28th October 2021

Morning Bell - Paulina Peters

Yesterday, the ASX200 struggled to find direction for most of the day, finishing flat as investors contemplated the possibility of interest rate hikes happening sooner rather than later. The best performing sector was the Communication Services sector, up 2%, while the Consumer Staples sector fell the most, down 2%. Uniti Group (ASX:UWL) led the gains, up 6%, following the company announcing it will be under taking a share buyback. The worst performer was a2 Milk (ASX:A2M). Investors were selling down a2 Milk shares, after the company released an update that revealed its margins were significantly lower compared to pre-COVID-19 levels.

In the US, the earnings season rally seems to have lost some of its momentum, with the S&P500 slipping from its record high and the Dow falling for the first time in four days. The Nasdaq closed flat, despite Microsoft and Alphabet reporting results that exceeded estimates.

After a mixed session on Wall Street, the futures are suggesting the Aussie share market will open 0.54% lower this morning.

What to watch today:

  • In economic news, yesterday, the ABS released its key inflation reading. The Consumer Price Index (CPI) rose 0.8% this quarter. Over the twelve months to the September 2021 quarter, the CPI rose 3.0%. The quarterly rise was driven primarily by a 7.1% jump in fuel and a 3.3% jump in new dwelling purchase costs. Today, investors will hear from RBA Deputy Governor Guy Debelle who will respond to the latest inflation figures.
  • Australia and New Zealand Bank (ASX:ANZ) and Fortescue Metals (ASX:FMG) are set to report today. ANZ is set to release its full year results this morning. FMG will release its first quarter update, which should provide investors with an idea of just how badly the pullback in iron ore prices has impacted its margins.
  • AGMs wise, there’s 14 companies holding theirs today. To list a few, South32 (ASX:S32), JB Hi-Fi (ASX:JBH) and Boral (ASX:BLD).
  • Companies going ex-dividend today include Bank of Queensland (ASX:BOQ) and Centrepoint Alliance (ASX:CAF).
  • Oil prices fell on Wednesday after crude stockpiles rose more than expected and fuel inventories unexpectedly increased last week in the US, the world’s largest oil consumer. The gold price steadied off the back of a softer dollar and US bond yields retreating, currently trading at $US1,796 an ounce. And the sea borne iron ore price continues to trade at around US$122 a tonne.

Trading ideas:

  • Bell Potter has reiterated its BUY recommendation on IT company, Life360 (ASX:360), a company best known for its family location sharing app. Bell Potter has increased Life360’s price target by 16% to $12.50 (previously $10.75).
  • Bullish charting signals have been identified in Carnarvon Petroleum (ASX:CVN), Uniti Group (ASX:UWL) and Tyro Payments (ASX:TYR), according to Trading Central.