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Morning Bell 7 December

Paulina Peters
December 7, 2021

The Aussie share market started the trading week to yet another choppy and directionless trading session, in which gold miners and supermarkets gained ground, while tech stocks slumped.

Embattled property giant, Evergrande fell as much as 15% to an eleven-year low, after it said that there was no guarantee that it would have enough cash to meet its next debt repayments.

The utilities sector advanced the most, up 2%. Meanwhile, the information technology sector was hit the hardest, down 2.2%, following some major losses on the tech-heavy Nasdaq last Friday. Metcash (ASX:MTS) was the top stock of the day, up 7.3%, after the company released strong first half results, as more Aussies shopped local during lockdown. The company also announced its plans to inject $4 million into digital technology to accelerate online shopping across its food, grocery, hardware, and liquor brands. There were also six gold miners that made the stock leaderboard, including Silver Lake Resources (ASX: SLR) and Gold Road Resources (ASX:GOR). On the flipside, BNPL stocks came under pressure, including Zip (ASX:Z1P), Afterpay (ASX:APT) and Sezzle (ASX:SZL), which were down 10.1%, 4.3% and 16% respectively. Kogan.com (ASX:KGN), Nearmap (ASX:NEA) and Redbubble (ASX:RBL) were also amongst the worst performers, with this trio of technology stocks to be removed from the XJO later this month.

In the US, all three benchmarks advanced, as investors shook off fears around the threat of the Omicron variant. The Dow closed nearly 650 points higher, the S&P500 up over 1% and the Nasdaq up 0.9%. Shares linked to the economy recovery gained, while investors continued to sell tech stocks with relatively high valuations.

What to watch today:

  • Following a positive session over on Wall Street, the futures are suggesting the Aussie share market will lift 0.3% at the open.
  • The RBA meets for the final time this year to discuss the cash rate. While it’s expected to remain at 0.10%, the RBA could provide an update on when its first hike will occur.
  • It’s worth keeping an eye on Magellan Financial Group (ASX:MFG) after the announcement its CEO Dr Brett Cairns had resigned for personal reasons.
  • Oil prices rebounded 5% on hopes the Omicron variant would have a less damaging impact on the economy if symptoms proved to be mostly mild. The gold price fell 0.3% to US$1,778 an ounce, while the seaborne iron ore price traded 2.2% higher to about US$104 a tonne.
  • Bank of Queensland (ASX:BOQ) are holding their AGM today.

Trading Ideas:

  • Bell Potter have a SPECULATIVE BUY rating on biotechnology company, Kazia Therapeutics (ASX:KZA) with a valuation of $2.40. Kazia recently reported the headline data from its phase II clinical trial. The highlights included that median progression free survival and median overall survival was extended by three months. The next catalyst for the stock will be the first readouts from investigator led studies currently underway in the US. At its current share price of $1.20, this implies 100% share price growth in a year.
  • Trading Central has detected a bullish charting signal in BWP Trust (ASX:BWP). This signal indicates that the stock price may rise from the close of $4.21 to the range of $4.30-$4.32 in the next 18 days, according to standard principles of technical analysis.

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