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Morning Bell 24 March

Sophia Mavridis
March 24, 2022

On Wednesday, Australian shares rose to a two-month high, as tech shares gained 3.5%, following the US tech rally. The local tech sector was led by Afterpay’s parent company Block (ASX:SQ2), which rose to its highest closing price since the company officially listed on the ASX in January, at $188.10.

Financials closed at the sector’s highest level since mid-November. Major banks, NAB, CBA, Westpac and ANZ all closed with solid gains, which may partly reflect comments on the increase in interest rates by US Federal Reserve Chairman Jerome Powell. Morgan Stanley has said that ANZ and NAB could announced a $1 billion and $2 billion buyback, respectively, in May, while CBA may launch another share buyback, with an additional $2 billion, if it goes ahead with plans to sell its 10% stake in the Chinese Bank, the Bank of Hangzhou.

Looking at the ASX200 leaderboard shares in Uniti Group (ASX:UWL) led among blue chips. UWL surged 10.7% before entering into a trading halt in afternoon trade. This followed news of a $5 a share bid for Uniti, made by Macquarie Asset Management and PSP Investments. This new proposal beats the current offer on the table from Morrison & Co by approximately 11%. Meanwhile Fisher & Paykel Healthcare (ASX:FPH) fell 8%, after the company announced it expects a decline in its sales guidance for FY22 and also warned that freight costs are weighing on margins.

The most traded stocks by Bell Direct clients yesterday included Lake Resources (ASX:LKE), Northern Star Resources (ASX:NST) and the Australian Foundation Investment (ASX:AFI).

US equities closed in the red, with all three major benchmarks lower. The Dow was down 1.3%, the S&P500 down 1.2% and the Nasdaq down 1.3%.

What to watch today:

  • Following the broad sell-off in New York overnight, the SPI futures are suggesting the ASX200 will fall 0.73% at the open this morning.
  • In commodities, the oil price rallied, trading at US$114 per barrel, after Russia announced that a storm in the Black Sea had damaged one of the world’s largest oil pipelines, which has disrupted exports from Russia and Kazakhstan.
  • The gold price is also higher, however remains under pressure as the Fed calls for an aggressive monetary tightening to combat inflation.
  • Iron ore is lower, moving away from the 7-month high hit earlier this month, following demand concerns with the resurgence of COVID-19 cases in China.
  • Companies that are set to go ex-dividend today include Cash Converters (ASX:CCV), Healius (ASX:HLS) and Spark New Zealand (ASX:SPK).

Trading Ideas:

  • Bell Potter maintain their BUY rating on Uniti Group (ASX:UWL) and have increased their price target from $4.50 to $5. This price target is a premium to the office price of $4.50 by Morrison & Co, in the bidding war for Uniti.
  • Trading Central have identified a bullish signal in Ioneer (ASX:INR) indicating that the price may rise from the close of $0.58 to the range of $0.69-$0.71, over 19 days, according to the standard principles of technical analysis.

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