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Morning Bell 18 October

Sophia Mavridis
October 18, 2022

It was a strong session for US equities overnight, with all three major benchmarks rallying higher. Strong earnings results came in from the banks that boosted the volatile market. The Dow Jones gained 550 points or 1.86%. The S&P500 gained 2.65% and oversold tech names also enjoyed a rebound, with the Nasdaq closing with a 3.43% gain.

What to watch today:

  • The SPI futures are suggesting the Australian market rise 0.92% at the open this morning.
  • In economic news, today the RBA will release the minutes from its October meeting, when the cash rate was raises a further 25 basis points to 2.6%, while brining borrowing costs to a level last seen mid-2013. It’s not likely the minutes will move markets but it will provide us with some more commentary the RBA’s current position.
  • In commodities,
    • Oil is trading flat at around US$85 per barrel as China’s continuation of loose monetary policy offset fears of high inflation and energy costs.
    • The price of gold is up 0.5%, extending its rebound after hitting a two-week low earlier in the week, as the UK’s decision to reverse unfunded tax cuts lifted market sentiment.
    • Seaborne iron ore is down 1%.
  • Watch the price movements of Rio Tinto (ASX:RIO) and Hub24 (ASX:HUB). Both companies are set to release a quarterly report today.
  • While Endeavour (ASX:EDV), Cochlear (ASX:COH) and Brambles (ASX:BXB) will hole their AGMs today.

Trading Ideas:

  • Bell Potter maintain a Buy rating on Coronado Global Resources (ASX:CRN). The companies CY22 guidance implies a strong July- December lift in coal output and corresponding lower costs. And Bell Potter say that CRN will generate strong free cash flow on their met coal price outlook. And in the absence of acquisition or major project developments, the company is likely to return surplus funds to shareholders, and that’s reflected in their strong dividend yield outlook. Bell Potter have increased their price target to $2.20 and at CRN’s current share price of $2.06, this implies 6.8% share price growth in a year.
  • And Trading Central have identified a bearish signal in BHP Group (ASX:BHP) indicating that the stock price may fall from the close of $39.09 to the range of $34.40 to $35.30 over 15 days, according to the standard principles of technical analysis.

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