30th January 2024

Morning Bell - Grady Wulff

Wall Street rose back into record territory on Monday with the S&P500 ending the day up 0.76% at a fresh record high as investors assessed several tech giant earnings reports and ahead of the Fed’s interest rate decision announced tomorrow. The Dow Jones ended Monday’s session up 0.6% and the tech-heavy Nasdaq advanced 1.12% as we head into the busiest week of earnings results for the February reporting season. Microsoft, Apple, Meta, Amazon and Google parent company, Alphabet, are all set to release results this week which will likely spark movements for the Nasdaq, while Boeing and Merck also releasing results this week may spark movements on the Dow Jones.

As the Fed’s FOMC meeting kicks off on the 30th January US time, traders are factoring in a 97% chance the Fed will not cut rates at the January FOMC meeting. The current market sentiment is that in order to maintain the current rally on Wall Street, earnings need to meet expectations, the Fed needs to provide outlook and positive guidance on the rate front, and later this week, US jobs numbers will need to remain resilient but not too hot.

Over in Europe, markets started the week mixed ahead of key earnings results being released in the region, as well as economic data and bank announcements released later this week. The STOXX600 rose 0.2% led by oil and gas stocks rising 1%, while Germany’s DAX fell 0.12%, the French CAC lifted 0.09% and, in the UK, the FTSE100 ended the day mostly flat.

Across the Asia markets on Monday, stocks closed mostly higher ahead of key fourth-quarter GDP data out of Taiwan and Hong Kong later this week while Singapore’s central bank left its policy unchanged, as expected, on Monday. Chinese authorities have also moved to make it more difficult for investors to ‘short’ Chinese stocks as China’s stock markets have been among the worst performing in the world this year so far amid the ongoing sluggish economic recovery in the region post-pandemic.

Shares in embattled Chinese property developer, Evergrande, halted trading on Monday after Hong Kong’s high court ordered the liquidation of the company following the failure of an 11th- hour restructuring deal over the weekend.

Locally on Monday, the ASX200 rose for a sixth straight session, end the day up 0.3% at the closing bell, led by the energy sector climbing 1.83% on rising tensions in the Red Sea, while technology stocks weighed on the market.

Gold Road Resources tanked over 18% on Monday after the gold producer revealed its latest quarter production was lower QoQ due to delays accessing higher grade ore from the company’s open pit, on top of labour availability impacting the mining rate at the company’s operations.

What to watch today:

  • Ahead of the local trading session here in Australia, the SPI futures are expecting the ASX to open Tuesday’s session up 0.5% ahead of December’s retail sales data out later this morning.
  • On the commodities front this morning, oil is trading down 1.3% at US$76.98/barrel, gold is up 0.65% at US$2031/ounce and iron ore is flat at US$137.50/tonne.
  • AU$1.00 is buying US$0.66, 97.51 Japanese Yen, 51.97 British Pence and NZ$1.08.

Trading Ideas:

  • Bell Potter has maintained a buy rating on Gold Road Resources (ASX:GOR) but has lowered the 12-months price target from $2.05 to $1.80 after the gold producer released a Q4 CY23 update including production at its 50%-owned Gruyere Gold Mine had been impacted by labour availability issues and the issuance of lowered CY24 production guidance to allow for labour issues.
  • And Trading Central has identified a bearish signal on Mader Group (ASX:MAD) following the formation of a pattern over a period of 99-days which is roughly the same amount of time the share price may fall from the close of $6.65 to the range of $4.20 to $4.60 according to standard principles of technical analysis.