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Morning Bell 2 December

Paulina Peters
December 2, 2021

As the omicron variant continues to spread, and the Federal Reserve flags that they will consider winding down bond purchases sooner, the Aussie share market closed 0.28% lower, a near two-month low. The market did manage to recover in the afternoon after better-than-expected GDP data and a positive outlook for Chinese growth. The lockdowns in NSW and Victoria drove a 1.9% contraction in the economy for the third quarter, which was less than the 2.7% decline expected. As household spending crashed, levels of savings surged.

Nearly all sectors were in the red: consumer staples, utilities and real estate sectors led the losses, while the materials, healthcare and financial sectors managed to post gains. The top stocks included South32 (ASX:S32), Waypoint REIT (ASX:WPR) and Lynas Rare Earths (ASX:LYC). GUD Holdings (ASX:GUD) headed south, after a discounted share placement. Other worst performers included Pro Medicus (ASX:PME) and IDP Education (ASX:IEL).

The most traded stocks by Bell Direct clients yesterday included Fortescue Metals (ASX:FMG), Telstra (ASX:TLS) and OZ Minerals (ASX:OZL).

In the US, all three benchmarks gave up decent gains and turned negative after the first omicron case was confirmed in the US. The Dow closed over 450 points lower, the S&P500 was down 1.2% and the Nasdaq fell 1.8%. Travel stocks were hit hard: American Airlines, Delta Airlines and United Airlines all fell over 7%. And on the data front, private payroll data for November showed 534,000 jobs were added, above expectations of 506,000.

Following the negative session over on Wall Street, the futures are suggesting the Aussie share market will fall about 1.1% at the open.

What to watch today:

  • Economic news out today includes Australia’s balance of trade data for October (difference between what we export vs. what we import). Australia’s trade surplus decreased to A$12.24 billion in September and consensus expects trade surplus to decrease again to A$11 billion in October. Retail sales for November and home loans for October will also be released today.
  • Moving to commodities, oil prices fell into the red in late afternoon trading on Wednesday. The WTI settled 1.63% lower to US$65.10 a barrel. The gold price rose, as investors used the safe-haven asset as a hedge against wider market volatility and demand was boosted as the US dollar fell. And the seaborne iron ore price traded 8% higher to US$103 a tonne.
  • A few companies going ex-dividend today, including ALS Limited (ASX:ALQ), Fisher & Paykel Healthcare (ASX:FPH), Pendal Group (ASX:PDL) and TechnologyOne (ASX:TNE).
  • Portman’s and Peter Alexander owner Premier Investments (ASX:PMV) holds its AGM today.

Trading Ideas:

  • Citi has a BUY rating on gold miner, Northern Star Resources (ASX:NST), with a price target of $12. NST recently signed a funding deal with Quebec-based gold miner Osisko Mining, whereby under the deal, NST will contribute $169 million to Osisko via a convertible senior unsecured debenture. NST closed flat yesterday at $9.44, which implies around 27% share price growth in a year.
  • Trading Central has detected a bullish charting signal in pharmaceutical company Starpharma (ASX:SPL). This signal indicates that the stock price may rise from the close of $1.21 to the range of $1.35-$1.39 in the next 32 days, according to standard principles of technical analysis.

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