Morning Bell 24 July

Between the Bells

Wall Street closed lower on Tuesday as a morning rally eased in the last hour of trade to see the key indices post slight losses as investors continue to assess second quarter earnings reports. 2 of the magnificent 7, Tesla and Alphabet, released results after the closing bell on Tuesday with Alphabet reporting better-than-expected results while Tesla saw its profit tumble 45% on easing EV demand. Investors are digesting the combination of results, economic data and US political developments at present which is likely to continue driving investor moves for some time to come.

UPS shares fell 12% on Tuesday after the global shipping and logistics service provider released results that fell short of expectations on both the top and bottom lines, while General Motors beat expectations for Q2, however, shares in the automaking giant declined 6.4% on Tuesday as the company delayed plans for its electric and autonomous vehicles.

Investors grew wary of tech valuations late last week, prompting a mass sell-off in the high growth sector, in favour of opportunities in the small cap space.

In Europe overnight, markets closed mixed as investors continued assessing earnings reports from companies across the region. The STOXX 600 rose 0.13%, while Germany’s DAX added 0.8%, the French CAC fell 0.31% and, in the UK, the FTSE100 ended the day down 0.38%.

Across the Asia markets on Tuesday is was a mixed session with Japan’s Nikkei adding 0.3% while Hong Kong’s Hang Seng fell 0.94%, and China’s CSI index fell 2.14%.

Locally on Tuesday, the ASX has had a positive start to the week as investors looked for opportunities in the small cap space while also buying back into the AI-driven tech sector. Locally on Tuesday the ASX200 rose 0.5% driven by the tech, healthcare, industrials and consumer discretionary sectors posting gains over 1% while energy stocks tumbled 2% on the sliding price of key commodities.

Woodside shares slipped on Tuesday after the mining giant released second quarter results including quarterly production down 1% on Q1 due to planned maintenance activities, weather impacts and unplanned outages at Wheatstone and Julimar. Quarterly revenue rose 2% on Q1 though to $3.033bn, and Woodside maintained full year guidance. Investors may have been hitting the sell button yesterday after Woodside increased total estimated costs of the Scarborough Energy project by 4% to US$12.5bn.

What to watch today:

• Ahead of the midweek trading session here in Australia the SPI futures are anticipating the ASX to open Wednesday’s session up 0.14% extending on yesterday’s rally ahead of the release of Judo Bank Manufacturing and Services PMI flash data for July out this morning.
• On the commodities front this morning, oil is trading 1.53% lower at US$77.20/barrel, gold is up 0.35% at US$2404/ounce and iron ore is down 0.3% at US$108.16/tonne.
• AU$1.00 is buying US$0.66, 102.98 Japanese Yen, 51.33 British Pence and NZ$1.11.

Trading Ideas:

• Bell Potter has downgraded the rating on DroneShield (ASX:DRO) from a buy to a hold and have increased the 12-month price target on the counter drone technology company from $1 to $1.60 noting all eyes are on H2 for DroneShield. Bell Potter sees the bullish long-term view of DroneShield remains unchanged, however, at its current valuation, DRO will attract increased scrutiny over its short-term performance and future contract announcements thus the analyst anticipates continued share price volatility.
• And Trading Central has identified a bullish signal on Centuria Capital (ASX:CNI) following the formation of a pattern over a period of 20-days which is roughly the same amount of time the share price may rise from the close of $1.69 to the range of $1.95 to $2.01 according to standard principles of technical analysis.