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Morning Bell 4 October

Grady Wulff
October 4, 2022

The US Market has started the new month and quarter on an upbeat note as weaker than expected manufacturing data prompted investors to rethink how aggressive the Fed’s upcoming interest rate hikes will be as the economy is starting to show small signs of slowing. The Dow Jones industrial Index posted the biggest gain of 2.66% at the Closing Bell, while the tech-heavy Nasdaq closed 2.3% higher, and the S&P500 added 2.6%.

US government bonds also rallied sharply on the first trading day of the fourth quarter with the yield on the 10-year Treasury note sliding 0.18 percentage points as it’s price rose. Lawmakers in Russia’s lower House of Parliament have unanimously approved moving forward with absorbing full Ukrainian territories captured into Russia despite battlefield setbacks and a lack of control over the four new areas. Ukrainian President Volodymyr Zelensky has vowed to retake all land seized from his nation.

Watch to watch today:

  • The new month rally extended into Europe with Germany’s DAX adding 0.8%, and the French CAC lifting 0.55% to start the new month.
  • Over in The UK, the FTSE100 followed the global rally but investors were less confident, with the UK’s key index closing Monday’s session just 0.22% higher.
  • The rally was fuelled by new UK Prime Minister Liz Truss saying the UK economy needs a reset and has pledged to prioritise ‘aspiration, enterprise and growth’. Ms Truss’ government also scrapped plans to reduce taxes on the UK’s higher earners.
  • Taking a look at commodities, Brent crude settled 4.08% higher at US$88.61/barrel, gold is trading 2.43% higher at just under US$1700/ounce, but iron ore is down almost 3% at US$98/tonne.
  • Ahead of the local trading day, ASX futures are expecting the Australian market to open sharply higher by 1.58% buoyed by the global rally overnight.
  • On the economic data front, investors will be keeping a close eye on the RBA’s interest rate decision for Australia’s cash rate this month which is out at 1:30pm eastern daylight savings time today. New home loans and building permits data for August are also released today which will give an insight into the country’s building and property market for August.

Trading Ideas:

  • Bell Potter has maintained a buy rating on Cogstate (ASX:CGS) and increased its price target on the neuroscience technology company from $1.95/share to $2.20/share driven by a modest decline in weighted average cost of capital due to decreased risk associated with future earnings, FDA regulatory approval and CMS imbursement and the evolving clinical trial execution of the Eisai strategy involving its ‘Dementia Ecosystem’.
  • And Trading Central has identified a bearish signal on Ridley Corp (ASX:RIC) following the formation of a pattern over a 33-day period, which is roughly the same amount of time the share price may fall from the close of $1.99 to the range of $1.70-$1.76 according to standard principles of technical analysis.

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