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Morning Bell 7 July

Paulina Peters
July 7, 2022

Yesterday our local market closed in the red for the first time this week, declining 0.5%, off the back of renewed worries about a global recession. This led to a sharp fall in the Aussie dollar, commodity prices and global markets.

Mining and energy stocks suffered heavy losses, with both sectors sinking more than 5%, offsetting the gains seen across most other sectors, like real estate and tech.

Looking at the ASX200 leaderboard, many of the winners were tech stocks, following the strong lead from the US Nasdaq. Stocks like Megaport (ASX:MP1), Life360 (ASX:360), Zip (ASX:ZIP) and EML Payments (ASX:EML), were all up more than 10%. On the flip side, the ten biggest decliners were all from the materials sector, led by gold miner St Barbara (ASX:SBM), which was down 9.5%, along with stocks like Rio Tinto (ASX:RIO) and Woodside Energy (ASX:WDS).

The most traded stocks by Bell Direct clients yesterday were BHP Group (ASX:BHP), the BetaShares Geared Australian Equity Hedge Fund (ASX:GEAR) and Woodside Energy (ASX:WDS).

In the US, stocks pushed slightly higher following the latest minutes from the US Federal Reserve, which reiterated the central bank’s commitment to bringing down inflation. Energy stocks were some of the worst performers on the day, as oil prices continued their recent slide.

What to watch today:

  • Following the positive session in the US, our local market is set to open 0.5% higher if you go by the SPI futures.
  • Economic news wise, balance of trade data for May will be released at 11:30am AEST. That’s the difference between what we export vs. what we import, and consensus expects May’s reading to come in higher at $10.725b.
  • Keep watch of payments company, Block (ASX:SQ2) after its US listed shares dropped into the red overnight.
  • In commodities, oil prices have continued to slide, falling below US$100 a barrel. Gold is trading lower, down 1.5% to US$1,739 an ounce. And the spot iron ore price trades at US114 a tonne.

Trading Ideas:

  • Citi have retained its Buy rating on Lovisa Holdings (ASX:LOV), with a price target of $20.40. At its current share price of $15.46, this implies 32% share price growth in a year.
  • Trading Central has a bearish signal on engineering services company, Worley (ASX:WOR) indicating that the stock price may fall from the close of $13.62 to the range of $11.10 – $11.60 in the next 19 days according to standard principals of technical analysis.

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