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Morning Bell 3 February

Paulina Peters
February 3, 2022

Yesterday, the Aussie share market continued its positive streak in February, closing 1.2% higher to pop back over 7,000 points. We also heard from RBA Governor Philip Lowe, who stated that a rate rise later this year was a plausible situation. And BHP (ASX:BHP) once again became the largest company on the Aussie share market after officially completing the unification of its Australian and UK listings.

In sector performances, nearly all sectors closed in the green, with the energy and materials sectors gaining the most. On the ASX200 stock leader board, eight mining stocks were amongst the best performers. Auckland International Airport (ASX:AIA) pushed 5.4% higher and Worley (ASX:WOR) gained about 5%, benefiting from surging oil prices. Meanwhile, the worst performing stocks included Credit Corp Group (ASX:CCP), Block (ASX:SQ2) and Amcor (ASX:AMC). Amcor fell 3.5% despite announcing a 12% jump in its first-half sales.

The most traded stocks by Bell Direct clients yesterday included software company BrainChip (ASX:BRN), which topped the list, lifting over 6% after announcing the receipt of another patent in the US. Another highly traded stock was Mineral Resources (ASX:MIN), its share price gained 2.2% after the company reported that the Western Australian government is set to increase iron ore export capacity at the Port of Port Hedland.

In the US, stocks rose for the fourth straight day, the Dow jumping over 200 points, the S&P500 climbing nearly 1% and the Nasdaq pushing 0.5% higher. The stock that led the gains was Alphabet, after its quarterly results beat analyst expectations. And Facebook-parent Meta shares have tumbled more than 15% in extended trading after a disappointing earnings report was released, where they also gave a weaker than expected forecast.

Today, the futures are suggesting the Aussie share market will open 0.09% higher this morning.

What to watch today:

  • In economic news, Australia’s balance of trade data for December will be released today. That’s the difference between what we export vs. what we import. Australia’s trade surplus declined to 9.42 billion in November, that was our smallest trade surplus since April.
  • Westpac (ASX:WBC) will be on watch today as the company has released its first quarter update this morning. The company delivered first quarter cash earnings of $1.58 billion, which while does represent growth, does fall short of Bell Potter’s forecasting of $1.82 billion. Aggressive competition also continued to weigh on margins.
  • Nick Scali (ASX:NCK) will be releasing its first quarter 2022 results today. Bell Potter has a BUY rating on the stock and is expecting NPAT to come in at $29.1m, while consensus expects a slightly more modest NPAT of $30.5m.
  • Moving to commodities, OPEC have decided to green-light the return of 400,000 barrels per day for March, despite pressure from the US and India. The gold price gained as the US dollar and Treasury yields fell, following a disappointing ADP jobs report, where companies unexpectedly cut 301,000 jobs in January. And the seaborne iron ore price is trading 0.86% higher to US$140 a tonne.

Trading Ideas:

  • Bell Potter has upgraded its rating on Select Harvests (ASX:SHV) from a HOLD to a BUY with a price target of $7.10. This comes as SHV’s share price has fallen about 40% from its September 2021 highs and Bell Potter believe that the stock is trading at a modest discount. SHV last closed at $5.65, so that implies about 26% share price growth in a year.
  • Trading Central has a bullish signal on Orica (ASX:ORI). This signal indicates that the stock price may rise from the close of $14.50 to the range of $15.30-$15.50 in the next 33 days, according to standard principles of technical analysis.

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