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Morning Bell 16 January

Grady Wulff
January 16, 2024

Over in Europe, markets started the week lower as investors in the European region prepare for the World Economic Forum in Switzerland. The STOXX600 fell 0.5% on Monday, while Germany’s DAX closed down 0.49%, the French CAC lost 0.72% and, in the UK, the FTSE100 ended the day 0.4% lower. Germany’s DAX closed in the red after fresh GDP data indicated the economy contracted 0.3% in 2023 amid rising interest rates, weaker domestic and foreign demand and high inflation in the region. Despite the 0.3% contraction in the region, Germany’s GDP was still 0.7% higher in 2023 than pre-pandemic in 2019.

Locally on Monday, the ASX was little unchanged with the key index closing the day down just 0.03% as a 2.11% surge in energy stocks was offset by losses among materials, healthcare and utilities companies.

Uranium stocks have enjoyed an extended rally into the first trading weeks of 2024 as global sentiment around nuclear energy continues to rise. Locally, Boss Energy and Palandin Energy rose over 9% and over 7% respectively on Monday.

On legal battles front yesterday, Santos and Qantas had very different outcomes that led to mixed reactions from investors. Santos shares rallied almost 4% after the mining giant received the green light to push ahead with laying the pipe at its $5.8bn Timor Sea gas project, after the Federal Court judge rejected cultural and environmental evidence from a group seeking to halt the project.

Qantas shares on the other hand fell 4.44% on Monday on news that the airline is engaged in another legal case with its workforce over alleged underpayment of its aircraft engineers.

What to watch today:

  • Ahead of Tuesday’s trading session on the ASX, the local market is set to open the day 0.3% lower, taking no lead from Wall Street overnight as the U.S. was closed for the Martin Luther King Junior holiday.
  • On the economic calendar today, we can expect Westpac’s consumer confidence data for January out this morning with the expectation of a slight rise by 0.5% for the first month of the year, that’s down from a 2.7% rise that ended 2023 on a high for consumers.
  • Looking at the commodities, oil is trading 0.1% lower at US$72.61/barrel, uranium is up 1.65% at US$92.50/pound, gold is up 0.26% at US$2054/ounce and iron ore is down 2.92% at US$133/tonne amid ongoing weak economic growth fears out of China.
  • AU$1.00 is buying US$0.67, 97.07 Japanese Yen, 52.31 British Pence and NZ$1.08.

Trading Ideas:

  • Bell Potter has increased the price target on Santana Minerals (ASX:SMI) from $1.40 to $1.85 and maintain a speculative buy rating on the gold explorer and developer after the company released an update outlining it is awaiting one last batch of infill drilling results before commencing an updated Rise-and-Shine Mineral Resource Estimate. Bell Potter’s re-rating follows an update on the outlook for gold price forecasts, a modification to Bell’s Notional Development Scenario to confine the initial project development to an open pit mine development on the Rise-and-Shine deposit and an increase in exploration valuation to account for unutilised Mineral Resources.
  • And Bell Potter has maintained a buy rating on GrainCorp (ASX:GNC) but has slightly decreased the 12-month price target on the end-to-end grain logistics company following a review of key drivers at the end of harvest season including improved soil moisture and tighter domestic wheat premiums. The reason for the slight decline in price target is due to NPAT expectation being reduced by around 4% in FY24 on lower assumed crush margins.

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