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Morning Bell 5 November

Grady Wulff
December 5, 2023

Wall Street opened the new trading week lower, retreating from the rally experienced on the NYSE over the last five weeks. The Dow Jones fell 0.11%, the S&P500 dropped 0.54%, and the Nasdaq took the biggest hit, falling 0.84%. The sectors that have carried Wall Street over the last 11 months took the biggest hit on Monday as investors digest the high valuations of big-name companies especially in the technology sector.

Alaska Air fell 14.2% on Monday after it agreed to acquire rival airline, Hawaiian Airlines for US$1.9bn in a bid to expand Alaska Air’s presence to the West Coast of the US.

Spotify shares rose 8.8% on Monday after the music streaming giant announced it would lay off 17% of its workforce, which equates to around 1500 jobs in a bit to cost cut in the high-cost environment.

Over in Europe, markets closed mostly lower on to start the week as the big miners weighed on markets in the region, while gold miners bucked the trend with a rally on the back of the precious commodity hitting a record high US$2100/ounce. Analysts are predicting the price of gold will remain resilient into 2024 on outlook of a weaker USD, geopolitical uncertainty and the prospect of interest rate cuts on the horizon. The STOXX600 fell 0.1% on Monday, Germany’s DAX rose 0.04%, the French CAC fell 0.2% and, in the UK, the FTSE100 lost 0.22%.

Locally yesterday, the ASX200 kicked off the new trading week on a very positive note with the key index ending the session up 0.73% buoyed by interest-rate sensitive sectors, with the tech sector rising 1.9%, while real estate added 1.55%. On the other end of the market, the utilities sector fell 2.52% while energy stocks lost 1.26% on the sliding price of oil.

Chalice mining recovered 11.47% on Monday despite no price sensitive news out of the copper-nickel miner yesterday. Star Entertainment Group gained 6.86% on Monday while the lithium miners came under pressure yesterday with Sayona Mining falling 9.68%, Core Lithium shedding 5.56% and Pilbara Minerals ending the day down 2.22%.

What to watch today:

  • Ahead of the local session here in Australia the SPI futures are expecting the ASX to open Tuesday’s session down 0.53%, taking lead from Wall Street overnight.
  • Taking a look at commodities this morning, oil continues to decline despite OPEC+ announcing production cuts of 2.2 million barrels per day in a bid to stabilise the price of oil, which is trading 1.07% lower at US$73.28/barrel. Gold is down 2% this morning at US$2029/ounce and iron ore is up 0.4% at US$133/tonne.
  • On the economic calendar today the highly anticipated RBA interest rate decision is announced today with the expectation of the interest rate to be maintained at the current 4.35%.
  • Stocks trading ex-dividend today include Fisher & Paykel Healthcare Corporation and Dalrymple Bay Infrastructure. If you’ve been thinking about these stocks, it might be worth considering buying in today as stocks trading ex-dividend, generally trade lower on the ex-dividend date.

Trading Ideas:

  • And Bell Potter has maintained a speculative buy rating on Deep Yellow (ASX:DYL) and a 12-month price target of $1.81 after the uranium miner added an additional approximately 1.5 years of production to the Tumas project, with the expanded indicated and inferred resources. Looking into CY24, some key catalysts include a Final Investment Decision on Tumas, refreshed capital and operating costs for Tumas, and Mulga Rock updated definitive feasibility study.
  • And Bell Potter has slightly increased the price target on Genusplus Group (ASX:GNP) from $1.40 to $1.50 and maintain a buy rating on the mining services provider following the Genusplus and its JV partner ACCOINA being awarded a $1.4bn design and construction contract for the HumeLink East project by Transgrid.

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