Market wraps 12th February 2024

Morning Bell - Grady Wulff

Wall Street closed mixed on Friday with the S&P500 climbing 0.57% to close above 5000 points for the first time ever on Thursday as investors responded to December’s revised inflation report came in below first reported reading. The Dow Jones fell 0.14% at the closing bell while the tech-heavy Nasdaq ended the day up 1.25%. Over the 5 trading days last week the S&P500 added 1.4% in its 5th straight positive week, the Nasdaq rose 2.3% and the Dow Jones remained flat across the trading week.

The initial December inflation reading of 0.3% growth was downwardly revised on Friday to a 0.2% increase and core inflation results for the U.S. are due out this week.

Strong earnings results are also driving investor confidence in the US as tech mega caps including Nvidia and Alphabet rallied 3.6% and 2% respectively on Friday while Cloudfare soared 19.5% on strong earnings.

Over in Europe, markets closed slightly lower on Friday as investors digested corporate earnings results despite the release of favourable economic data out in the region. The STOXX600 fell just 0.08% on Friday, Germany’s DAX lost 0.22%, the French CAC dropped 0.24%, and in the UK, the FTSE100 ended the day down 0.3%.

Fresh inflation data out of Germany released on Friday indicated inflation fell to 3.1% in January in a positive sign for Europe’s largest economy.

Locally on Friday, the ASX200 rose 0.07% led by the technology sector rallying 1.12% and healthcare stocks adding 1%, while losses among energy and utilities stocks weighed on the key index.

Boral shares jumped 13% on Friday after the leading cement producer delivered very strong first half results including revenue up 9.4% and underlying NPAT soaring 143% over the 6-month period. Strong price realisation and volume recovery were the drivers of the stronger first half results.

Local uranium stocks took a hit on Friday after Canadian uranium miner Cameco announced plans to expand production at its Cigar Lake Mine and McArthur River/Key Lake, to address the growing global demand for the key commodity. Boss Energy fell 12.7% on Friday while Paladin Energy fell just over 7%.

What to watch today:

  • Ahead of the local trading session here in Australia to start the new week, the ASX200 is set to open Monday’s session slightly in the red ahead of a big reporting season week locally this week.
  • On the commodities front this morning, oil is trading 0.81% higher at US$76.84/barrel, gold is down 0.5% at US$2022.90/ounce, uranium is up 6% at US$106/pound and iron ore is flat at US$128/tonne.
  • AU$1.00 is buying US$0.65, 97.29 Japanese Yen, 51.67 British Pence and NZ$1.06.
  • On the reporting season calendar today, you can expect to see results released from Aurizon Holdings, Beach Energy, JB Hi-Fi, and James Hardie Industries.

Trading Ideas:

  • Bell Potter has maintained a hold rating on REA Group (ASX:REA) and has slightly decreased the 12-month price target from $179 to $174 following the release of first half results including a 22% increase in EPS to 189cps, a 16% increase in dividend to 87cps which fell short of Bell Potter expectations. Despite the strong quarter, Bell Potter believes the current share price of $176.43 has REA Group relatively fully valued.
  • And Trading Central has identified a bullish signal on Infratil (ASX:IFT) following the formation of a pattern over a period of 9-days which is roughly the same amount of time the share price may rise from the close of $10.11 to the range of $10.80 to $11/share according to standard principles of technical analysis.