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Morning Bell 8 September

Grady Wulff
September 8, 2022

US markets snapped a two-session losing streak, to close higher across the three key indices, led by the Nasdaq rallying more than 2% on Wednesday as oil prices and rate concerns eased, which cooled investor fears over continued high inflation. Stocks rallied after Federal Reserve Vice Chair Lael Brainard reaffirmed the Fed will do what it takes to control the country’s inflation, while also noting the risks of going too far. US trade balance data for July came in overnight, with imports continuing to outweigh exports, as the trade balance in the world’ largest economy regained some ground to a deficit of US$70.7 billion from $80.9 billion in the month prior.

Over in Europe, Russian President Vladimir Putin caused a sell-off in stocks after threatening to cut back grain exports from Ukraine and said Moscow could extend its rations of natural gas exports and cut off oil flow if the west goes ahead with a planned price cap on Russian crude. Putin’s comments on grain sent global wheat prices up 4%. Stocks were also sold off as investor concerns over a recessionary outlook continue to grow. The FTSE100 fell almost 1%, the DAX added just 0.3% and the CAC closed just 0.02% higher.

What to watch today:

  • On local shores, the ASX futures are anticipating the market to open just under half a percent higher today, to recover from yesterday’s sharp sell-off.
  • In commodities, crude oil is trading 6% lower overnight, natural gas is down 3.5%, gold is 1.3% lower and iron ore is trading down 1.5%.
  • In economic data, investors will be keeping an eye on RBA Governor Philip Lowe’s speech to gain an insight into just how aggressively the RBA will continue to raise interest rates in the future. Australia’s trade balance data is also out today, with the market expecting a trade surplus of $14.5 billion, down June’s surplus above $17.6 billion. Investors will be hoping the data boosts mining stocks today, following a sharp sell-off yesterday, after China’s trade balance showed demand fell nationally and internationally for iron ore, copper and gold.

Trading Ideas:

  • Trading Central has identified a bullish signal on software company Nuix (ASX:NXL), amid a pattern forming over a 17-day period. The bullish signal indicates that over this same period the stock price could climb from the close of $0.69/share to between $0.81-$0.85 / share according to standard principles of technical analysis.
  • Bell Potter has initiated coverage of medicinal cannabis company Cronos Australia (ASX:CAU) with a buy rating and a price target of $0.60 per share with the expectation that momentum observed for Cronos in FY22 will continue into FY23 and translate into strong revenue and earnings growth.

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