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Morning Bell 3 February

Sophia Mavridis
February 3, 2023

US stocks eased in afternoon trade, with earnings pending after the closing bell from Apple, Alphabet and Amazon. The Nasdaq was up more than 2% when the final hour of the session began, after rising 3.5% earlier in the day. The Nasdaq’s rally was boosted by Meta Platforms, which was 22% higher by 3pm after the company announced its plans to buy US$40 billion worth of its own shares. The Nasdaq then rebounded, closing the session 3.25% higher, while the S&P500 closed 1.47% higher and the Dow Jones ended 0.11% in the red.

European markets rallied overnight, with all major benchmarks closing higher, after the Bank of England and the European Central Bank announced they’d would hike interest rates by 50 basis points, as widely expected.

What to watch today:

  • The SPI futures are this morning indicating that our local market will open 0.13% higher this morning.
  •  In commodities, oil prices edged lower overnight. The gold price is set to end the week in the red, currently trading 1.9% lower. While iron ore has also dropped, after rallying in the previous session, as global economic growth concerns appear to weigh on prices.
  • Economic data to watch out for: tonight the unemployment rate for January in the US will be announced, and the Producer Price Index for December for the Eurozone will be announced as well.
  • CSL Limited (ASX:CSL) share price will be on watch today, after competitor GSK received FDA approval for a competing drug. CSL is also set to release its half-year earnings on February 14th. Ahead of the announcement, Morgan Stanley reiterated their Overweight rating on CSL, with a target of $354.
  • And the Australian dollar is currently buying US$0.71, 57.01 British Pence, 91.75 Japanese Yen and NZ$1.09.

Trading Ideas:

  • Bell Potter maintain a Buy rating on DGL Group (ASX:DGL). They’ve made no net changes to the drivers of the company’s underlying business but have upgraded their EPS forecasts 2-7% across FY23-25 expectations. That’s for the recent all cash Nightingale Transport acquisition for $18.2 million, which is an attractive deal in Bell Potter’s view. There is no change to the BUY rating, however Bell Potter’s price target is reduced from $2.25 to $2. At DGL’s current share price of $1.49, this implies 34.2% share price growth in a year.
  • And Trading Central have identified a bullish signal in IDP Education (ASX:IEL), indicating that the stock price may rise from the close of $31.80 to the range of $36.25 to $37.25 over 26 days, according to the standard principles of technical analysis.

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