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Morning Bell 7 April

Paulina Peters
April 7, 2022

The local market declined 0.5% yesterday, weighed down by the tech sector as Aussie tech shares followed the US Nasdaq led, and took a tumble.

Sectors wise, only the financials and consumer staples sectors managed to close in the green. The gains for the banks were partly due to the increase in interest rate expectations following the RBA’s monetary policy statement on Tuesday.

Looking at the ASX200 leaderboard, healthcare company, PolyNovo (ASX:PNV) performed well, lifting 4.6% after the business revealed its strong March quarter results. The company delivered a 60% increase in revenue compared with the same period last year. Travel stocks also were amongst the best performers, including Flight Centre (ASX:FLT) and Corporate Travel Management (ASX:CTD) as the sector continues to benefit from the removal of restrictions around the world. Meanwhile, stocks that took a hit yesterday included tech shares NOVONIX (ASX:NVX) and Block (ASX:SQ2), as well as AVZ Minerals (ASX:AVZ).

The most traded stocks by Bell Direct clients yesterday included mineral company, Andromeda Metals (ASX:ADN), Champion Iron (ASX:CIA) and Vanguard Australian Shares ETF (ASX:VAS).

Moving to the US, all three benchmarks closed in the red for the second day. This comes as the US Federal Reserve gave more insight on its plans to tighten monetary policy to fight inflation. Central bank officials are considering larger rate hikes than the usual 25-basis-points. And across the sea, European markets closed lower off the back of the Fed’s hawkish comments and as investors await details of fresh international sanctions against Russia.

What to watch today:

  • Following the negative session in the US, the futures are suggesting that the Aussie share market is set to open 0.28% lower this morning.
  • In commodities, the oil price has sunk 5% following the International Energy Agency (IEA), releasing 120 million barrels from strategic reserves. The gold price on the other hand was steady, trading at US$1,925 an ounce. And the spot iron ore price continues to trade flat at US$154 a tonne.
  • In economic news, balance of trade data for February will be released today. Australia’s trade surplus increased to $12.89 billion in January 2022. Today’s reading for February is expected to come in a bit lower at $12 billion.
  • Scentre Group (ASX:SCG) is holding its AGM today.

Trading Ideas:

  • Another stock that is benefiting from the strong market demand for lithium is Mineral Resources (ASX:MIN) and Bell Potter have maintained its BUY rating on the stock, lifting its price target from $61.35 to $74.35. This is due to MIN’s increase in lithium production plans. MIN plans to double spodumene processing capacity at Mount Marian lithium mine. Now MIN closed 1.1% higher yesterday to $60.35, which implies about 23% share price growth in a year.
  • Trading Central has a bullish signal on Steadfast Group (ASX:SDF), indicating that the stock price may rise from the close of $4.87 to the range of $5.30 – $5.40 in the next 14 days according to standard principals of technical analysis.

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