• The ASX is set to open higher on Tuesday
  • It was all about Tesla on Wall Street overnight, as the stock jumps 10pc
  • Morgan Stanley says healthcare stocks are undervalued


Australian shares are set to open higher on Tuesday after a rally on Wall Street overnight. At 8am AEST, the ASX 200 index futures was pointing up by +0.1%.

In New York, the S&P 500 rose by +0.67%, blue chips Dow Jones up by +0.25%, and tech heavy Nasdaq by +1.14%.

Tesla surged 10% or around US$80bn in market cap after Morgan Stanley changed its rating for the stock from Hold to Buy, and upped the price target from US$250 to US$400.

MS said the main reason for the upgrade was its optimism for Tesla’s Dojo supercomputer, which it predicts could add US$500bn to the enterprise value of Tesla.

In other stocks, Meta rose 4% after a report suggested the company was working on a new, more powerful AI platform.

Chipmaker Qualcomm also jumped 4% after signing a deal with Apple to supply 5G chips until at least 2026.

Meanwhile, investors are anxiously awaiting Apple’s iPhone 15 unveiling later tonight.

“Apple’s iPhone events typically generate significant buzz and anticipation, leading to a surge in sales. This in turn will boost stock prices for shareholders in the short-term,” said Nigel Green of deVere Group.

Apple rose +0.7%.


Healthcare stocks are undervalued – Morgan Stanley

Morgan Stanley analysts have singled out healthcare as a sector to watch.

“Health care has underperformed the market year-to-date, but is showing relative strength against other defensive pockets,” says a note from MS analyst, Mike Wilson.

From here, Wilson says we will see the sector as a late cycle out-performer, given its defensive and growth properties.

“Earnings revisions are turning higher for the cohort, and valuation remains attractive,” he said.

“Under the surface, providers and services, biotech and pharma look the most attractive on a relative valuation basis,” says the note.

Morgan Stanley holds Overweight ratings on four stocks: CSL (ASX:CSL), Ebos (ASX:EBO), Sonic Healthcare (ASX:SHL) and small cap Monash IVF (ASX:MVF).


In other markets …

US bond yields climbed ahead of the US inflation data on Wednesday (US time), an crucial input into the Fed’s decision next week.

Gold rose +0.21% to US$1,921.88 an ounce. Most base metals also rebounded last night, with copper futures rising 2.5%.

Crude prices eased around half per cent as a stronger US dollar and economic concerns in China weighed on the outlook for demand. Brent is now trading at US$90.07 a barrel.

Iron ore futures rose +1.1% to US$118.23 a tonne as deflationary pressures eased in China.

The Aussie dollar jumped US0.9c to US64.33c, the biggest daily gain in six weeks.

Bitcoin meanwhile dropped almost 3% in the last 24 hours to US$25,145.


5 ASX small caps to watch today

Novonix (ASX:NVX)
Novonix said that Hatch, a global engineering consultancy firm, has delivered its report that evaluates NOVONIX’s revolutionary all-dry, zero-waste cathode synthesis process. The report highlights potential improvements over conventional cathode synthesis including: capital expense intensity estimated nearly 30% lower, and estimated power consumption improvements of approximately 25%.

Ionic Rare Earths (ASX:IXR)
IXR’s magnet recycling business Ionic Technologies has executed landmark partnership agreements with Ford Technologies, Less Common Metals, and British Geological Survey to create a UK rare earth supply chain from recycled magnets. Ionic Technologies’ recycling technology will be used to produce high purity, separated and traceable rare earths from end-of-life magnets and swarf. The UK government will support the partnership via a £1 million project.

Alto Metals (ASX:AME)
Alto has received notification that its new Mining Lease Application over the Lords Corridor in WA has been granted. Lords Camp contains an Indicated and Inferred Mineral Resource of 0.4Moz at 1.6 g/t gold. The new lease further de-risks and provides optionality for future mining scenarios, says Alto.

NickelSearch (ASX:NIS)
NIS and Allkem (ASX:AKE) have agreed to work in technical collaboration with respect to the lithium prospectivity of Carlingup. Allkem is the owner and operator of the Mt Cattlin lithium mine, 10km from the Carlingup Nickel Project. Under the guidance of AKE’s lithium geologists, NIS will undertake additional rock chip sampling and stream sediment sampling to refine high-priority lithium target areas.

Black Canyon (ASX:BCA)
Further assay results have been received from the ~7,000m reverse circulation (RC) drilling program completed across six key targets including KR1 within the Balfour Manganese Field. Significant intersections include: 3m @ 19.2% Mn from surface, and 15m @ 18.6% Mn from 2m.


At Stockhead we tell it like it is. While Iconic Rare Earths and NickelSearch are Stockhead advertisers, they did not sponsor this article.