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Morning Bell 4 July

Bell Direct
July 4, 2024

US equities extended the bull market run on Wall Street overnight in a shortened session. Trading volume was muted with the New York Stock Exchange closing early a 1pm and will be closed tonight for Independence Day. The S&P500 and the Nasdaq both closed at record highs, with investors looking past soft economic data. The S&P500 gained 0.5%, while the Nasdaq closed 0.88% in the green, as mega cap tech names rallied, including Tesla and Nvidia.

European markets rallied with all major benchmarks closing in the green ahead of two national parliamentary elections, with the UK voting on Thursday followed by France on Sunday.

After a negative run last week, the STOXX600 has been volatile in July so far. The index closed 0.8% higher, with most sectors in the green, primarily lead by mining stocks. The German DAX up 1.16%, Fance’s CAC up 1.24% and the FTSE 100 advanced 0.6%.

After a choppy session on the ASX200 yesterday, the key index posted a 0.28% gain at the closing bell, as investors weighed unfavorably strong retail sales data against a tech rally, prompted by the Nasdaq hitting a record high the prior trading session. Retail sales data came in at a rise of 0.6% for May, which is significant from the 0.1% increase reported in April and well above economist expectations. The data, however, wasn’t favorable for retail companies, as it was due to heavy discounting to move inventory levels as opposed to profit making on an earnings front. Building permit data in Australia for May was also out yesterday, up 5.5%, again above expectations. Both readings show the RBA’s case at taming inflation remains a difficult task as these drivers of inflation remain high.

What to watch today:

  • Our local market is set to open higher this morning, with the SPI futures suggesting a 0.94% rise at the open.
  • In economic data, balance of trade data for May will be out today. Australia’s trade surplus on goods widened to $6.55 billion in April, from a downwardly revised $4.84 billion in the previous month, surpassing market forecasts.
  • In commodities,
    • Crude oil is rallying, up 1.05% at US$83.68 per barrel, holding close to a two-month high amid lingering concerns about lower supply.
    • The price of gold is up more than 1.1% to US$2,357.71 an ounce, hovering at its highest price in a month due to the drop in the US dollar and Treasury yields.
    • And iron ore is trading 2.15% higher at US$110.32 per tonne, rising for the fourth straight session and hitting a one-month high amid an improving demand outlook in top consumer China.

Trading Ideas:

  • Bell Potter maintains a Speculative Buy rating on Chalice Mining (ASX:CHN) and have increased their valuation from $5.00 to $5.15. At CHN’s current share price of $1.22, this implies over 100% share price growth in a year.
  • Trading Central have identified a bullish signal in NRW Holdings (ASX:NWH) indicating that the stock price may rise from the close of $3.09 to the range of $3.34 to $3.40 over 7 days, according to the standard principles of technical analysis.

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