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Morning Bell 27 July

Paulina Peters
July 27, 2022

Yesterday, our local market nudged 0.3% higher, reaching a six-week high, with six of the 11 industry sectors posting gains. Energy shares led the way. Meanwhile, consumer discretionary and healthcare shares were the biggest decliners.

Looking at the ASX200 leaderboard, BNPL stock Zip (ASX:ZIP) advanced the most, rising nearly 20%, and closing above $1 for the first time in two months. There was no news out from Zip, so it’s likely investors are still feeling positive about last week’s quarterly update. Another top performer was Paladin Energy (ASX:PDN). Its share price gained 8.1% following the production restart of one of its uranium projects. The worst performers yesterday included Iress (ASX:IRE), Flight Centre (ASX:FLT) and Perseus Mining (ASX:PRU).

The most traded stocks by Bell Direct clients yesterday included National Australia Bank (ASX:NAB), Lake Resources (ASX:LKE) and Zip Co (ASX:ZIP).

Moving to the US, all three benchmarks closed lower. Stocks fell after Walmart cut its earnings forecast because of rising food inflation. This dragged down other retail shares and added concern that consumer spending might not be strong enough to keep the US out of a recession. And on Tuesday, the US Fed began its two-day policy meeting. Investors are widely expecting a three-quarter percentage point hike and will be looking for clues on the future interest rate path.

What to watch today:

  • In line with the poor session we saw in the US, the ASX200 is expected to fall 0.54% at the open if you go by the SPI futures.
  • The ABS will release its latest inflation figure, also known as the Consumer Price Index. It’s likely to be a dull announcement for investors and households, with the annual reading expected to come in at 6.2%, which will be the highest reading in more than 30 years, leaving the door open for the RBA to continue its aggressive rate hikes.
  • IGO (ASX:IGO) and St Barbara Mines (ASX:SBM) will be reporting their quarterly production results. Rio Tinto (ASX:RIO) will be reporting its earnings results after market close today.
  • Moving to commodities:
    • Natural gas hit its highest level since 2008, and is on pace for its best month as Russia cut supply and as high temperatures around the world stoke demand. So keep watch of ASX gas companies like AGL Energy (ASX:AGL) and Origin Energy (ASX:ORG).
    • The oil price fell 1.3% to US$95 a barrel. Gold also came under pressure, trading at US$1,717 an ounce.
    • The spot iron ore price trades 1% higher at US$104 a tonne.
  • Iluka Resources’ demerger, Sierra Rutile, will be debuting as its own ASX-listed company today under the ticker code SRX on a deferred settlement basis.
  • Kelly Partners Group (ASX:KPG) and Mirrabooka Investments (ASX:MIR) are set to go ex-dividend today. And lastly if you hold Premier Investments (ASX:PMV) you will receive your dividend payment today.

Trading Ideas:

  • Bell Potter have maintained its Buy rating on Perpetual (ASX:PPT) however with a reduced price target from $42 to $38.40. At its current share price of $28.97, this implies about 33% share price growth in a year.
  • Trading Central has a bullish signal on Allkem (ASX:AKE) indicating that the stock price may rise from the close of $10.45 to the range of $12.60 – $13.20 in the next 37 days according to standard principals of technical analysis.

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