Morning Bell 6 October

Jessica Amir
October 6, 2021

The major US indices rebounded in the US overnight, led by investors buying the dip into tech stocks.

There is near term uncertainty in the market, as the world awaits the fate of China’s biggest property developer Evergrande, currently in a trading halt. Fantasia, another large Chinese developer, also missed a repayment. Therefore, iron ore demand is likely to slow down even further.

The Aussie share market is set to open higher, with the futures suggesting a rise of 0.5%, with a focus on tech and oil stocks.

What to watch today:

  • The oil price rose to US$78.93, its highest level since 2014. Oil prices have surged over 50% this year, adding to inflationary pressures.
  • Uranium is trading higher as the International Atomic Energy Agency expects world nuclear-generating capacity to double by 2050, as the world aims to move away from fossil fuels to fight climate change. Keep you eye on Paladin (ASX:PDN) and Deep Yellow (ASX:DYL). Also keep in mind four uranium companies with licences to mine in South Australia. These include Alliance Resources (ASX:AGS), Boss Energy (ASX:BOE), BHP (ASX:BHP), as well as Energy Resources (ASX:ERA), one of the longest operating uranium producers, which is majority owned (86%) by Rio Tinto (ASX:RIO).
  • In economic news, yesterday Australia’s balance of trade data hit a record all time high, while iron ore sales to China were lower than expected in August compared to July. In addition, yesterday the RBA reconfirmed it will continue to buy bonds to support the economy until February next year.

Trading Ideas:

  • Citi reiterated its BUY rating for baby retailer Baby Bunting (ASX:BBN) and has increased its price target to $6.11, implying 13% share price growth in a year. Baby Bunting’s AGM revealed sales momentum has accelerated, following the last trading update. Citi expects further acceleration in sales throughout the rest of this year as lockdowns end. The company is also making faster than expected progress on its private label strategy, resulting in gross margins being better than expected to date.
  • Bullish charting signals have been seen in Silver Lake Resources (ASX:SLR), Kalium Lakes (ASX:KLL) and Teaminvest Private Group (ASX:TIP), according to Trading Central.

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