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Morning Bell 31 August

Grady Wulff
August 31, 2022

US stocks extended their losing streak to a third day on Tuesday as interest rate pressures continue to weigh heavily on the market. The Nasdaq again led losses, closing the session down 1.12%, which extended the Nasdaq’s year to date loss to 24.05%. US home price index data for June was released yesterday showing slowed growth for the month as higher mortgage rates make home ownership less affordable. US job openings data was also released yesterday which showed job openings rose to a seasonally adjusted 11.2 million in July as employers took on more workers in a tight labour market.

Over in Europe, the FTSE100 fell 0.9%, the CAC lost 0.2% but the DAX gained 0.5%.

What to watch today:

  • The SPI futures are anticipating the local market will open 0.85% lower today following the broad sell-off on Wall St overnight.
  • In commodities:
    • Iron ore fell 4.1% to trade below US$100 a tonne as COVID-19 outbreaks continue to cloud demand from China.
    • Oil declined 5.5% yesterday to hit US$99.28 a barrel.
    • Gold is trading down 0.7% to US$1,724 an ounce.
  • Reporting season continues today with Atlas Arteria (ASX:ALX) and St Barbara (ASX:SBM) releasing first half and FY22 results respectively.
  • On the economic front today, we can expect to gain an insight into the state of Australia’s building crisis with construction work data for the second quarter due out today with markets expecting growth of just under 1%. Private sector credit data for July is also out today, with analysts’ expecting a decline from June to 8.2% for July.

Trading Ideas:

  • Trading Central has identified a bullish signal on Cobram Estate Olives (ASX:CBO) based on a pattern that formed over a 53-day period, indicating the stock price may rise over this same amount of time from the close of $1.67 to a range between $1.74-$1.78, according to standard principles of technical analysis.
  • Citi has downgraded its rating from Buy to Neutral on Healius (ASX:HLS) and reduces its price target from $4.30 to $4.00 following the release of the company’s FY22 results noting that HLS’ results were significantly assisted by high levels of COVID-19 testing but the company failed to issue any guidance for FY23.

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