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Three ASX stocks to watch in July


ArvinIG

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Woodside Energy concluded June with a 7.3% gain while the ASX 200 was down by more than 12%; CBA shares tumbled to a 13-month low and BrainChip dropped 30% in June.

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Source: Bloomberg
 
 

Australia's share market crossed the finish line after a grim June and quarter with negative numbers, marking it the worst month since March 2020. During the past six months, the ASX 200 was down by more than 12% and although there is no reset button, the beleaguered equity market does bring renewed hope.

Market participants expect the central banks to change their hawkish stance once the economy has shown convincing signs of cooling down. As for the week ahead, the RBA will again lead the decision-making to lift the interest rate for the third straight month.

Today we look at three stocks:

Woodside Energy

For the ASX 200, the energy sector is unlikely to conclude June with a gain amid fluctuating oil prices, the falling value of coal, and the spreading of the energy crisis. That beinf said, the major players in the ASX energy sector delivered mixed performances led by Woodside Energy Group with a 7.3% gain while Santos moved down by 8.6%.

Woodside Energy is now the biggest energy share on the ASX after the company completed its merger with BHP’s petroleum business in early June. The goodwill following the merger has helped Woodside to shelter from the headwinds and deliver a beat to the market.

Major support for the price can be found from the month-long ascending trend line which sees the price stabilise at around $31. Resistance should come from the 50 and 100-day moving average between $31.5 to $32. However, once broken through this level, investors can expect upside movement toward the 20-day moving average.

Daily chart

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Source: IG

Commonwealth Bank of Australia

The rapid changing interest rate has placed the banks on high alert and the central stage. The Commonwealth Bank of Australia's share price fell by more than 13% in June and last week announced to lift its fixed home loan by a jaw-dropping 1.4% in one go.

What's more, the interest rate is expected to keep edging up.

On the other hand, the property market is cooling and a higher interest rate will help the bank's margin and profit. However, the accelerated slowdown in the home loan market could lead to a greater number of loan losses and a shrink in the market size.

The price of the CBA is currently trading at its lowest level in 13 months. The high from last February and March can be considered as key support for now at around $89 and the steep 20-day moving average is set to limit the high for the rebounds. While the RSI shows a pull back from the oversold territory, massive selling pressure is expected from the level of $93.

Daily chart

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Source: IG

BrainChip

BrainChip is a developer company for AI computer chips and the recent star company had a turbulent month as its share price ended the month 30% lower amid the broad ASX200 market which was down 9%.

The steep decline of BrainChip’s share price can be attributed to the external market sentiment rather than the company’s performance and this was particularly the case in the risk-off market where BrainChip sits. However, the risk ahead can’t be ignored with the global chip producer being under the whammy recently after the semiconductor maker warned that demand is falling and sales will be lower in the current quarter. As such, global chip leaders like Nvidia and AMD are being hit particularly hard as the concern about entering the recession cycle increases.

BrainChip has seen its share price increase substantially from a value of $0.04 in 2020 to 9.49% in early 2022. As shown from the daily chart, the price is moving along the descending trend line since early June and the price has found its support at 0.783 at the moment. A bounce from this level brings the price to the trend line resistance at 0.855 which is also where the 20-day moving average sits. Moving forward, should the price manage to succeed in a breakout, buyers can anticipate a short-term rebound to the level of $1. On the flip side, the breach of current support may erase all gains for 2022.

Daily chart

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Source: IG

Hebe Chen | Market Analyst, Melbourne
05 July 2022

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