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Morning Bell 23 March

Sophia Mavridis
March 23, 2023

The Federal Reserve has announced a further 25 basis point rate hike, and although this was widely expected, the US stock market declined with all three major benchmarks closing around 1.6% lower. The Fed also acknowledged turmoil in the banking sector could slow the already fragile economy, which share US bank shares slide.

What to watch today:

  • The SPI futures are suggesting that our local market will drop 0.74% at the open this morning, following Wall Street’s lead.
  • In commodities:
    • The oil price continues to regain last week’s losses, after data out from the US Energy Information Administration showed a surprise build in US crude stocks and large draws in other fuels like gasoline. Also, the US oil benchmark is 5% higher this week, as the Treasury Secretary Janet Yellen said the government would be willing to take further action to protect deposits. Watch ASX energy shares today.
    • The price of gold over 1.5% higher and is heading toward a one-year high, as investors weighed on the Fed’s dovish tone in its policy decision. This may see gold miners rise, such as Regis Resources (ASX:RRL), Newcrest Mining (ASX:NCM), Northern Star Resources (ASX:NST) or Evolution Mining (ASX:EVN).
    • Iron ore has dropped more than 1%, extending the retreat from the nine-month high hit last week, amid increased control of speculatory prices and curbs for major steel producers.
  • Watch the share price movements of Brickworks (ASX:BKW) which is set to release an earnings report today.

Trading Ideas:

  • Bell Potter maintains a Buy rating on EROAD (ASX:ERD) with modest downgrades to their forecasts post the company’s guidance u[date provided late last month and their investor day held this week. Bell Potter have decreased their price target, down 32% to $1.50, after updating each valuation used in the determination of their price target for the forecast changes, as well as market movements and time creep. The $1.50 target is still an over 100% premium to the current share price of $0.64.
  • Trading Central have identified a bullish signal in AGL Energy (ASX:AGL), indicating that the stock price may rise from the close of $7.07 to the range of $7.30 to $7.36 over 22 days, according to the standard principles of technical analysis.

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