Morning Bell 26 June

Wall street closed mixed on Tuesday as the S&P and Nasdaq snapped 3-day losing streaks while the Dow Jones reversed gains to close lower as investors regain appetite for AI-stocks after some profit taking sessions. The Dow Jones fell 0.76% on Tuesday, while the S&P 500 and Nasdaq ended the day up 0.39% and 1.26% respectively, driven by Nvidia jumping 6.7%. In recent weeks we have seen investors in the region shift focus from rate-driven sentiment to a bull market driven purely by the AI movement.
In Europe overnight markets closed lower amid investor fears of rising geopolitical tensions in the region. The STOXX600 fell 0.3% weighed down by industrial stocks, while Germany’s DAX lost 0.81%, the French CAC declined 0.58% and, in the UK, the FTSE100 ended the session down 0.41%. Airbus shares fell 9.4% on Tuesday after the company announced aircraft delivery and earnings target cuts for 2024, while drug maker Novo Nordisk rose 4% after the company’s Wegovy weight loss treatment has been approved in China for long-term weight management.
Across the Asia markets on Tuesday, China’s CSI 300 closed at its lowest level since February despite the rest of the region rallying yesterday. Japan’s Nikkei rose 0.95% on Tuesday, Hong Kong’s Hang Seng added 0.25% and South Korea’s Kospi index ended the day up 0.35% on a clime in consumer confidence in the region.
What to watch today:
• Locally yesterday, the ASX recovered on Tuesday from Monday’s sell-off to close the day up 1.36% taking lead from Wall Street rising on Monday and buoyed by a strong rally for the local banks which saw CBA rise to a record high yesterday. Mining giants were also boosted yesterday by a rise in the price of oil which led to the energy sector ending the day up with a strong 2.23% rally.
• KFC Australia operator Collins Foods jumped over 7.3% yesterday after the restaurant operator released full year results including record revenue and rising earnings in this challenging market. Collins Foods reported revenue rose 10.4% to $1.4889bn, and underlying NPAT rose 15.6% to $60m. Collins also reported net operating cash flow rose $30.2m and net debt was reduced by $46.7m. Investors welcomed the 28cps fully franked final dividend declared by the company which is up from 27cps in FY23.
• Casino operator Sky City Entertainment Group recovered some of Monday’s losses on Tuesday after announcing it has entered into an unconditional agreement to sell its entire shareholding comprising around 10% in Gaming Innovation Group, a European-based online gaming platform provider, for around NZ$55m with proceeds to be used to pay down Sky’s debt as part of its capital management review.
• On the commodities front this morning, oil is trading 1.11% lower at US$80.72/barrel, gold is down 0.53% at US$2318/ounce, and iron ore is down 0.38% at US$106.55/tonne.
• 1 Aussie dollar is buying 66 US cents, 106.15 Japanese Yen, 52.57 British Pence and 1 New Zealand dollar and 9 cents.
Today is a big day on the economic calendar locally with the release of Australia’s inflation print out this morning with the expectation of a slight uptick to 3.8% from 3.6% in April which if it does come in at this reading, will indicate inflation remains sticky and the RBA has a tough job ahead on a rate front.
• Ahead of the midweek trading session here in Australia the SPI futures are anticipating the ASX to open the day down 0.37%.
Trading Ideas:
• Bell Potter has slightly increased the 12-month price target on Cleanaway (ASX:CWY) from $3.10 to $3.15 and maintain a buy rating on the leading waste and environmental services company in Australia after the company announced the acquisition of Melbourne-based Citywide Waste which will add three key waste services to Cleanaway’s Melbourne Metro operations and a further 1500 C&I customers in metro Melbourne.
• Trading Central has identified a bearish signal on Orora (ASX:ORA) following the formation of a pattern over a period of 6-days which is roughly the same amount of time the share price may fall from the close of $1.93 to the range of $1.64 to $1.70 according to standard principles of technical analysis.
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