Morning Bell 1 July

Jessica Amir
July 1, 2020

The Aussie share market is eyeing a muted start with the futures suggesting a 0.1% fall at the open to kick off the new financial year and quarter. Yesterday the ASX200 ended the second quarter of the year up 16.7%, the best quarterly rise since 2009.

Wall Street wrapped up the June quarter on a high with the Dow Jones gaining 17.8%, the best quarterly gain since 1987.

What to watch today:

  • Manufacturing data for June is out with the sector set to remain in contractionary phase. Building approvals are out and expected to fall 10% given the numbers are from May.
  • COVID-19 restrictions ease heavily today in NSW with pubs and cafes to allow max capacity, weddings and public gatherings can have up to 20 people, funerals can have up to 50 people and community sport can kick off. So watch companies like Coca-Cola Amatil (ASX:CCL), Woolworths (ASX:WOW) and Coles (ASX:COL) with food and beverage demand to tick up.
  • Alot of ETFs go ex-dividends today, including (ASX:VGS) a popular global investment, and (ASX:VAS) which invests in the ASX300.

Local Trading ideas:

  • UBS rated KFC franchisee Colins Foods (ASX:CKF) as a buy following its stronger than expected results in this challenging environment. UBS upgraded its outlook suggesting its price will grow to $10.65.
  • UBS reiterated IDP Education (ASX:IEL) as a long term growth stock with a $18.20 target.
  • After Telstra (ASX:TLS) lifted mobile prices, UBS also reiterated the telco giant as a buy with a $3.70 target.
Read Transcript

Good morning, well Wall Street wrapped up the June quarter on a high by the Dow dancing 17.8% higher, the best quarterly gain since 1987.

European stocks wrapped up their quarter, the best one in five years and in Australia yesterday we turned it on ending the second quarter up 16.7%, that was the best quarterly rise since 2009.

Now overnight we heard from the U.S. central bank chair and the Treasury secretary in their response to COVID-19.

Now in particular, Steve Mnuchin said that the U.S. economy is in a strong position to recover from COVID-19.

The S&P500 ended 1.5 percent higher, the Dow up 217 points, the Nasdaq up the most 1.9%.

Now as for key standout stocks Lululemon shares rose 6% on news that it’s buying an at-home fitness company and Micron shares rose 4% higher or just over that on stronger than expected earnings.

Now moving to commodities the oil price nudged 0.3% higher to US$39.82, gold shone 1% higher nearing an 8 year top now US$1,798 an ounce, copper gained 1.4%, while the iron ore price lost a bit of momentum falling 0.2%.

A few very key things to watch today, firstly the Aussie market is eyeing a muted start, the futures are suggesting 0.1% of a haircut to kick off the new financial year but let’s keep in mind the ASX200 is now about 30% up from its bear market COVID-19 bottom.

On the economic front a lot to watch today, manufacturing data is out for June, the sector is tipped to remain in contractionary phase.

Building approvals is out, expecting a 10% fall given the numbers are from May.

COVID-19 restrictions ease heavily in New South Wales today with pubs and clubs to allow max capacity, adhering to space restrictions, weddings can have up to 20 people, public gatherings allow up to 20 people, funerals up to 50 people and community sport can kick off.

So keep an eye on Coca-Cola Amatil (ASX:CCL), Woolworths (ASX:WOW) and Coles (ASX:COL) with food and beverage demand to take up.

A lot of ETF’s go ex-dividend today including (ASX:VGS) which is a popular global investment and (ASX:VAS) which invests in the ASX300.

Three trading ideas from UBS, well firstly the International Bank has rated the KFC franchisee Colins Food (ASX:CKF) as a buy following stronger than expected results in this very challenging environment.

Now KFC sales were up 12% so far in the second half of this year and given more people are opting for the special recipe that’s a finger licking good apparently.

UBS upgraded its outlook for Colins Food suggesting its shares will grow to $10.65.

Second, UBS reiterated IDP Education (ASX:IEL) the student placement business is a long-term growth stock according to UBS with a $18.20 price target.

Thirdly Telstra (ASX:TLS) lifted their mobile prices, UBS reiterated the telco giant as a buy with a $3.70 target.

I’m Jessica Amir with Bell Direct, happy trading and stay safe.

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