closed just 0.02% lower. UK GDP data came in below expectations with a 0.5% contraction for the month of July which is the biggest decline so far this year and reversed the 0.5% growth in June.

Locally yesterday, the ASX rally that started the week on a positive note came to an end with the key index closing 0.73% lower, weighed down by the tech-sector falling 1.56% on the back of weakness in US tech-stocks on Tuesday. Qantas shares fell even further yesterday after the high court upheld a Federal Court ruling that Qantas breached the Fair Work Act at the start of the COVID-19 pandemic by standing down workers and replacing their services with third-party providers to cost cut during in 2020. While the airline has apologised and taken full responsibility, the impact is said to be wide ranging on the flying kangaroo. Coronado Global Resources led the wins on the ASX200 yesterday with the coal miner adding over 3%, while Eagers Automotive was the worst performer, down 4.54% at the closing bell.

What to watch today:

  • Ahead of the local trading session here in Australia the SPI futures are expecting the local index to open 0.07% lower on the back of the global sell-off overnight.
  • On the commodities front this morning, oil is trading slightly lower at US$88.81/barrel, gold is down 0.22% at US$1908.97/ounce and iron ore is up 0.42% at US$120.50/tonne.
  • AU$1.00 is buying US$0.64, 94.61 Japanese Yen, 51.28 British Pence and NZ$1.09.
  • Stocks trading ex-dividend today include Ramelius Resources (ASX:RMS), Cleanaway Waste Management (ASX:CWY), Cash Converters International (ASX:CCV), Austal (ASX:ASB), Ingham’s Group (ASX:ING), BBHI, Seven Group Holdings (ASX:SVW), and Spark New Zealand (ASX:SPK). If you’ve been thinking about these stocks it might be worth considering buying in today as stocks trading ex-dividend generally trade lower on the ex-dividend date.

Trading Ideas:

  • Bell Potter has decreased the price target on Select Harvests (ASX:SHV) from $5.50 to $5.30 and maintain a buy rating on the almond producer following the release of the company’s crop and market update including Select Harvests reducing its FY23 pricing estimate per kilo due to downward movement in crop pricing linked to the market and quality of crop. FY23 orchard production has been lifted though following a higher recovery in the pollinator crop.
  • And Trading Central has identified a bearish signal on Medibank Private (ASX:MPL) following the formation of a pattern over a period of 97-days which is roughly the same amount of time the share price may fall from the close of $3.47 to the range of $3.09 to $3.17 according to standard principles of technical analysis.

 

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