Morning Bell 22 July

Wall Street closed sharply lower on Friday as investors dumped mega cap stocks in favour of smaller caps following the broad rally that sent key indices and valuations to record highs in recent months. The Dow Jones fell 0.93%, the S&P500 declined 0.71%, the tech-heavy Nasdaq ended the day down 0.81%, but the small-cap focused Russell 2000 climbed 1.68% on Friday.

CrowdStrike, the cybersecurity company behind the global IT outage on Friday, tanked 11.1% following the outage.

Over in Europe, markets closed lower as the global IT outage hit businesses in the region. The STOXX 600 fell 0.77%, marking a fifth straight losing day, as the travel sector plunged 2.07% amid widespread flight disruptions on the back of the IT outage. Germany’s DAX ended Friday’s session down 0.45%, the French CAC lost 0.7% and, in the UK, the FTSE100 ended the day down 50 points.

Across the Asia region tracked broad global market declines with Japan’s Nikkei falling 0.4% on Friday, while South Korea’s Kospi index declined 1.6% and Hong Kong’s Hang Seng ended the day down 2.1%.

Locally on Friday, the ASX200 fell 0.81% for a third straight losing day as the big miners weighed on the key index, tracking the declining price of key commodities, while tech stocks also tracked the sharp sell-off in tech stocks on the Nasdaq on Thursday. The local economy was thrown into chaos mode on Friday amid the global Microsoft system outage sparked by a system update run by cybersecurity company CrowdStrike in the early hours of Friday morning US time. The outage hit thousands of businesses and almost every sector was impacted. For the week, the ASX200 posted a slight gain of 0.15% as real estate, consumer staples and healthcare stocks posted gains over 1% which offset the heavy losses among materials and tech stocks.

What to watch today:

• Ahead of the first trading session of the new week, the SPI futures are anticipating the ASX to open the day down 0.84% tracking Wall Street’s broad large cap sell-off on Friday.
• On the commodities front this morning oil is trading 0.53% higher at US$80.43/barrel, gold is up 0.63% at US$2410/ounce and iron ore is down 0.26% at US$108.45/tonne.
• AU$1.00 dollar is buying US$0.67, 105.37 Japanese Yen, 51.74 British Pence and NZ$1.11.

Trading Ideas:

• Bell Potter has increased the rating on Whitehaven Coal (ASX:WHC) from a hold to a buy and have increased the 12-month price target from $8.90 to $9.90 as the analyst sees tailwinds incoming for the thermal and metallurgical coal producer. The company reported Q4 results last week outlining higher quarterly production, and higher managed saleable production than Bell Potter was expecting. 1H25 earnings are expected to strengthen at the same time stronger met coal demand is expected to provide additional earnings tailwinds.
• And Trading Central has identified a bearish signal on Sigma Healthcare (ASX:SIG) following the formation of a pattern over a period of 26-days which is roughly the same amount of time the share price may fall from the close of $1.31 to the range of $0.99 to $1.05 according to standard principles of technical analysis.