Morning Bell 14 November

Wall St extended its post-rally breather into Wednesday with the major averages ending the day mostly flat. The Dow Jones rose 0.11%, the S&P500 added just 0.02% and the tech-heavy Nasdaq ended the day down 0.26%.

The US CPI index for October showed inflation rose to an annual rate of 2.6% which met economists’ expectations and was a slight uptick from the 2.4% reported in September. Core inflation which excludes food and energy rose 3.3% in the last month which also met expectations.

Over in Europe on Wednesday, the global market pullback extended into the Euro region with the STOXX 600 falling 0.17%, while Germany’s DAX lost 0.16%, the French CAC fell 0.14% and, in the UK, the FTSE100 ended the day up just 0.06%.

Across the Asia region overnight, markets in the region mostly fell in line with the global market sell off and as investors assessed corporate goods data out of Japan showing YoY price growth reached its highest level since July 2023, for the month of October with a reading of 3.4%. China’s CSI index rose 0.62%, while Hong Kong’s Hang Seng fell 0.45%, Japan’s Nikkei lost 1.66% and South Korea’s Kospi index ended the day down 2.64%.

Locally yesterday, the ASX200 tumbled 0.75% taking lead from Wall Street’s losses on Tuesday US time, as investors took a breather from the recent post-election rally. 10 of the 11 sectors on the ASX ended Wednesday’s session in the red led by financials stocks falling 1.07%.

CBA shares fell almost 0.5% on Wednesday after the leading Aussie bank released a quarterly trading update including operating income out 3.5%, OpEx up 3%, and unaudited statutory NPAT of $2.5bn. CBA shares hit a record $150/share on Tuesday and a vast number of market participants continue to question whether this valuation is fair or if the bank is overvalued.

Building materials producer James Hardie Industries bucked the sell-off on Wednesday to close higher despite outlining profit dropped 23% in Q2FY25 results out yesterday due to weakness in Europe and China, while its North American division, the key driver of revenue, is expected to continue growing into FY26.

In economic data out yesterday, Australia’s wage price index rose at the weakest level since Q4 2022 with a QoQ rise of just 0.8% and an annual rise of 3.5%, both of which fell short of economist’s expectations and provide a strong sign of inflation easing in Australia as wages inflation has been a key driver of the stickiness of inflation in recent months.

What to watch today:

• Ahead of Thursday’s trading session in Australia the SPI futures are anticipating the ASX will open the day up 0.35% despite the global market turbulence overnight.
• On the commodities front this morning, oil is trading 0.24% lower at US$67.95/barrel, gold is down 1.18% at US$2575.86/ounce and iron ore is down 0.14% at US$102.96/tonne.
• The Aussie dollar has weakened again overnight against the greenback to buy US$0.65, 100.83 Japanese Yen, 51.20 British Pence and NZ$1.10.

Trading Ideas:

• Bell Potter has increased the 12-month price target on Light and Wonder (ASX:LNW) from $165 to $180 and maintain a buy rating on the gaming technology provider following the release of the company’s Q3 update including 12% YoY revenue growth and adjusted NPATA of US$122m which is growth of 23% YoY. The company’s outlook target of FY25 AEBITDA at US$1400m was reaffirmed.
• And Trading Central has identified a bearish signal on South32 (ASX:S32) following the formation of a pattern over a period of 21-days which is roughly the same amount of time the share price may fall from the close of $3.54 to the range of $3.19 to $3.27 according to standard principles of technical analysis.