Morning Bell 8 August

Between the Bells

Wall Street’s rollercoaster week extended into the midweek session as stocks went from a rally on Tuesday to a sea of red again on Wednesday as investor fears of recession drive investor sentiment in the current market conditions. The Dow Jones fell 0.6% on Wednesday, the S&P500 dropped 0.77% and the tech-heavy Nasdaq ended the day down 1.05%. Super Micro Computer shares tanked 20.1% after the server company missed Q4 earnings estimates, while Shopify soared over 22% after the e-commerce giant beat expectations for Q2.

Over in Europe markets closed higher on Wednesday in the best performance for the region for more than 9-months. The STOXX600 rose 1.56%, Germany’s DAX climbed 1.47%, the French CAC added 1.9% and, in the UK, the FTSE100 ended the session up 1.75%.

Puma shares tumbled over 11% on Wednesday after the sportswear company released Q2 earnings and reduced its EBIT forecast fore the full year.

The Asia markets extended gains in the region on Wednesday as Japan’s Nikkei continued its recovery with a 1.2% rise, while Hong Kong’s Hang Seng added 1.3%, while China’s CSI index ended the day flat.

China’s trade balance data out yesterday indicated a stagnated recovery in the region’s trade for July with imports rising 7.2% in July, while exports rose 7% which missed expectations.

Locally on Wednesday, investors took confidence from Wall Street’s recovery on Tuesday into our local midweek session resulting in the key benchmark ending the day up 0.25% as all but two sectors ended the day in positive territory. Investors are focused on corporate earnings and rate outlook, with subdued trading volumes locally indicating investors sit nervously on the sidelines assessing economic outlook and the rate cut forecasts.

Arcadium Lithium was the best performer on the ASX200 yesterday after the company announced it will suspend or delay a number of its projects in Argentina and Canada amid the persistently depressed lithium spodumene prices.

GQG Partners shares rose 3.3% yesterday after the fund manager reported funds under management increased almost 0.5% MoM to US$156.3bn as of the end of July, implying net inflows of US$13.9bn for the year to date to July 31.

What to watch today:

• Ahead of Thursday’s trading session on the ASX, the SPI futures are anticipating the local market to open the day down 0.43%, taking lead from Wall Street’s turbulence overnight.
• On the commodities front this morning, oil is trading 3.13% higher at US$75.48/barrel, gold is flat at US$2383/ounce, and iron ore is down 1.27% at US$102.86/tonne.
• AU$1.00 is buying US$0.65, 95.51 Japanese Yen, 51.52 British Pence and NZ$1.09.

Trading Idea:

• Bell Potter has decreased the 12-month price target on Neuren Pharmaceuticals (ASX:NEU) from $28 to $25 but maintain a buy rating on the biotech company developing drugs and treatments for key neurodevelopmental disorders, following the release of the company’s Q2 results including Daybue sales rising 11% QoQ to US$84.6m and treatment persistency continuing to track towards 50% long-term. The decrease in the price target by Bell Potter’s analyst was due to the company’s distribution partner, Acadia, decreasing the CY24 sales guidance of Neuren’s Daybue drug to US$340-US$370m from US$370m to US$420m.