Three brokers, three very different AGM-inspired upgrades

The Morning Wrap

Livewire Markets

Welcome to Charts and Caffeine - Livewire's pre-market open news and analysis wrap. We'll get you across the overnight session and share our best insights to get you better set for the investing day ahead.

MARKETS WRAP

Source: Investing.com

S&P 500 TECHNICALS

Source: Yahoo Finance

THE CALENDAR

Source: Forex Factory

The good news? There is less to worry about next week. The bad news? The "less" is only in number, not in importance. US CPI and those midterm elections are the big highlights next week. The current forecast for CPI is 0.7% increase month-on-month (headline), far faster than last month's 0.4% increase. On the core measure, the forecast is for a 0.5% increase, suggesting there are elements of inflation that are very stubborn.

Apart from that, we've got a slew of central bank speak to look forward to and the UK's GDP print. But seeing as they avoided recession last month, it's slightly less dramatic than it could have been.

THE CHART

It's midterms week! Yay!

Today's chart has a US feel - and that's because America goes to the polls tomorrow to elect a new Congress. But after what has been a very rough year for equity markets stateside, there are people who will be wanting some good news or hoping for it at least. So, in that spirit, here's my chart of the day - the idea that any make-up of Congress post-midterms is actually good news for the S&P 500.

Of course, the magnitude of the return will depend on what kind of split we get in Washington. And this year's inflation problem also doesn't apply in most other years so that may change this thesis somewhat. But let's take it as reason for a win for now!

THE INFOGRAPHIC

I see dominance, and I raise you Apple. 

STOCKS TO WATCH

Today, I thought I'd bring you three very different upgrades from three top brokers. All three stem from updates given during the AGM season and they provide some interesting insights into the disparity between different sectors on the ASX.

Downer EDI (ASX: DOW) is now a buy (instead of an accumulate) at Ord Minnett, with the broker upgrading the stock on valuation grounds. That's in spite of reducing its profit growth forecast for FY23 from 23% to a still-healthy 15%.

Orica (ASX: ORI) has been upgraded to buy from neutral at UBS because it feels the company's FY22 result is now "de-risked". The view is supported by a recent trading update.

And Woolworths (ASX: WOW) gets an upgrade to neutral at Credit Suisse in spite of Woolworths losing market share in the grocery game during the lockdowns of 2021. But the profit reset is expected to be a lasting one, so it gets the tick of approval.

Hans Lee wrote today's report.

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The Morning Wrap
Markets Wrap
Livewire Markets

Australia's most comprehensive markets wrap is back for 2023, with a fresh look and a new emphasis on getting you and your money ahead of the curve. Available each weekday morning at 8:30am AEDT. Written by Chris Conway, Kerry Sun, and Hans Lee.

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