Morning Bell 7 August

Between the Bells

Over in the US on Tuesday the steep sell-off of the previous three sessions took a pause with stocks recovering some losses, as investors took a pause from the recession-fear-driven pull-back. The Dow Jones rose 0.76% on Tuesday, the S&P500 rose 1.04% and the tech-heavy Nasdaq ended the day up 1.03%. US investors began the US Market correction last Friday after US jobs data came in weaker-than-expected, which sparked the broad market tumble for 3 sessions amid rising recession fears. The rally on Tuesday has identified key areas of the market that still have growth potential including small-caps and rate-sensitive groups.

Across European markets overnight, markets in the region joined the global market rebound on Tuesday to close mostly higher in Europe. The STOXX 600 rose 0.2% on Tuesday, Germany’s DAX added 0.09%, the French CAC declined 0.27%, and, in the UK, the FTSE100 ended the day up 0.23%.

In the Asia region on Tuesday, Japan’s Nikkei recovered from its worst session since the Black Monday crash of 1987 on Monday, to close up 10.23% on Tuesday as heavyweight stocks in the region including Softbank Group Corp and Mitsui rose 12.06% and 10.43% respectively. Japan’s markets have been sliding of late since the Bank of Japan raised rates to their highest level since 2008 on July 30, causing the yen to strengthen which placed pressure on equities.

What to watch today:

• The local market tanked over 3% on Monday before recovering to close 0.41% higher on Tuesday, taking no-lead from Wall Street’s worst session in years on Monday night. Local investors yesterday were more focused on the RBA’s rate decision and key corporate earnings results to provide outlook for FY25.
• The RBA maintained the nation’s cash rate at a 12-year high 4.35% for yet another period as was widely expected as key inflation drivers remain stubbornly sticky including housing inflation, food and non-alcoholic beverages, and clothing and footwear, in addition to services, and wages inflation driving up the nation’s inflation rate to 3.8% in the June quarter.
• RBA governor Michele Bullock said yesterday ‘a rate cut is not on the agenda in the near term’ as inflation remains sticky above the 2-3% target range and that the RBA actually considered a raise for August’s meeting before deciding to hold at the current rate. Ms Bullock also pointed out the impacts of sticky overseas inflation and locally, the need to see demand and supply coming back into better balance.
• On a corporate earnings front, Audinate tanked 36% yesterday after releasing strong FY24 results alongside the outlook for headwinds set to impact earnings in FY25. Investors were more concerned about the outlook of earnings depreciation than the strong results in FY24.
• Coronado Global Resources shares fell 1.3% on Tuesday after the leading coal producer reported 1H NPAT fell 92% on PCP, while EBITDA tumbled 62% YoY and revenue fell 10% on the PCP. CRN retained CY24 guidance on volumes, cost and CAPEX and attributed the performance dip on lower coal prices and lower sales.
• On the commodities front this morning oil is trading 0.5% higher at US$73.03/barrel, gold is down 0.4% at US$2395/ounce and iron ore is up 0.17% at US$104.18/tonne.
• The Aussie dollar is buying 65.15 US cents, 94.93 Japanese Yen, 51.02 British Pence and 1 New Zealand dollar and 10 cents.
• Ahead of the midweek trading session on the ASX the SPI futures are anticipating the ASX to open the day down 0.25%.

Trading Ideas:

• Bell Potter has increased the 12-month price target on Lotus Resources (ASX:LOT) and maintain a speculative buy rating on the uranium-focused miner with projects in Africa following the company’s announcement that it has signed the Mine Development Agreement with the Malawi Government for the restart of the Kayelekera (Kay-el-e-kera) Uranium Mine (KM). Bell Potter’s analyst sees posit