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Morning Bell 5 April

Sophia Mavridis
April 5, 2023

US equities closed lower overnight. The Dow Jones fell nearly 200 points as investors assessed what the spike in oil prices could mean for the global economy. The S&P500 closed 0.6% lower; both the Dow and S&P500 snapped a four-day win streak. The Nasdaq closed 0.5% in the red. Also prompting the market losses was the latest job openings report out in the US, which saw that the number of available positions in February dropped below 10 million for the first time in almost two years.

European stocks were marginally lower. The oil and gas sector declined following the announcement earlier this week by OPEC; they’re cutting output by over a million barrels of oil per day, starting from May. Investors are now focusing on demand trends and the impact of higher prices on the global economy.

Also overnight, we saw the British pound trade higher against the US dollar throughout the session and hit a 10-month high. This followed the Bank of England’s chief economist warning that “domestically-generated inflation remains a risk” and that the fall in US job openings suggests that the Fed’s aim of slowing the labour market is taking effect.

What to watch today:

  • After global markets closed in negative territory overnight, the SPI futures are suggesting that our local market will fall 0.18% at the open this morning.
  • A few stocks to watch today include Novonix (ASX:NVX) and Scentre Group (ASX:SCG) both holding their AGMs today. While stocks going ex-dividend today include ARB Corporation (ASX:ARB), Imdex (ASX:IMD) and Ridley Corporation (ASX:RIC). Remember this often sees share prices fall, as investors take their profits.
  • In economic news, today the RBA Governor Phillip Lowe will give a speech, following yesterday’s cash rate decision, with the RBA holding the cash rate at 3.6% for the first time in 10 months.
  • In commodities:
    • Oil prices continue to rise, underpinned by the surprise production cut announcement by OPEC.
    • The price of gold has reached its highest level since March 2022, after the US jobs opening data pointed to a slowdown in the labour market, which suggests that the Fed may not need to raise rates.
    • Iron ore is currently trading almost 3% lower at US$123.50 per tonne, approaching a two-month low, amid underwhelming demand in the Chinese peak construction season, as well as signs of increased speculatory control. So, keep watch of iron ore stocks today.

Trading Idea:

  • Bell Potter maintain a Speculative Buy rating on Chalice Mining (ASX:CHN), after the miner announced a major resources upgrade for the Gonneville deposit, at its 100% owned Julimar Nickel-Copper Platinum Group Elements (PGE) project, which is approximately 70km north of Perth. Bell Potter says that the “project represents a unique opportunity to establish a new, strategic, long-life, low-cost PGE and base metals supply in a top mining jurisdiction. It’s partly because of the inclusion of PGE’s nickel and cobalt on Australia’s and the USA’s critical minerals lists, due to their role in the lithium-ore battery and hydrogen fuel cell production value chain and Russia’s market dominance. The company’s latest update exceeded Bell Potter’s expectations and they have lifted their valuation by 8% to $12. At CHN’s current share price of $7.25, this implies 65.5% share price growth in a year.

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