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Morning Bell 20 April

Grady Wulff
April 20, 2023

Wall Street had another lacklustre session overnight as investors continue to assess first quarter results as earnings season ramps up into full swing. The Dow Jones industrials index lost 0.23%, the S&P500 fell 0.01% and the tech-heavy Nasdaq gained 0.03%.

Netflix and Morgan Stanley headlined the results released on Wednesday. Netflix shares fell 3.2% after the streaming giant pushed back plans to crack down on password sharing, but for the quarter Netflix beat analysts’ estimates on earnings per share.

Morgan Stanley shares rose 0.7% despite the big bank reporting weaker-than-expected margins for investment banking, wealth, and asset management. This earnings season investors are looking out for slowing earnings growth and signs of weakening demand likely to hit corporate profits in the second half of FY23 as the Fed continues its rate hike path toward the end of the tightening cycle.

Over in Europe, markets closed mixed as investors digested the latest CPI data out of the UK. UK CPI or inflation data came in at 10.1% for March, down from 10.4% in February but well above economists’ expectations of a fall to 9.8%, in a sign inflation remains stubbornly high in the UK. Data out on Tuesday though showed wages growth in the UK slowed by less than expected in the three months to March which may encourage the Bank of England to continue raising rates at the next monetary policy meeting. Germany’s DAX rose 0.08%, the French CAC added 0.21% and, in the UK, the FTSE100 fell 0.13%.

On the local bourse yesterday, it was a muted day on the ASX, with the key index closing 0.07% higher as strong gains for materials stocks were offset by sharp losses in the consumer discretionary sector. Gold stocks did most of the heavy lifting yesterday amid a rise in the price of the precious commodity, while Telix Pharmaceuticals (ASX:TLX) was the top performing stock for a second straight session after releasing record-setting results to start the week.

What to watch today:

  • Ahead of the local trading session the SPI futures are anticipating the ASX to open 0.09% lower following lacklustre sessions on global markets overnight.
  • On the commodities front this morning oil is trading 2.26% lower at US$79.03/barrel, gold is down 0.51% at US$1994.70/ounce and iron ore is up 2.54% at US$121/tonne.
  • AU$1.00 is buying US$0.67, 90.43 Japanese Yen, 53.93 British Pence and NZ$1.08.

Trading Ideas:

  • Bell Potter has increased its price target on RMA Global (ASX:RMY) from 20 cps to 21 cps and maintain a speculative buy rating on the company amid the digital real estate marketing company’s success in penetrating the large US market including US claimed profiles growing to 250,000 up 6.4% quarter-on-quarter, while US reviews increased 97% year-on-year.
  • Bell Potter has downgraded its price target on Frontier Digital Ventures (ASX:FDV) from $1.23 to $1.05 but maintain a speculative buy rating on the company following the company completing a capital raise and the headwinds faced through difficult trading conditions in Pakistan.

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