Sunday, December 22, 2024

5 things to watch on the ASX 200 on Friday

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On Thursday, the S&P/ASX 200 Index (ASX: XJO) was back on form and charged 0.45% higher to 7,749.7 points.

Will the market be able to build on this on Friday and end the week on a high? Here are five things to watch:

ASX 200 to edge lower

The Australian share market looks set to end the week with a small decline despite a decent session on Wall Street. According to the latest SPI futures, the ASX 200 is expected to open 9 points or 0.1% lower this morning. On Wall Street, the Dow Jones was down 0.2%, but the S&P 500 rose 0.2% and the NASDAQ pushed 0.35% higher.

Oil prices fall

It could be a subdued session for ASX 200 energy shares Beach Energy Ltd (ASX: BPT) and Karoon Energy Ltd (ASX: KAR) after oil prices fell overnight. According to Bloomberg, the WTI crude oil price is down 0.7% to US$77.96 a barrel and the Brent crude oil price is down 0.55% to US$82.13 a barrel. This may have been driven by profit taking after solid gains this week.

Sell Reece shares

The Reece Ltd (ASX: REH) share price could be overvalued according to analysts at Goldman Sachs. According to a note, the broker has initiated coverage on the plumbing parts company’s shares with a sell rating and $23.35 price target. This implies potential downside of 12% for investors. The broker said: “REH is trading in excess of its historical average premium to the S&P ASX200 (0.6x standard deviations above its 5yr average). Compared to its peer set, REH is also trading above its historic premiums despite lagging the peer set on metrics such as EBIT margins and EBIT growth (note we forecast a 5% EBIT CAGR for REH, in line with Visible Alpha consensus).”

Gold price tumbles

ASX 200 gold shares such as Evolution Mining Ltd (ASX: EVN) and Northern Star Resources Ltd (ASX: NST) could have a tough finish to the week after the gold price tumbled overnight. According to CNBC, the spot gold price is down 1.5% to US$2,318.8 an ounce. This was despite the release of cooler-than-expected U.S. producer price data. Analysts are attributing the price drop to profit-taking.

Deterra Royalties announces $276 million acquisition

Deterra Royalties Ltd (ASX: DRR) shares will be on watch today after the ASX mining stock announced that Trident Royalties has accepted its 49 pence or 144 million pounds (A$276 million) cash offer. Trident Royalties is a diversified mining royalty company based in the UK. It owns a portfolio of 21 royalties and royalty-like offtake contracts providing exposure to base, precious, bulk and battery metals. This includes lithium, gold, silver, copper, zinc, mineral sands, and iron ore.

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