Morning Bell 7 January

Wall Street started the new trading week in mostly positive territory as chip stock boosted the S&P and Nasdaq higher with gains of 0.55% and 1.24% respectively, while the Dow Jones lagged the market with a fall of 0.06%. Market optimism about tech stocks and the earnings growth potential remains elevated which continues to fuel strong tailwinds for the sector.

Over in Europe on Monday markets closed higher amid reports Trump’s team is considering a plan to impose tariffs on all countries but only on ‘critical imports’. The STOXX 600 rose 0.94%, Germany’s DAX added 1.56%, the French CAC climbed 2.24% and, in the UK, the FTSE 100 ended the day up 0.31%.

Across Asia on Monday, markets closed mostly lower as investors digested business activity and key data out in specific regions. China’s Caixin services PMI index from S&P Global rose to 52.2 in December, the fastest expansion since May last year. Despite this, China’s central bank said over the weekend it would implement a ‘moderately loose’ monetary policy in 2025. China’s CSI index fell 0.16% on Monday, Hong Kong’s Hang Seng lost almost 0.5% but South Korea’s Kospi Index rose 1.91%.

Locally, the ASX raced out of the gates this morning with a strong rally on the back of Wall Street’s strength on Friday before pulling back in afternoon trade to close just 0.08% higher as the miners weighed on the market gains despite the tech sector posting a 0.8% gain.
 The iron ore mining giants came under pressure yesterday amid a decline in the price of iron ore to below US$100/tonne. Singapore’s iron ore futures contracts falling below US$100/tonne were the key driver of the spot price decline today as traders exit amid easing demand for the commodity.

DroneShield fell over 1.5% on Monday despite the counter-drone technology producer announcing a $9.7m order from a major military customer in Latin America.

While Gold Road Resources rose 1.2% after reporting record quarterly production at the 50%-owned Gruyere project with 91,631 ounces of gold produced during the December quarter, significantly above the 68,781 ounces produced in the September quarter.

Insignia Financial shares soared over 14% yesterday to a 3-year high after the superannuation company announced it had received a $2.87bn takeover bid from US-based investment manager CC Capital Partners, which trumps the former takeover offer of $2.67bn from Bain Capital. The deal would provide CC Capital with access and market share into Australia’s estimated $4.1tn superannuation market which is considered to be the 4th largest in the world.

What to watch today:

• Ahead of Tuesday’s trading session on the ASX the SPI futures are anticipating the local market will open the day up 0.15%, extending on the positive finish from yesterday.
• On the commodities front this morning oil is trading 0.67% lower at US$73.47/barrel, gold is down just 0.06% at US$2636/ounce and iron ore has further weakened to trade down 1.16% at US$99.44/tonne.
• The Aussie dollar is buying US$0.62, 98.44 Japanese Yen, 50.09 British Pence and NZ$1.11.

Trading Ideas:

• Trading Central has identified a bullish signal on Macquarie Group (ASX:MQG) following the formation of a pattern over a period of 70-days which is roughly the same amount of time the share price may rise from the close of $224.47 to the range of $243 to $248 according to standard principles of technical analysis.
• And Trading Central has identified a bearish signal on Australian Ethical Investment (ASX:AEF) following the formation of a pattern over a period of 38-days which is roughly the same amount of time the share price may fall from the close of $5.15 to the range of $4.25 to $4.45 according to standard principles of technical analysis.