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Yesterday our local market extended its losses, falling 1.3% or 85 points to close at 6,601. This comes as investors digested rising interest rate forecasts and an increase to the minimum wage. We also got an update on consumer confidence for June, which fell 4.5% month-over-month, back to levels seen at the beginning of the pandemic. Now confidence was weighed down by surging prices and expectations of further interest rate hikes.

Losses were seen across the board, with all 11 industry sectors in the red. The tech sector was down the most, as it’s quite sensitive to interest rates, due to their high price to earnings ratios and low dividend payments.

The best performer yesterday was medical device company PolyNovo (ASX:PNV) despite no announcements out from the company. However, insider buying action amongst its senior managers has likely propped up its share price and overall sentiment. Other top performers included Lynas Rare Earths (ASX:LYC), Suncorp (ASX:SUN) and Computershare (ASX:CPU). Meanwhile, the worst performers included tech companies like NOVONIX (ASX:NVX), Megaport (ASX:MP1) and Block (ASX:SQ2).

And the most traded stocks by Bell Direct clients were ANZ (ASX:ANZ), Insignia Financial (ASX:IFL) and Lake Resources (ASX:LKE).

In the US, as was widely expected, the US Federal Reserve lifted rates by 75 basis points, the biggest increase made in almost 30 years. Stocks rallied, as Federal Reserve Chairman Jerome Powell noted that a 50 or 75 basis point increase “seems most likely” at its next meeting in July, highlighting the central bank’s commitment to fighting inflation. So, we saw all three benchmarks push higher, with the Nasdaq up the most, rising 2.5%.

What to watch today:

• Following the US market’s positive session, our local market is set for a positive day, with the SPI futures suggesting a lift of 0.4% at the open.
• Economic news wise, the latest jobs figures will be released today, with the May unemployment rate expected to remain steady on forecasts of a small gain in jobs across the economy.
• Keep an eye on Coronado Global (ASX:CRN) – its share price might see a lift today after news that the coal miner has been added to the ASX200 index, replacing Crown Resorts (ASX:CWN), which has been delisted following Blackstone’s takeover.
• In commodities:
  • Oil prices tumbled over 2% amid concerns that rising interest rates would impact demand. The WTI crude oil pride now trades at around US$116 a barrel.
  • Gold prices retreated from their highs of the day after the rate hike. Now remember, although gold is considered a hedge against inflation, rate hikes increase the opportunity cost of holding non-yielding bullion.
  • The spot iron ore price is trading 0.7% lower at US$136 a tonne.
• If you hold medical device company ResMed (ASX:RMD) you will receive your dividend payment today.

Trading Ideas:

• Bell Potter have maintained its Buy rating on hardware company, Coventry Group (ASX:CYG) with a reduced price target from $2.00 to $1.70. Bell Potter sees Coventry as a business that is fast approaching an inflexion point in recovery, with market share in Australia being recouped at pace and, importantly, little cost to gross margin. Now, at its current share price of $1.20, this implies about 42% share price growth in a year.
• Trading Central has a bearish signal on Duxton Farms (ASX:DBF) indicating that the stock price may fall from the close of $1.68 to the range of $1.40 – $1.46 in the next 111 days according to standard principals of technical analysis.