Market wraps 1st March 2024

Morning Bell - Sam Kanaan

Wall St closed higher overnight as investors shrugged off unfavourable key inflation data to post gains across the key indices which remain in line for a winning month. The inflation data reading came in the form of US core PCE prices which excludes food and energy increasing by 0.4% from the previous month, while rising at an annual rate of 2.8%, indicating inflation in the world’s largest economy remains sticky. GDP growth data was also released on Wednesday, indicating the US economy grew by 3.2% in Q4 which was slightly less than economists were expecting and well below the 4.9% growth recorded in Q3. The Dow Jones ended Thursday’s trading session 0.15% higher, the S&P 500 gained just over half a percent and the tech-heavy Nasdaq rallied 0.84%.

Over in Europe, markets closed slightly higher as investors reacted to key inflation reports. The STOXX600 closed 0.1% higher with construction stocks leading gains, up 1.2% whilst healthcare and food and beverage stocks both fell 0.7%. Germany’s DAX closed 0.44% higher, the French CAC closed down 0.34% and over in the UK, the FTSE100 ended the trading session 0.07% in the green.

Locally yesterday, the ASX200 closed half a percent higher with all but the utilities sector ending the trading session higher. Real estate and the consumer discretionary sectors lead gains up 1.73% and 1.29% respectively whilst the utilities sector fell 0.33%.

What to watch today:

  • The Australian share market is set to open slightly higher, with the SPI futures suggesting a rise of 0.04% at market open this morning.
  • On the commodities front this morning,
    • Oil is trading 0.4% lower at US$78.22 cents a barrel as investors await the OPEC+ meeting in March where discussions will be held on the ongoing output cuts.
    • Gold is trading 0.47% higher at US$2044 an ounce and iron ore is trading 0.84% lower at US$118.50 a tonne following a decline in home sales in China, consequently lowering margins for steel furnaces, meaning input buying declined.

Trading Ideas:

  • Bell Potter maintains a buy rating on Electro Optic Systems (ASX:EOS) and has increased its price target from $1.60 to $2.30. The buy rating is maintained following strong CY23 results which saw a return to positive EBITDA earlier than was forecasted. The company is currently experiencing substantial price growth and with a reduced cost base, Bell Potter has upgraded their EBITDA margin forecasts to 6%, 10.5% and 12% in CY24, CY25 and CY26, respectively.
  • And Trading Central has identified a bullish signal on Perseus Mining (ASX:PRU), indicating that the stock price may rise from the close of $1.75 to the range of $1.93-$1.97, on a pattern formed over 8 days, according to the standard principles of technical analysis.