Market wraps 25th July 2022

Morning Bell - Sophia Mavridis

Our local market closed flat on Friday, however, did deliver its best week since March. On Friday, real estate and financials gained the most. All four major banks closed higher, and tech stocks also rallied.

Leading the market was Pointsbet Holdings (ASX:PBH), Zip Co (ASX:ZIP) and EML Payments (ASX:EML), while the worst performers were Coronado Global Resources (ASX:CRN), Paladin Energy (ASX:PDN) and Webjet (ASX:WEB)

The most traded stocks by Bell Direct clients on Friday were ANZ (ASX:ANZ) and National Australia Bank (ASX:NAB).

European shares gained after the European Central Bank on Thursday announced a 50-basis point hike to interest rates, as expected, its first hike in 11 years. The STOXX 600 closed 0.4% higher, with travel and leisure stocks performing best.

In the US, all three major benchmarks declined. The Dow Jones closed 0.4% lower, the S&P500 fell 0.9% however did finish the week higher, while the Nasdaq dropped 1.9%. The Nasdaq’s previous rally was halted by an earnings miss from Snap, which sent share falling 39% lower. The yield on the US 10-year note declined 12 basis points to 2.76%.

What to watch today:

  • The Australian share market is set to open lower, with the SPI futures suggesting a 0.18% fall at the open this morning.
  • In commodities, oil extended losses for a third session, trading just below US$95 per barrel, amid continuing concerns of a US recession, as well as weakening gasoline demand with the rate hikes triggering slowdown concerns. On the other hand, gold is trading in the green, rebounding from a 16-month low. And iron ore is trading slightly higher, at levels last seen in December.
  • Today watch mining company South32 (ASX:S32) as its set to release a quarterly update today.
  • In economic data, this week investor focus will be on the Federal Reserves rate decision early Thursday AEST, as well as the Australian inflation rate for Q2 out on Wednesday. Commonwealth bank economists expect inflation to rise by 1.9% in the quarter, for an annual rate of 6.2%.

Trading Ideas:

  • Bell Potter maintain their BUY rating on Coronado Global Resources (ASX:CRN), following the companies June quarter update. Bell Potter expect CRN to generate strong free cash flow on their met coal price outlook. And while they expect global economic factors may see some short-term weakness in met coal markets, longer term supply-demand fundamentals do remain strong. Bell Potter have lowered their price target from $2.15 to $1.95, and at its current share price of $1.47, this implies 32.7% share price growth in a year.
  • Trading Central have identified a bullish signal in Lendlease Group (ASX:LLC) indicating that the stock price may rise from the close of $9.87 to the range of $10.55 to $10.75 over 29 days, according to the standard principles of technical analysis.