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Market wraps 4th August 2022

Morning Bell - Paulina Peters

Yesterday, the Aussie share market started the trading session in negative territory, down about 1% in the morning, but fought back in the afternoon to close 0.3% lower.

The tech sector was the top performing sector, up 2.2%. Materials also managed to post a small gain of 0.35%. However, the rest of the sectors were in the red.

Looking at the ASX200 leaderboard, Pinnacle Investment Management (ASX:PNI) jumped 12.2% after its strong full-year results, which showed profits had grown in financial year 2022. Zip (ASX:ZIP) was up 8.6%, continuing to lift since its quarterly report a couple of weeks ago. And some other tech shares like NOVONIX (ASX:NVX), EML Payments (ASX:EML) and Megaport (ASX:MP1) were amongst the top gainers for the day. On the flip side, the worst performers yesterday included Centuria Industrial REIT (ASX:CIP), Star Entertainment Group (ASX:SGR) and City Chic Collective (ASX:CCX).

The most traded stocks by Bell Direct clients yesterday included Lake Resources (ASX:LKE), telehealth company ResApp (ASX:RAP), as well as Zip (ASX:ZIP).

Moving to the US, stocks rallied off the back of better-than-expected economic data and a rebound in tech stocks. The positive July services PMI helped investors shake off worries of a recession and sent traders back to beaten-down tech stocks. The Dow Jones was up more than 400 points, the S&P500 lifted 1.6% and the Nasdaq jumped 2.6%, boosted by solid gains from Apple, Amazon, and Microsoft. European markets also closed higher after the strong US data reported.

What to watch today:

  • In line with the positive session seen in the US and in Europe, the ASX200 is expected to rise 0.47% at the open if you go by the SPI futures.
  • In economic news, balance of trade data for June will be released. Australia's trade surplus lifted to a record high of $15.97 billion in May 2022, easily beating market forecasts of a surplus of $10.73 billion, as exports rose more than imports, amid solid global demand and soaring commodity prices. Today’s reading is expected to come in at $14 billion, so stay tuned at 11:30am AEST.
  • Moving to commodities, oil prices have fallen after a surprise increase in US crude and gasoline inventories weighed on prices. The WTI oil price is trading at around US$90 a barrel. The gold price was pressured by a stronger dollar and Treasury yields and currently trades at US$1,763 an ounce, and the spot iron ore price trades slightly down, at US$117 a tonne.
  • If you hold Arena REIT (ASX:ARF), Prospect Resources (ASX:PSC) or Uniti Group (ASX:UWL), you will receive your dividend payment today.

Trading Ideas:

  • Bell Potter have maintained its Buy rating on Technology One (ASX:TNE) with an increased price target from $12.50 to $14.25. Bell Potter forecast double digit underlying EPS growth in each of the next three years. TNE also recently reported a strong result which was generated by an increase in the average number of products per customer, a large number of Software as a Service (SaaS) flips and also CPI increased for those customers in Australia who renewed contracts in the first half of FY22. At its current share price of $12.30, this implies about 16% share price growth in a year.  
  • Trading Central has a bullish signal on Fletcher Building (ASX:FBU) indicating that the stock price may rise from the close of $4.77 to the range of $5.55 - $5.70 in the next 71 days according to standard principals of technical analysis.