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Morning Bell 30 August

Sophia Mavridis
August 30, 2022

Well, the sell-off continued overnight. US equities declined further with all three major benchmarks closing in the red, amid increasing concerns over rising rates and tighter US monetary policy. The Dow ended the session down 0.6%, the S&P500 down 0.7%, while the Nasdaq dropped just over 1% at the close. Tech was also the worst performing S&P500 sector, while energy and utilities outperformed.

 

What to watch today:

  • Despite the broad selling in New York, the SPI futures are suggesting the Australian market will open 0.26% higher at the open this morning.
  • In commodities,
    • The oil price has jumped, current trading over 4% higher, as supply-side concerns have outweighed fears that a prolonged economic slowdown will affect fuel demand. Also last week, Saudi Arabia flagged possible OPEC production cuts to stabilise volatile markets. So keep watch of oil producers today such as Santos (ASX:STO), Woodside Energy (ASX:WDS) and Beach Energy (ASX:BPT).
    • The gold price has dropped, tracking the downturn in the US dollar.
    • Iron ore continues to gain, bouncing back after hitting its lowest level in more than a month.
  • Companies reporting their earnings results today include Dicker Data (ASX:DDR), Healius (ASX:HLS), IGO (ASX:IGO), Link Administration (ASX:LNK), Woodside Energy (ASX:WDS) and WISR (ASX:WZR).
  • Companies set to go ex-dividend today, which often sees their share prices fall, include Accent Group (ASX:AX1), Bega Cheese (ASX:BGA), Blackmores (ASX:BKL), Endeavour Group (ASX:EDV), OZ Minerals (ASX:OZL), Treasury Wine Estates (ASX:TWE), Wesfarmers (ASX:WES) and Woolworths (ASX:WOW).

Trading Ideas:

  • Bell Potter have upgraded their rating on The a2 Milk Company (ASX:A2M) from a Hold to a Buy. A2M yesterday reported FY22 underlying NPAT ahead of Bell Potter’s expectations of NZ$122.6 million. Revenue and EBITDA also increased and the company’s FY23 outlook is promising. Bell Potter increased their price target form AU$4.75 to AU$6.35. And at A2M’s current share price of AU$5.40, this implies 17.6% share price growth in a year.
  • Trading Central have identified a bullish signal in Galileo Mining (ASX:GAL) indicating that the stock price may rise from the close of $1.25 to the range of $1.46 to $1.50 over 28 days, according to the standard principles of technical analysis.

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