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Morning Bell 2 August

Paulina Peters
August 2, 2022

The Aussie share market started the new trading week with a gain of 0.7%, supported by gains in utility, energy, and healthcare stocks. While three sectors posted losses: tech, consumer discretionary and real estate.

Looking at the ASX200 leaderboard, the top performer was Allkem (ASX:AKE) up 4.5%, despite any news out from the company. It seems the gain could be attributed to the longer-term uptick spurred by the company’s recent record quarterly revenue report. Agricultural business Elders (ASX:ELD) was also up after Goldman Sachs indicated that the company was a strong buy, with a price target of $21, which at its current share price of $11.75, implies about 80% share price growth in a year. Meanwhile, the biggest decliner was United Malt Group (ASX:UMG), which fell a massive 17.2% after the company cut its guidance for the second time this year.

The most traded stocks by Bell Direct clients yesterday included ANZ (ASX:ANZ), Lake Resources (ASX:LKE) and the Magellan Infrastructure Fund (ASX:MICH).

Moving to the US, equities fell, as investors question whether the recent rally has further to run. All three of the major indexes snapped their three-day winning streaks. The Dow Jones was down close to 50 points, the S&P500 dropped 0.3% and the Nasdaq was down about 0.2%.

What to watch today:

  • In line with the negative session in the US and in Europe, the ASX200 is expected to fall 0.3% at the open if you go by the SPI futures.
  • In economic news, the RBA will announce its next cash rate decision this afternoon. The central bank is tipped to lift the official cash rate by 50 basis points to 1.85%, and this would mark the third consecutive increase of this magnitude, which has never happened in Australia. Despite last week’s headline inflation coming in less than expected, the door still remains open for a larger-than-expected rate hike as the country’s core inflation reading actually came in higher than the market expected, and this is used as the basis for RBA monetary policy.
  • Reporting wise, it’s a light week of results. Today, debt collector, Credit Corp Group (ASX:CCP) and Centuria Office REIT (ASX:COF) will announce their earnings results. And Virgin Money UK (ASX:VUK) will be releasing its Q3 trading update.
  • In commodities:
    • The gold price nearly hit a one-month high off the back of a weaker US dollar. The gold price is currently trading at around US$1,771 an ounce.
    • Oil prices dropped significantly, after weak manufacturing data from China and Europe weighed on the demand outlook. Investors are also bracing for this week’s OPEC meeting on supply. The WTI crude oil price trades at US$94 a barrel.
    • The spot iron ore price trades slightly down, at US$117 a tonne.

Trading Ideas:

  • Bell Potter have maintained its Buy rating on Janus Henderson (ASX:JHG) with a price target of $43.50 (that’s 4.4% lower than its previous price target of A$45.50). JHG reported worse than expected Q2 results. Bell Potter forecasted assets under management (or AUM) of US$319b, however JHG reported AUM of US$299b, well below Bell Potter’s expectations. Despite the miss, Bell Potter believes JHG is still worth considering given markets should start to recover, JHG has a new direction with its newly appointed CEO and the business is still the prospect of merger and acquisition. At its current share price of $36.78, this implies about 18% share price growth in a year.
  • Trading Central has a bullish signal on AMP (ASX:AMP) indicating that the stock price may rise from the close of $1.10 to the range of $1.15 – $1.17 in the next 28 days according to standard principals of technical analysis.

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