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Morning Bell 23 November

Grady Wulff
November 23, 2022

Wall Street rallied on Tuesday as investors shift focus from China’s covid-lockdowns to a number of strong earnings reports due out in the short trading week including from Nordstrom and HP Inc. The Dow Jones industrials index closed 1.16% higher, the tech-heavy Nasdaq added 1.25%, and the S&P500 rose 1.30%. Investors are keenly focused on a number of Fed official speeches this week, particularly on Wednesday, in hope of gaining an insight into future rate hike movements. Tesla shares hit the lowest level since July 2020 to start the week, amid a tech sell-off, however shares in the electric vehicle maker have been sold-off since the company’s CEO Elon Musk took over Twitter. Shares in Tesla are also being sold-off in line with China’s COVID lockdowns.

Over in Europe, markets closed higher on Tuesday driven by a rally for oil stocks after Saudi Arabia denied a report that OPEC+ may boost oil output. The STOXX 600 closed up 0.8%, Germany’s DAX added 0.29% and the French CAC rose 0.35%. And the UK’s FTSE 100 closed Tuesday’s session up 1.03%.

What to watch today:

  • On the commodities front this morning, it’s a mixed bag as crude oil trades 2.29% higher at US$81.89 a barrel, natural gas is up 0.23%, gold is flat at US$1,739 an ounce and iron ore is down 2.01% at US$97.50 a tonne.
  • Ahead of the local trading session, the SPI futures are expecting the ASX to open 0.74% higher on the back of the rally on Wall Street overnight.
  • After the closing bell yesterday, RBA governor Philip Lowe spoke at the annual Ceda dinner outlining that the inflation we are feeling right now was the same high inflation that was felt in the 70s and 80s that damaged the economy and hurt our standards, which Mr Lowe is wary of allowing to happen again, therefore warned Aussies to brace for higher inflation and lower growth, fewer jobs and lower real wages. All in all Mr Lowe reiterated the RBA’s need to continue raising interest rates in order to curb the current period of high inflation and that they are not ruling out further 50-basis point rate hikes if needed in future.
  • Looking at economic data, Australia’s S&P Global services and manufacturing preliminary PMI data is out for November giving an insight into demand for private services and manufacturing production companies in Australia which has been declining since September as the RBA continues to raise interest rates to tackle the nation’s red-hot inflation. The Reserve Bank of New Zealand will also announce its latest cash rate hike this morning with the market expecting a hike of 75-basis points, with the nation accelerating its monetary tightening to control rising inflation.
  • The Aussie dollar has strengthened to buy 66.34 US cents, 56.16 British Pence, 93.74 Japanese Yen and NZ$1.08.

Trading Ideas:

  • Trading Central has identified a bullish signal on Cooper Energy (ASX:COE) following the formation of a pattern over a period of 30-days which is roughly the same amount of time the share price may rise from the close of $0.20 to the range of $0.27-$0.29 according to standard principles of technical analysis.
  • Trading Central has identified a bearish signal on Infomedia (ASX:IFM) following the formation of a pattern over a period of 34-days which is roughly the same amount of time the share price may fall from the close of $1.11 to the range of $0.78-$0.84 according to standard principles of technical analysis.

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