Latest / ausbiz a.m / 14.09.26 with Grady Wulff, Bell Direct
Transcript
- Andrew: Good morning and welcome to your morning wrap from Ozbiz. It is Monday, September 14th, and we are expecting the local market to snap out of its recent run of losses. ASX Futures pointing up just 0.2 of percent in a moment. We'll preview the day ahead with Grady Wolf. But first, though, quick wrap of where global markets finished on Friday. It was risk-on with the latest US CPI data coming in hotter than expected in July at 3.4%, but broadly matched market expectations. And ⁓ The Fed rate hike. Odds for this week's meeting jumped to 85% after that print. Now Wall Street did bounce back, led by Apple and Amazon. ⁓ Dell also surging. The SP up around eight tenths, NASDAQ 1% higher. The Dow two-thirds a percent higher. Volatility index that ⁓ plunged about 11% among the commodities. Well, Brent Crude ⁓ jumped 5% overnight to around $110 a barrel. That's after Iran expanded. Its attacks on shipping and Hooti attacks on Saudi energy facilities intensified overnight as well. Gold steadied to be around four thousand four hundred an ounce, Bitcoin remaining around seventy seven thousand US, and the Aussie trading at seventy one point six. Well joining us to get across the market moves. Grady Wolf from Bell Direct. Grady, good morning. Grady Wulff: Good morning Andrew, how are you? Andrew: Good. Hope you had a great weekend. So looking perhaps for a positive start, mind you, you take a look at ⁓ what's been going on more recently, it was ⁓ well, I think we were off about three percent last week, weren't we? Grady Wulff: Yeah, it wasn't a great week on the local or global markets. And I think there's a lot to kind of unpack here. It's not just that inflation is back in focus, it's that bond yields have surged. So investors are really taking a risk-off approach and looking at where they can get the best bang for buck in this time where there's a lot of volatility in the markets. So obviously we still have oil is the major major wild card right now, sitting around a hundred US dollars a barrel in the Middle East tensions. They although they pulled back a bit on Friday, they've still not really eased out across the globe. ⁓ central banks turning more hawkish, markets are again pricing in higher rates for longer. So I thought we're at the end of the rate hiking cycle, and I thought we're at the end of this chat as well about rate hikes, but we seem to be back in the middle of it. And obviously, China still matters for Australia. We've got a lot of Chinese economic data coming out this week that is really going to impact our local market. Andrew: Yeah, and w of course the big event this week is is the Fed. if they do I mean eighty five percent ⁓ chance the market's pricing and they're gonna hike. Of course there's no guarantee that's gonna happen because we cannot read Kevin Walsh, he just doesn't give anything away. And of course you you got that political pressure as well. If they were to hike, what sort of effect do you think that would have on the markets? Grady Wulff: Yeah. Yeah. Gives nothing. Yeah, we could see that markets it will allow the markets to stabilize, albeit not probably not in a positive direction, because a hike accompanied by a signal that multiple hikes are coming could probably put renewed pressure or upward pressure on yields and downward pressure on equity multiples. So higher demand for bonds and lower demand for equity markets, because particularly for those expensive tech stocks that we've seen, small caps and other rate sensitive areas of the market, which is kind of what you expect. Higher rates for longer, you see a shift back. into the defensive stocks and investors are really looking for kind of security on the market. But while bond yields are high, there's no reason that investors wouldn't be getting out of the equity market or kind of favoring bonds in their portfolios because sitting around that 5% level, that's a real psychological breakthrough if it does continue to go that way. Andrew: So Grady, focusing on the local market then, ⁓ as I mentioned, we have been sort of struggling of late, ⁓ although commodities have done a lot of the heavy lifting. Now, ⁓ I I gather you were at a conference last week with a bit of a focus on ⁓ on commodities. Grady Wulff: Mm-hmm. I was Yeah, it was a really interesting ⁓ conference and really good to see how bullish the market is on resources right now, despite them running red hot, copper at all-time highs. You've got gold kind of pulling back recently, and I was a bit confused about that, but I think it's because of the bond ⁓ market, and it is because of the bond market and bond yields running so high because gold doesn't pay interest and bond yields do. So that's simply why we've seen softening in the gold price. But the outlook is really strong for gold at the moment. We've seen a lot of the ⁓ in not only in Investors, but the CEOs themselves, executives, analysts who were there, everyone's really keen on gold and copper at the moment. Copper did pull back on Friday as we saw. That was all the resources stocks took a bit of the brunt on Friday with the pullback on the market there. But we have seen that the outlook for copper, supply, demand, supply is just not going to meet demand for years to come. By 2040, we're expecting a 50% increase in demand for copper. And mind you, it takes about 17 years to bring a copper. mine into production, whereas other commodities are like four years, five years to bring back online and production's ready to go. So that's something to keep in mind there. But one word, I'm not sure if you've ⁓ heard of this commodity, but it's the one rising to the top at the moment, is tungsten. Andrew: Well, I've I've heard of it, but not in terms, I guess, of a stock place. So so tell us. Grady Wulff: Yeah. Everyone, everyone was talking about tungsten and how it is this massive critical mineral for defense, and it's o it's used in the aerospace, it's used in missiles and armor, it's extremely dense and heat resistant, and it's also used in AI chips. Now, the interesting thing is that the price of tungsten has increased 622% in six in 2026 because China dominates 80% of mine tungsten globally, and the U. US have come out saying they will not use any tungsten that has touched China at all. Like at all. So now every you see everyone out there going, we've got tungsten, which is interesting because tungsten was kind of the forgotten commodity that a lot of people saw in their assay results and were going, no, we don't want touch it. So Sky Metals, Flynn Gold, they were two companies that stood out having tungsten, and then Kayoko is a new story to watch in the copper fields in ⁓ in Namibia. And then there was a lot of other companies there that were really stood out to us. ⁓ last week at Resources Rising Stars. Andrew: So are are you finding that perhaps w what you've got established mining companies that are pivoting to tungsten? Is that's how is that how it's working? Grady Wulff: Yeah, yeah, it's really interesting. So a lot of them are seeing that their exploration further out from their existing mines. So for example, Flynn Gold in Tasmania, they're an explorer, they've got these gold assets, but they've s found really high strikes of tungsten, sky metals as well, exactly the same out of New South Wales. So you look at them and you go, They previous well, sky metals was tin, and now they've got this massive tungsten ⁓ assay and massive tungsten resource out there. So they're really pivoting into that and seeing if they can get that online developed well. the c the price is so r is running red hot and they can capitalize on developing that and kind of putting your supply into the market where it's very much needed right now. Andrew: So, ⁓ Grady, overall what's what's Bell's view then on the broader commodities complex, in particular with that focus on how well copper is done, whether that bullish thesis thesis essentially remains intact? Grady Wulff: Yeah, it's definitely still running intact. And we see that copper mines, as I mentioned, it's the longest thing to take on to into from exploration into production. And so you look at it, you've got your evolution mining, your aoris resources. You you're looking for a low all-in sustaining costs and multiple assets, multiple commodities exposure kind of de-risks the projects and de-risks the company and also adds diversification into your portfolio. So your aoris resources, evolution mining in that area. And then you've got some real emerging stories like Kyoko, as I mentioned. ⁓ Gerard O'Donovan, he's been he was from Sun Sun Silver, now he's gone out with two partners and they're really rising up the ranks. It's a share price that you want to follow, twenty cents to two dollars forty since May this year. So it's definitely one that I think the majors will be looking at a takeover of. Andrew: ⁓ more broadly, beyond commodities, how are you balancing the portfolio at the moment? Perhaps what's in favour, what's out of favour? Grady Wulff: Yeah, I'm still looking for the opportunities in healthcare at the moment. So you look at the healthcare space, it's been really kind of banged down, but we did see it really outperform in the reporting season. So healthcare is one that's what's catching my eye at the moment. Retail stocks have taken the full brunt of it. And I think, as I mentioned a couple of weeks ago, it's a tailored two-speed economy right now. We've got these resources stocks, energy doing much of the heavy lifting of the ASX gains, and then you have the consumer-facing stocks really taking the full brunt of investors selling out. So there's definitely Definitely opportunities for the best of the bunch in each of those sectors, like your JB Hi-Fi's, you've got the Strength in Goodman Group, which is the AI theme that's run red hot, but they've still got the really strong balance sheet, really strong revenue growth outlook, and really strong ⁓ kind of global diversification of earnings. And that's exactly what you want to see in this day and age. Andrew: Yet, Grady, as we all know, ⁓ potentially one even two rate hikes to come, just how cautious are you in that space? Grady Wulff: Yeah. Yeah, I'm definitely cautious and I think the banks look a bit more favourable given how how red hot they've been running recently. And I think investors kind of pulled out of them i after reporting season because we saw the mortgage the mortgage applications are dropping, but higher interest rates for longer definitely plays well for the banks and those defensive stocks. So I think your Woolworths, your calls, all those inflation kind of buffered companies are really what investors are looking at right now. Andrew: And so do you think you want to have ⁓ quite a bit of cash on the sidelines at the moment, take a advantage of those opportunities? You know, bearing in mind you have where the market is going right now. Grady Wulff: Yeah, I think personally I'd be taking a bit of a kind of watch and wait situation on the market right now. Like whilst equities are looking really good, ⁓ we've seen this bubble talked about in so lo for so long in AI, we've looked at where the market's gonna go. I think I'd watch and wait. Well, personally, I'm gonna watch and wait until what to see what the RBA does on a rate hike front, see where the opportunities are, because there's a lot of bang for a buck and I think a lot of the stocks have been oversold after reporting season in the wake of like outlook for what's gonna be in twenty twenty seven as a sector broad kind of thesis, but I would be taking kind of a stock by stock approach at the moment. Stock picking is definitely back. Andrew: Well Grady, great to get across ⁓ your outlook. ⁓ hope you have a a good day and a good week. Thanks for joining us in Bell Direct. Grady Wulff: I hope you have a wonderful day too. Thanks for having me. Andrew: Thanks, Grady. And that is your Ausbiz morning wrap. I hope you have a great day. I'm Andrew Gagan. Thanks for listening.