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Morning Bell 8 February

Paulina Peters
February 8, 2022

Yesterday, the Aussie share market posted a small loss of 0.13%, in what was a choppy session. ANZ reported worse-than-expected first quarter margins, which saw its share price decline nearly 2% and the Australian government announced that our international COVID-19 border closures would end on February 21.

Looking at the sector performances, the energy sector outperformed, up 1.6%, benefitting from the recent gains in both oil and gas commodity prices, while the healthcare sector led the losses, down 1.3%.

GrainCorp (ASX:GNC) led the way, rising an impressive 12.3%, after revealing that it’s expecting a favourable outlook for financial year 2022. And travel stocks were back on top following the government’s announcement that Australians would be welcoming back international travellers later this month. Flight Centre (ASX:FLT), Corporate Travel Management (ASX:CTD), Webjet (ASX:WEB) and Qantas (ASX:QAN) all gained more than 4%. Meanwhile, Magellan Financial Group (ASX:MFG) declined 11%, after it was announced that its director and chairman, Hamish Douglass would be taking a leave of absence.

The most traded stock by Bell Direct clients yesterday, was iron ore miner Champion Iron (ASX:CIA). Its share price fall may have been because the company traded ex-dividend yesterday. As a reminder, a company’s share price typically drops by the amount of the dividend paid to reflect the fact that new shareholders are not entitled to that payment.

In the US, both the S&P500 and Nasdaq started the week on a negative note as quarterly results continued to be a source of volatility, and as investors await key US inflation data on Thursday. The Dow closed flat, the S&P500 down 0.37% and the Nasdaq also down 0.58%. And Facebook-parent Meta shares have fallen another 5%, continuing its post-earnings slide.

Today, following the negative session over on Wall Street, the futures are suggesting the Aussie share market will open 0.16% lower this morning.

What to watch today:

  • In economic news, business confidence data for January will be released this morning, which will provide further detail on how business confidence is holding up during the Omicron outbreak. Trading Economics expects today’s reading for January to come in at -14.
  • Suncorp (ASX:SUN) will be on watch today as the company is set to release its half-year results. Bell Potter currently has a BUY rating on the stock and is expecting NPAT to come in at $267.6m. While consensus is expecting a more modest NPAT of $290.5m.
  • Also reporting results today is Shopping Centres Australasia Property Group (ASX:SCP), G.U.D Holdings (ASX:GUD) and Charter Hall Long Wale REIT (ASX:CLW).
  • Keep an eye on Macquarie Group (ASX:MQG) as the company will be releasing its operational briefing today which will include an update on the investment bank’s performance during the third quarter of financial year 2022.
  • In commodities, the oil price fell following signs of progress in the US-Iran nuclear talks. The WTI crude oil price dropped nearly 1% to US$91.51 a barrel. On the flip side, the gold price climbed to a more than one-week high, as inflation risks boost the safe-haven’s appeal. And the seaborne iron ore price is trading 3.2% higher to US$150 a tonne.

Trading Ideas:

  • Bell Potter has upgraded its rating on software company Altium (ASX:ALU) from a HOLD to a BUY, and have decreased its price target by 11% to $40. Bell Potter believe potential catalysts for the stock include 1) a strong first-half financial year 2022 result, 2) an upgrade in its financial year 2022 guidance and 3) a renewed and increased takeover offer from Autodesk. Now ALU last closed at $34.50, so that implies about 16% share price growth in a year.
  • Trading Central has a bullish signal on Insurance Australia Group (ASX:IAG). This signal indicates that the stock price may rise from the close of $4.44 to the range of $4.71-$4.79 in the next 44 days, according to standard principles of technical analysis.

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