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Morning Bell 29 November

Sophia Mavridis
November 29, 2021

We’ve seen a broad sell off across global financial markets amid fears of the new COVID-19 variant identified in South Africa. It has sparked concerns that the virus could again set back economic recoveries worldwide.

The Aussie market tumbled 1.7% on Friday. All sectors declined and energy stocks took the biggest hit felling 4.5%. Gold miners finished lower most of last week, however rebounded on Friday after the gold price pushed higher. Meanwhile, travel stocks were hit hard, amid fears of the omicron variant. Webjet (ASX:WEB), Qantas (ASX:QAN), Corporate Travel Management (ASX:CTD) and Flight Centre (ASX:FLT) all fell. Machine intelligence company Appen (ASX:APX) was the worst performer on Friday after Macquarie downgraded APX to an underperform rating and decreased its price target to $9.50 from $11.80.

US equities fell in a short post-thanksgiving session. The Dow had its worst day of the year, falling 900 points, or 2.5%. The S&P500 fell 2.3%, while the Nasdaq fell 2.2%.

Today, the ASX200 is set to fall for a second session, with the SPI futures suggesting a sharp drop of 1.4%.

What to watch today:

  • The oil price has dropped 13% – its worst day of the year, as the omicron variant sparks global demand concerns. Oil is trading at US$68 a barrel. Oil markets had already been under pressure, following the announcement of a coordinated release of crude reserves. So keep watch of energy producers such as Woodside Petroleum (ASX:WPL) and Santos (ASX:STO).
  • Gold is trading higher at US$1,792 an ounce. Watch Newcrest Mining (ASX:NCM), Northern Star Resources (ASX:NST) and other gold mining stocks.
  • Keep an eye on iron ore stocks like BHP Group (ASX:BHP) and Fortescue Metals (ASX:FMG), after iron ore prices tumbled on Friday night.

Trading ideas:

  • Bell Potter maintained their BUY rating on Australia and New Zealand Bank (ASX:ANZ) and have kept their price target unchanged at $31. Bell Potter have noted significant opportunities from decarbonising the economy and the bank is well positioned to facilitate to net zero emissions. ANZ closed on Friday at $27.07, implying 14.5% share price growth in a year.
  • UBS have retained their BUY rating on Adairs (ASX:ADH) and have increased their price target from $5.40 to $5.90. Adairs have purchased vertically integrated furniture retailer Focus on Furniture for $80 million. Meanwhile, Ord Minnett upgraded ADH to Accumulate from a Hold, and increased their price target from $4.00 to $4.10.
  • Bullish charting signals have been identified in Weebit Nano (ASX:WBT), Zenith Minerals (ASX:ZNC) and Jervois Global (ASX:JRV), according to Trading Central.

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