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Morning Bell 17 February

Paulina Peters
February 17, 2022

The ASX200 advanced 1.1% yesterday, powered by strong earnings results from companies like CSL (ASX:CSL), Treasury Wine Estates (ASX:TWE) and Vicinity Centres (ASX:VCX). The gains managed to offset losses from major resource stocks, following falls in both iron ore and oil prices.

Sectors wise, the healthcare sector led the way, supported by CSL’s strong gain, while the materials and energy sectors posted small losses.

Liontown Resources (ASX:LTR) jumped an impressive 18% yesterday, after it was announced that the company would supply Tesla with more than 100,000 tonnes of lithium spodumene concentrate a year. That’s LTR’s second major contract in two months. And six of the other best performers were companies that reported results. Meanwhile, Netwealth (ASX:NWL) came under pressure yesterday. Its share price fell nearly 10% after its results release disappointed the market. The biggest surprise was its higher-than-expected costs on new staff and technology.

The three most traded stocks by Bell Direct clients yesterday were CSL (ASX:CSL), BHP Group (ASX:BHP) and Senex Energy (ASX:SXY).

Moving to the US, the market was mixed, the S&P500 managed to close slightly higher, while the Dow Jones and Nasdaq both closed slightly lower. During the session, the minutes from the Fed’s January meeting were released, which to investors relief, didn’t indicate that the Fed would move any faster than already expected in hiking interest rates.

Following the mixed session on Wall Street, the futures are suggesting the Aussie share market will open slightly higher this morning.

What to watch today:

  • In commodities, the gold price managed to gain 1% as the Russia-Ukraine tensions remain high. The oil price was trading higher, but is now trading down over 1% to US$90 a barrel. The lithium price is trading up 1.3% and the platinum price is also up 3.6%. While the seaborne iron ore price is trading 1.8% lower to US$142 a tonne.
  • Economic news wise, the unemployment rate for January will be released today. As a reminder, the unemployment rate came in at 4.2% in December, which was the lowest rate in more than 13 years. And the RBA recently stated that the unemployment rate could fall to 3.75% by the end of 2023, which would be the lowest rate since 1974. So keep watch today at 11:30am AEDT.
  • Reporting season: Today we’ll hear from companies including Wesfarmers (ASX:WES), Telstra (ASX:TLS), Whitehaven Coal (ASX:WHC), Magellan Financial Group (ASX:MFG), Newcrest Mining (ASX:NCM) and Goodman Group (ASX:GMG).
  • GrainCorp (ASX:GNC) is holding its AGM today, while GPT Group (ASX:GPT) is set to go ex-dividend today.

Trading Ideas:

  • Bell Potter have maintained its HOLD rating on Fortescue Metals (ASX:FMG) and have increased their price target to $19.09 (previously $18.33). Bell Potter stated that FMG’s result yesterday was in-line or marginally below its expectations. And despite the cut to its interim dividend, it’s important to recognise that it was in fact FMG’s second highest ever. Bell Potter also noted that the key to closing the gap for them to upgrade FMG to a BUY remains with Fortescue Future Industries. While FFI is critical to helping FMG achieve its objective of decarbonisation by 2030, its value accretion and optionality added to the core business cannot be quantified.
  • Trading Central has a bullish signal on Scentre Group (ASX:SCG), indicating that the stock price may rise from the close of $3.15 to the range of $3.53 – $3.63 in the next 30 days according to standard principals of technical analysis.

 

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