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Morning Bell 25 January

Grady Wulff
January 25, 2023

The US markets turned from negative to positive in afternoon trade before closing mixed as investors digested an array of economic data released. US flash PMI data from US business activity across manufacturing and services remained below par, indicating the impact of tightening financial conditions on growth and adding to hopes that the Fed is on track to ease its aggressive rate hike stance soon. The Dow Jones closed 0.4% higher, the S&P500 closed flat and the Nasdaq fell just 0.1%.

Retail company Bed Bath and Beyond jumped over 13% on Tuesday as investors continue piling into the heavily shorted company despite the company warning of a potential bankruptcy.

General Electric rallied over 1% after posting quarterly results that topped expectations amid the company working through a multi-year program to cut debt and simplify its operations.

Over in Europe, markets closed mixed despite PMI data in the region showing services and manufacturing sectors in the eurozone returned to modest growth in December, boosting hopes that the 20-member currency bloc may avoid recession. The stronger-than-expected PMI data reinforced expectations that the European Central Bank will maintain its aggressive stance against inflation at the upcoming meeting on the 2nd February. The PMI data also boosted business confidence which rose the most since the aftermath of the COVID-19 outbreak despite high inflation and rising borrowing costs. The STOXX600 fell 0.2% driven by losses in healthcare, oil and gas stocks, while Germany’s DAX fell 0.07%, the French CAC rallied 0.26% and the FTSE100 in the UK fell 0.35%.

Swiss watchmaker Swatch Group shares rose more than 5% on Tuesday after the company reported a 2.5% increase in 2022 sales and said it was positive about recovery especially in the Chinese market.

On the commodities front, oil is trading 1.53% lower at US$80.35/barrel, gold is up 0.15% at US$1934/ounce, and iron ore is flat at US$124.5/tonne.

What to watch today:

  • Ahead of the local trading session here in Australia, the SPI futures are anticipating the ASX to open the midweek session 0.22% lower despite the afternoon rally on Wall St.
  • The Aussie dollar is buying 70 US cents, 91.57 Japanese Yen, 56.71 British pence and 1 New Zealand Dollar and 8 cents.
  • On the economic calendar today, the highly anticipated inflation rate data for Australia in the fourth quarter will be released at 11:30am AEDT with the market expecting a rise to 7.6% Year on Year from 7.3% in Q3.

Trading Ideas:

  • Trading Central has identified a bullish signal on Galan Lithium (ASX:GLN) following the formation of a pattern over a period of 33-days which is roughly the same amount of time the share price may rise from the close of $1.23 to the range of $1.47 to $1.53 according to standard principles of technical analysis.
  • Trading Central has also identified a bullish signal on Breville Group (ASX:BRG) following the formation of a pattern over a period of 112-days which is roughly the same amount of time the share price may rise form the close of $22.39 to the range of $25.10 to $26 according to standard principles of technical analysis.

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