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Twitter, Qantas and FMG: what’s next for their share price?

Elon Musk put the Twitter bid on hold; Qantas is expected to benefit from an explosive demand for international travel, and FMG secured a global deal.

Source: Bloomberg

The Australian stock market ended the week on a high as the ASX had one of its best days of 2022 by soaring 2%. This high is likely to be interrupted as the stock market projected another weekly loss of 1.8%.

The volatility in the risk market is likely to continue as Federal Reserve Chairman Jerome Powell is expected to comment on the FED’s rate hike pathway on Tuesday. Meanwhile, Australia’s top leadership is under pressure as the Federal Election takes centre stage.

1. Twitter

One of the most talked about acquisitions of the year has been paused. Elon Musk tweeted last Friday saying the process was 'temporarily on hold' after the social network reported that spam accounts comprise less than 5% of its daily active users. Parag Agrawal, Twitter's CEO later stated he still expects the deal to close, but 'we need to be prepared for all scenarios.'

Twitter's shares dropped by more than 9% as concern over the stability of the deal flared up.

Right after the deal was halted, Musk posted a call for Twitter users to change their feeds from the algorithmically sorted 'home' version to 'latest', allowing tweets to be shown in reverse chronological order, a move that would keep eyeballs on the deal.

Notably, Twitter closed on Wall Street at around $US 40 ($58) before the weekend, 26% below the $US 54 proposed offer.

After the 19% drop over the past two weeks, the price of Twitter is $40.35 on the 100-days MA. The imminent resistance will be reach the 50-day MA at 43.16. Regarding the mid-terms, the previous support line will be the key hurdle for the price to move higher, meaning that the deal price at $54 will not be an easy target to achieve.

At the moment, the key question is whether the billionaire will renegotiate the deal and save his billions or walk away.

Source: IG

2. Qantas

The Qantas Airways Limited share price has suffered over the last two years but recent data shows bullish movement for the stock’s future. April’s travelling data shows that Australia’s international travel is on the sharp rise with 1.2 million international border crossings to and from Australia in April, compared to 710,000 in March and 118,000 in the previous year. This is still only a third of the pre-COVID levels in April 2019, suggesting substantial improvment and growth for the following months.

Source: ABS

Last week’s close saw the Qantas share price sit at $5.28, 30% below its record high. This isn't expected to be the case for long after a two-year boader closure, appetite for travel is returning, creating an exciting outlook for Australia's top carrier. Earlier this month, the airline announced that it anticipates returning to profit in the next financial year after the all-time high was last reached in December 2019 at $7.46.

Based on the daily chart, the share price is currently finding solid support from the 50-days MA as the 20-days MA comes into view. Above the level, a gap between $5.5 to $5.65 will be the key milestone for the price to overcome before returning to its April high.

Source: IG
Source: IG

3. FMG

Fortescue’s green energy venture, Fortescue Future Industries (FFI), announced that they had signed an agreement with Washington's Industrial Park to explore the potential production of green hydrogen. FFI is looking to create a hydrogen hub by transforming the state’s last coal-fired power plant into a green hydrogen production facility.

However, the share price for FMG started on a downtrend recently following global economic growth concerns triggered by the US rescission and China’s lockdown. Its price is now trading 15% lower than its April high.

From a technical standpoint, last week’s fall has broken through the trend line since October which may prove challenging for a future overturn. Besides the 20 and 50- day simple moving average (SMA), $20 will be the key to watch. Only when all these resistances can be conquered, can traders expect a broader rebound from the mining giant. On the flip side, if the price keeps moving down, support can be found at 18.486 and 17.967.

Source: IG

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This information has been prepared by IG, a trading name of IG Australia Pty Ltd. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.

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