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Morning Bell 20 February

Grady Wulff
February 20, 2023

The local market closed almost 1% lower on Friday as a sell-off in technology stocks weighed on the key index, with investors fleeing growth stocks in fear of further rate hikes out of the RBA and Federal Reserve.

Baby Bunting (ASX:BBN) fell over 6% on Friday after reporting a 66.5% drop in net profit for the first half, while QBE (ASX:QBE) insurance rallied over 7% on strong first half results including NPAT up 3%.

The winning stocks from Friday’s session were led by QBE (ASX:QBE) Insurance adding over 7%, while A2 Milk Company (ASX:A2M) rose 6.3%, and Corporate Travel Management (ASX:CTD) rallied 4.5%. And on the losing end Block Inc (ASX:SQ2) fell 7.76%, while New Hope Corporation (ASX:NHC) dropped 5.8%, and Centuria Industrial REIT (ASX:CIP) fell 5.76%.

The most traded stocks by Bell Direct clients on Friday were led by the Commonwealth Bank of Australia (ASX:CBA), Magellan Financial Group (ASX:MFG) and Woodside Energy (ASX:WDS).

Wall Street closed mixed on Friday as investor fears of further rate hikes to come from the Fed intensified last week on the back of a few economic reports coming in stronger than expected.

Yields on the 10-year and 2-year U.S. Treasury bonds hit levels not seen since November which weighed on markets during the last trading session or the week.

The Dow Jones rose 0.39%, while the S&P500 fell 0.28% and the Nasdaq closed the day down 0.58%. The Dow Jones notched out a third straight week of losses, and the S&P500 fell for a second week but the Nasdaq rose 0.59% for the week.

Over in Europe, markets closed lower on Friday following a week of economic data released that weighed on investor sentiment. The STOXX600 fell 0.2%, Germany’s DAX lost 0.33%, the French CAC shed 0.25% and, in the UK, the FTSE100 fell 0.1%.

What to watch today:

  • Taking a look at commodities, it’s a red start to the week with oil down 2.74% at US$76.34/barrel, coal is down 2.68% at US$214/tonne, gold is up slightly at US$1842.39/ounce and iron ore is up 0.4% at US$127.50/tonne.
  • Ahead of the local trading session here in Australia the SPI futures are anticipating the ASX to open flat on the back of the mixed session on Wall St on Friday.
  • Stocks going ex-dividend today include Zimplat Holdings (ASX:ZIM), Ansell (ASX:ANN), Vicinity Centres (ASX:VCX) and Wesfarmers (ASX:WES). If you have been thinking about these stocks it might be worth considering buying in today as stocks going ex-dividend generally trade lower on the ex-dividend date.
  • The Aussie dollar is buying 69 Us cents, 92.15 Japanese Yen, 57.30 British Pence and 1 New Zealand dollar and 10 cents.

Trading Ideas:

  • Bell Potter has increased its price target on OreCorp (ASX:ORR) to 93 cents, from 84 cents, and maintains a speculative buy rating on the company following a number of catalysts coming through including de-risking and the achievement of key milestones at its Nyanzaga Gold Project in Tanzania. The NGP has emerged 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.
  • Trading Central has identified a bullish signal on Rumble Resources (ASX:RTR) following the formation of a pattern over a period of 24-days which is roughly the same amount of time the share price may rise from the close of 23 cents to the range of 28 cents to 30 cents according to standard principles of technical analysis.

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