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Market wraps 24th February 2023

Morning Bell - Sophia Mavridis

Overnight in the US, equities advanced higher in a late-day rally, with all three major benchmarks in positive territory. European stocks also moved higher in response to the Federal Reserve’s meeting minutes, which showed that they’re still committed to fighting inflation with interest rate hikes. Equities were in the green, with the STOXX 600, Germany’s DAX and France’s CAC all closing in the green, while the FTSE 100 ended the session lower.

What to watch today:

  • The Australian market is set to open slightly higher this morning, with the SPI futures suggesting a rise of 0.06%.
  • In commodities:
    • Oil prices are rallying, currently trading around US$75.56 per barrel, ending two days of losses, amid lingering concerns about tight global supplies. Russia has announced its plans to cut oil exports from its western ports by up to 25% in March, exceeding its announced output curbs of 500,00 barrels per day. The market is also expecting China’s oil imports to hit a record high this year, amid rising demand for transportation fuel and as new refineries come online.
    • US natural gas is trading 8% higher, however remained not far from a 29-month low, as the market monitors demand and weather forecasts, with recent projections pointing to cold-than-expected temperatures.
    • Iron ore is trading at its strongest level in 8-months, with signs of stronger demand for Chinese construction, grouped with supply concerns.
    • Gold has held its recent decline, at its lowest in 8-weeks, after the Fed’s meeting minutes shoed that policymakers will continue interest rate hikes.
  • Companies reporting today include Allkem (ASX:AKE), Aristocrat Leisure (ASX:ALL), BWX (ASX:BWX), Brambles (ASX:BXB), Harvey Norman Holdings (ASX:HVN), Link Administration Holdings (ASX:LNK)and Mineral Resources (ASX:MIN).

Trading Ideas:

  • Bell Potter maintain a BUY rating on Eagers Automotive (ASX:APE) after the company reported its earnings. 2022 revenue fell, but was in line with Bell Potter’s expectations. Underlying operating profit before tax grew 1% to $405.2 million and was 3% above Bell’s forecast of $392.4 million. The company provided strong revenue guidance and forecasts were upgraded. Bell Potter’s price target dropped to $15 from $15.50, and at APE’s current share price of $13, this implies 15.4% share price growth in a year.
  • Trading Central has identified a bearish signal in Rio Tinto (ASX:RIO) indicating that the stock price may close from the close of $123.40 to the range of $114.50 to $116.25 over 62 days, according to the standard principles of technical analysis.