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Morning Bell 19 September

Grady Wulff
September 19, 2022

The Australian market closed sharply lower on Friday, down 1.52% as inflation panic set in causing investor confidence to tumble. Friday’s session was weighed down by a sharp sell-off in energy and materials stocks, but every sector closed the day in negative territory.

The winning stocks on Friday were the Star Entertainment Group (ASX:SGR), which jumped 5.07% higher on ASX, Computershare (ASX:CPU) added 4.42% and Tabcorp (ASX:TAH) rallied just over 4.2% on Friday. On the losing side, Lake Resources (ASX:LKE) recovered almost 1% on Friday but the lithium miner fell 28% for the week as investors sold out after the company revealed it has a dispute over deadline dates at its Kachi Lithium Project with its partner Lilac Solutions. Capricorn Metals (ASX:CMM) was the worst performing stock on Friday, shedding 11.7% followed by Atlas Arteria (ASX:ALX), which lost 9.7% and Sayona Mining (ASX:SYA), which ended the day down 9.4%.

The most traded stocks by Bell Direct clients on Friday were the BetaShares Geared Australian Equity Hedge Fund (ASX:GEAR), Silver Lake Resources (ASX:SLR), and Desert Metals (ASX:DM1).

Over in the US, the inflation related sell-off extended into Friday to close out America’s worst trading week since June. The Dow Jones fell 0.45%, the S&P500 shed 0.72% and the Nasdaq had the biggest fall of 0.9%. Shares in FedEx plunged 21.4% in the company’s worst session ever after the shipments company withdrew its full-year guidance and said it will implement cost-cutting initiatives to navigate softer global shipment volumes as the global market has ‘significantly worsened’. Following the news, shares in rivals UPS and XPO Logistics each dropped 4.5% and 4.7% respectively. The global market sell-off extended into the UK and Europe with the FTSE100 closing Friday’s session 0.62% lower while the CAC and DAX each lost 1.3% and 1.6% respectively.

What to watch today:

  • Locally today, ASX futures are expecting the market to open marginally lower, around 0.03% at 6737 points which is a sharp rise from Friday’s sell-off.
  • Stocks going ex-dividend today include Enero Group (ASX:EGG), Service Stream (ASX:SSM), IPD Group (ASX:IPD), and QUBE Holdings (ASX:QUB), which could be a good opportunity to buy in if you have been thinking about these stocks as stocks going ex-dividend generally trade lower on the ex-dividend date.
  • Taking a look at commodities, crude oil is flat trading around US$85 a barrel, Brent is up 0.99% at US$91.7 a barrel, natural gas is down 6.15% but gold is up 0.7% at US$1675.06 per ounce, and iron ore is down 2.9% to US$101.50 per tonne.
  • On the economic data front, investors will be nervously awaiting the release of the RBA meeting minutes for September which are out on Tuesday to determine exactly how dovish the RBA is toward raising interest rates in the future, or whether there are hidden signals that future interest rate rises could be as aggressive as the previous few.

Trading Ideas:

  • Trading Central has identified a bullish signal on the Star Entertainment Group (ASX:SGR) following a short-term pattern forming over a period of 15-days which is the same time the upgraded price range between $3.04 to $3.08 may be achieved from the close of $2.90, according to standard principles of technical analysis.
  • Bell Potter has initiated coverage on OreCorp (ASX:ORR) with a Speculative Buy rating on this stock and a price target of $0.84 per share following the major de-risking event of the completion of the Definitive Feasibility Study on the company’s prime asset, the Nyanzaga Gold Project, and ahead of the key catalyst of project financing. The NGP is emerging as an attractive, significant scale, new gold project with strong financial performance metrics in a region that is experiencing a resurgence in investment by the world’s largest mining companies.

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