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Morning Bell 25 May

Paulina Peters
May 25, 2022

The local market fell 0.3% or 20 points lower yesterday to close at 7,128 points.

The tech sector came under quite a bit of pressure, falling 3% after US tech stock Snapchat, plunged in after-hours trading. We’ll touch on Snapchat in just a bit. The rest of the sectors closed in the red, except for the real estate and financial sectors, both closing around 0.3% higher, with all four of the big banks closing higher.

Some of the best performers yesterday included Allkem (ASX:AKE), Pilbara Minerals (ASX:PLS) and Liontown Resources (ASX:LTR), all benefitting amid optimism that lithium demand will continue to outstrip supply for some time to come. While the worst performers included Nufarm (ASX:NUF), Imugene (ASX:IMU) and City Chic Collective (ASX:CCX).

The most traded stocks by Bell Direct clients yesterday, they included Grange Resources (ASX:GRR), which rose 5.6% yesterday, following the strength in the iron ore price. Also highly traded was Lake Resources (ASX:LKE), BHP Group (ASX:BHP) and Commonwealth Bank (ASX:CBA).

Moving to the US, the market was mixed. The Dow Jones managed to claw back its early losses and rally into the close, boosted by UnitedHealth Group, as well as McDonald’s, Verizon, and IBM. While the S&P500 fell 0.8% and the Nasdaq dropped over 2% after Snapchat plummeted 43%. The social media company’s shares fell as it warned that it was bracing to miss its earnings and revenue targets in the current quarter. So this led to other tech companies, like Meta, Alphabet, Amazon, and Apple leading the day’s losses as investors feared a slowdown in digital advertising.

What to watch today:

  • Following the mixed session in the US, the SPI futures are suggesting that our local market is set to open 0.1% higher this morning.
  • Reporting wise, ALS (ASX:ALQ) and Fisher & Paykel Healthcare (ASX:FPH) will be releasing their full-year results and dividend today.
  • Moving to commodities, the oil price traded flat as tight supply worries offset concerns over a possible recession and China’s COVID-19 curbs. The gold price gained as the US dollar fell, therefore boosting the safe-haven asset’s appeal. And the spot iron ore price trading 4.8% higher to US$132 a tonne.
  • One company debuting on the ASX today is Bellavista Resources. Bellavista is a mineral exploration company, targeting large, high-grade base metal and battery mineral deposits in WA. It will be trading under the ticker code BVR.
  • Alumina (ASX:AWC) and Costa Group Holdings (ASX:CGC) are holding their AGMs today.

Trading Ideas:

  • Bell Potter have maintained its Buy rating on software company, TechnologyOne (ASX:TNE) with an increased price target from $12.50 to $12.75. TNE provided financial year 2022 guidance of 10-15% profit after tax growth, as expected. The company also said it expects SaaS or Software as a Service annual recurring revenue growth for the full year to be more than 40%, with initial licence fees to be down from financial year 2021. At its current share price of $10.24 this implies about 25% share price growth in a year.
  • Trading Central has a bullish signal on lithium business, Liontown Resources (ASX:LTR) indicating that the stock price may rise from the close of $1.33 to the range of $1.54 – $1.60 in the next 22 days according to standard principals of technical analysis.

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