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Morning Bell 20 January

Grady Wulff
January 20, 2023

US markets fell again on Thursday for a third straight session as investors are increasingly concerned that the Fed will continue raising interest rates despite signs the economy is beginning to cool. The increasing concerns follow new jobless claims in the US hitting the lowest level since June last week in a sign the labour market remains resilient despite the slowing economy. The Dow Jones and S&P500 each fell 0.76%, while the Nasdaq closed the day down 0.96%. US investors continue eyeing off corporate earnings results which today will be released by Netflix after the bell with analysts’ expecting EPS of $0.45/share, a decline of 66.3% from the prior corresponding period, and a modest gain of 1.8% in revenue to US$7.85bn. Shares in the streaming giant fell 3.23% on Thursday ahead of the results being released. JPMorgan Strategist Marko Kolanovic said a recession hasn’t been priced into equities just yet, meaning stocks could have further downside from their current positions. He said ‘US industrials and non-tech large caps (Dow Jones) as well as European stocks are basically flat over the past year, and close to previous highs’.

Over in Europe, markets closed lower on Thursday as investor fears of a global recession continue to weigh on sentiment, especially on the outlook front which is an item high up on the agenda at this week’s World Economic Forum in Davos.

The STOXX600 closed down 1.6%, Germany’s DAX fell 1.72%, the French CAC lost 1.86% and in the UK, the FTSE100 closed the day down 1.07%.

What to watch today:

  • Ahead of the local trading session here in Australia, the SPI futures are anticipating the local market to open 0.01% lower following the turbulent session on Wall St overnight.
  • On the commodities front, oil is trading 1.21% higher at US$80.44/barrel, gold is up 1.60% at US$1934/ounce, and iron ore is trading more than 2% higher at US$123/tonne.
  • In economic data, Japan’s inflation rate data for December will be released at 10:30am AEDT with consensus expecting inflation to rise 0.2% to 4% for the month.
  • The Aussie dollar is buying US$0.69, 88.82 Japanese yen, 55.73 British pence and NZ$1.08.

Trading Ideas:

  • Trading Central has identified a bullish signal on Bubs Australia (ASX:BUB) following the formation of a pattern over a period of 39-days which is roughly the same amount of time the share price may rise from the close of $0.34 to the range of $0.38-$0.40 according to standard principles of technical analysis.
  • Trading Central has identified a bullish signal on BCI Minerals (ASX:BCI) following the formation of a pattern over a period of 143 days which is roughly the same amount of time the share price may rise from the close of $0.29 to the range of $0.33-$0.35 according to standard principles of technical analysis.

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