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Morning Bell 2 June

Paulina Peters
June 2, 2022

Yesterday, the Aussie share market started the month of June with a gain of 0.3% or 22 points, despite a huge lithium sell-off.

The market was mixed. The communication services sector advanced the most, while the utilities sector fell a massive 5.3%.

Looking at the ASX200 stock leaderboard, lithium miners, like Pilbara Minerals (ASX:PLS), Liontown Resources (ASX:LTR) and Allkem (ASX:AKE) were amongst the worst performers, all falling over 15%. This is due to three key factors: Firstly, Goldman Sachs have warned of a “sharp correction” in lithium prices in the next two years, secondly, customs in Argentina have set a reference price to stop ‘irregularities” and thirdly, Chinese EV giant BYD signalled plans to buy six African lithium mines. Meanwhile, the best performers yesterday included Fortescue Metals (ASX:FMG), Telstra (ASX:TLS) and TPG Telecom (ASX:TPG).

Looking at the US, Wall Street started the month of June lower, amid worries about the health of the economy. All three benchmarks were in the red, with the Dow dropping nearly 200 points, the S&P500 falling 0.75%, and the tech-heavy Nasdaq down 0.72%.

What to watch today:

  • Following the negative session in the US, our local market is set to fall this morning if you go by the SPI futures. The futures are suggesting a drop of 0.76% at the open.
  • Economic news wise, today we’ll get the latest data on Australia’s trade surplus for April, and the market is forecasting $9 billion trade surplus for the month.
  • Keep watch of Pilbara Minerals (ASX:PLS), who have announced its new CEO. According to its release, the business will be promoting its chief operating officer, Dale Henderson to the CEO role.
  • Moving to commodities:
    • The oil price rose as the European Union leaders agreed to a phased ban on Russian oil, and as China ended its COVID-19 lockdowns in Shanghai.
    • The gold price also lifted from its two-week low, as investors looked towards the safe-haven asset amid worries over an increase in inflation. However, a stronger dollar and higher US yields kept gains in check.
    • The seaborne iron ore price is trading 2.6% higher at US$137 a tonne.
  • TechnologyOne (ASX:TNE) is set to go ex-dividend today.

Trading Ideas:

  • Bell Potter have maintained its Buy rating on building company, Johns Lyng Group (ASX:JLG), with a reduced price target, from $8.70 to $7.50. Bell Potter’s favourable view on JLG is supported by the business being the category leader in Australia, its scalable business model, strong cash flow, as well as its opportunities in the US. Now, at its current share price of $5.92, this implies 26% share price growth in a year.
  • Trading Central has a bearish signal on Mineral Resources (ASX:MIN) indicating that the stock price may fall from the close of $58.70 to the range of $47 – $50 in the next 16 days according to standard principals of technical analysis.

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