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Morning Bell 16 December

Paulina Peters
December 16, 2021

The Aussie share market closed 0.7% lower yesterday, its biggest fall in nearly two weeks, with nearly all sectors closing in the red. Tech shares led the losses, down 2.6%. It was only the utilities sector that was able to post a modest gain of 0.3%.

On the ASX200 stock performance, just 40 of the top 200 blue chips by market value posted a positive gain for the day. The best performers included Virgin Money UK (ASX:VUK) and Alumina (ASX:ALU). Some other top stocks included Whitehaven Coal (ASX:WHC), as well as AGL Energy (ASX:AGL). Meanwhile, PointsBet Holdings (ASX:PBH) was the worst performer, falling 7.6%. Tech stocks like Life360 (ASX:360) and Megaport (ASX:MP1) tumbled, both down between 5-6%. And Buy Now Pay Later giants, Afterpay (ASX:APT) and Zip (ASX:Z1P) also saw some selling.

The most traded stocks by Bell Direct clients yesterday included Woolworths (ASX:WOW), Northern Star Resources (ASX:NST) and Westpac (ASX:WBC).

In the US, stocks recovered from their early losses after the Fed announced that it would wind down its asset purchases, at a faster pace amid a continued rise in inflation. This will put it on track to conclude the program in early 2022, rather than mid-year as initially planned. The Fed also signalled three rate hikes for 2022, due to the faster pullback, despite the ongoing challenge the pandemic poses to the economic recovery. So, all three benchmarks pushed higher. The Dow jumped just over 380 points, the S&P500 lifted 1.6% and the Nasdaq was up 2%.

For today, following the positive session on Wall Street, the futures as at 8:40am AEDT are suggesting the Aussie share market will open 0.6% higher.

What to watch today:

  • CSL (ASX:CSL) is due to return to trade today after completing its institutional placement. CSL had been in a trading halt since close of trade Monday.
  • Qantas (ASX:QAN) will be holding an investor update this morning.
  • In economic news, yesterday consumer confidence for December fell 1% to 104.5, however remains in positive territory, as an index score above 100 indicates that optimists outweigh pessimists. And today, the unemployment rate for November will be released. As a reminder, the unemployment rate came in at 5.2% in October. Consensus expects November’s reading to fall to 5%.
  • In commodities, oil prices turned positive, reversing early losses despite rising supply. While the gold price sunk following the Fed’s statement. A UBS strategist noted that the gold price should bottom out over the next 12-24 months, with prices likely to recover and stabilise after the Fed’s hiking cycle starts in earnest. And the seaborne iron ore price traded 2% higher to US$109.22 a tonne.
  • ANZ (ASX:ANZ), Elders (ASX:ELD) and Orica (ASX:ORI) are holding their AGMs today.
  • Boutique fund manager, Plato Income Maximiser (ASX:PL8) is set to go ex-dividend today.

Trading Ideas:

  • Bell Potter have maintained their BUY recommendation on software and services company, Envirosuite (ASX:EVS) with a slight increase in its price target to $0.275. Bell Potter did not anticipate the company’s recent capital raising but view it positively as they believe the key driver was that EVS sees a large opportunity in the global water and wastewater market. They therefore expect to see a higher level of contract wins in FY23 and FY24. EVS closed 5% higher yesterday to $0.21, which implies about 31% share price growth in a year.
  • Trading Central has a bullish signal on Global Lithium Resources (ASX:GL1). This signal indicates that the stock price may rise from the close of $0.64  to the range of $0.85 – $0.91 in the next 31 days, according to standard principles of technical analysis.

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