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Morning Bell 8 August

Sophia Mavridis
August 8, 2022

Our local market closed 0.6% higher on Friday, with materials advancing the most as gold miners extended gains, while energy stocks fell alongside a drop in the oil price.

NOVONIX (ASX:NVX) jumped 13.7% and was followed by miners including Liontown Resources (ASX:LTR), Ramelius Resources (ASX:RMS), Silver Lake Resources (ASX:SLR) and Core Lithium (ASX:CXO). Stocks that declined the most on Friday were Megaport (ASX:MP1) and Block (ASX:SQ2).

The most traded stocks by Bell Direct clients on Friday were BHP Group (ASX:BHP), Lake Resources (ASX:LKE) and Whitehaven Coal (ASX:WHC).

European stocks closed lower with the STOXX 600 closing down 0.8%. Most sectors were in negative territory, with tech stocks down the most, falling 2.4%. A strong US jobs report came in in the US, however it wasn’t quite enough to pull markets higher, as the three major benchmarks closed mixed. The labour market added more jobs in July than was expected, and the US unemployment rate dropped to 3.5%, while wage growth rose 5.2% higher than a year ago, signalling that high inflation is still a key concern. The Dow Jones closed just 0.2% higher, while the S&P500 fell 0.2%, and the Nasdaq dropped 0.5%.

What to watch today:

  • Following the US, the Australian market is set to open flat this morning.
  • OZ Minerals (ASX:OZL) rejected a takeover proposal by BHP for $8.34 billion, undervaluing the gold and copper miner. The offer was made on Friday – it was a $25 per share offer which was a 32% premium to the stock’s last close. So, watch the share price movements of BHP and OZL today.
  • Reporting season is picking up this week with quite a few companies releasing their earnings results. This morning, rail freight operator Aurizon Holdings (ASX:AZJ) and Suncorp (ASX:SUN) both published their full year results.
    • SUN delivered group NPAT of $681 million, down 34%, impacted by volatile investment markets and elevated natural hazard costs. Home lending was up 9% or $4.1 billion. And SUN announced a final fully franked ordinary dividend of 17 cents per share, representing a 75% payout ratio.
    • AZJ’s underlying EBITDA was only 1% lower than the prior comparable period. Cashflow increased 13%, and AZJ announced a final dividend of 10.9 cents per share fully franked.
  • In commodities, the price of oil is lower, heading for an over 9% weekly loss and wiping out the gains triggered by Russia’s invasion of Ukraine. Gold is also trading lower as markets react to a strong payroll report in the US. And iron ore continues to drop around worries of China’s ropery crisis and steel production cuts.

Trading Ideas:

  • Citi have a Buy rating on City Chic Collective (ASX:CCX) with a price target of $3.00. They see potential for long duration international growth underpinned by market share gains. The expected share price return is 35.7%.
  • Trading Central have identified a bullish signal in Resolute Mining (ASX:RSG), indicating that the stock price may rise from the close of $0.30 to the range of $0.34 – $0.35 over 41 days, according to the standard principles of technical analysis.

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