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Morning Bell 8 November

Sam Kanaan
November 8, 2023

Wall St ended the trading day higher again across the key indices with the S&P500 up 0.28%, rising for a 7th consecutive session, while the Dow Jones rose 0.17% and the tech-heavy Nasdaq ended the day 0.9% in the green.

Tech stocks lead the charge on Tuesday due to a pullback in treasury yields, making equities more attractive to investors, with Microsoft, Apple and Amazon each up over 1% on Tuesday.

Over in Europe, third-quarter earnings results weighed on markets in the region causing each to close mostly lower on Tuesday. The STOXX600 fell 0.3% as oil and gas stocks fell 1.85% after Saudi energy giant Aramco reported a steep decline in profit, while financial services stocks rose 0.9%. Germany’s DAX rose 0.11% on Tuesday, while the French CAC fell 0.4%, and, in the UK, the FTSE100 fell 0.1%.

The ASX closed 0.3% lower on Tuesday after the widely expected 25-basis point rate hike was handed down by the RBA in a bid to combat the nation’s sticky inflation under new RBA governor, Michele Bullock. Financial stocks weighed on the key index, with the sector sliding 1.04% while energy stocks fell 0.8% at the closing bell on Tuesday. While the market was factoring in the rate rise before yesterday, the slide in the key index came after RBA governor, Michele Bullock, left the possibility for further rate hikes open to ensure inflation which is currently at 5.4%, returns to the target range of 2-3% by December 2025.

What to watch today:

  • The Australian share market is set to open flat this morning at market open.
  • On the commodities front this morning,
    • Oil is down 4.14% to US$77.48 a barrel following concerns over China’s report of a worse-than-expected drop in exports in October.
    • Gold is down 0.46% to US$1968 an ounce and iron ore is trading flat at US$126.50 cents a tonne.

Trading Ideas:

  • Bell Potter has initiated coverage on Universal Store Holdings (ASX:UNI) and has recommended a buy. The buy rating is initiated as Universal’s higher margin sales from the majority private label sales will become a major driver of margin improvement and earnings growth.
  • And Bell Potter maintains a speculative buy rating on Matrix Composites & Engineering (ASX:MCE) and has slightly increased its price target to 34 cents a share. MCE is exposed to a protracted capital expenditure up-cycle across the global off-shore energy sector. This view is reinforced by record-high order backlogs and upgraded medium-term outlooks reported by offshore energy service providers.

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