Morning Bell 1 September

Jessica Amir
September 1, 2020

The Australian dollar has continued to soar, hitting a new two-year high overnight, 73.75 US cents. The reason for that is that the U.S. dollar continues to retreat, as inflation is now being encouraged to rise to over 2%, while interest rates are likely to remain at record lows for some time. Overnight, U.S. indices closed mixed, with the top 30 stocks, the Dow Jones falling 0.8%. The Nasdaq meanwhile gained 0.7%, supported by Apple shares rising 3.4%, and Amazon and Intel rising over 1% each.
The month of August marked great significance as both the broader S&P500 and Dow rose 7% – their best gain since the 1980’s. This came as the ASX200 closed higher for the 5th month, up 2.24% – the best return since 2009.

Commodities:

  • Gold holds steady where it was yesterday at US$1,974
  • Oil fell 0.4% to US$42.82.

What to watch today:

  • Aussie futures set to lose 0.96%, or 58 points at the open
  • The RBA meets today – rates tipped to remain on hold at 0.25%
  • BHP listed in New York lost 1.4%, Rio similarly fell by 1.2%

Trading ideas:

  • Temple & Webster (ASX:TPW) shares soared 18% yesterday to a record all time high – $9.69 after delivering results that were much stronger than expected. Its sales have risen 161%, and Bell Potter have increased its price target to $11.40.
  • PointsBet (ASX:PBH) shares fell about 7% yesterday, but it managed to remain in record high territory at $13.03. Bell Potter have upgraded the stock’s buy rating, and increased the price target to $18.40.
  • Sezzle (ASX:SZL) shares fell 9.4% yesterday to $10.27, after reporting its loss sank from $4.8m to $8.2m in the half year to June 30. However, its active merchants and customers increased 220-340%. Ord Minnett increased Sezzle’s price target to $11.80.
Read Transcript

Good morning. Happy first day of spring, the 1st of September, I’m Jessica Amir, a market analyst with Bell Direct. Well the Aussie dollar continued to soar, it’s hit a new two-year high overnight 73.75 US. The reason for that is because the U.S dollar is continuing to fall with inflation there now being encouraged to rise over two percent while interest rates are likely to remain at record lows for sometime.

The U.S. indices closed mixed overnight. The top 30 stocks as measured by the Dow fell by about 0.8%. The Nasdaq another story, rising by about 0.7%. That was supported by Apple shares which lifted 3.4%. We also saw Amazon and Intel shares rise over 1% each. Investors of course continuing to favour companies that are seeing earnings and share price momentum growth. What was noteworthy though overnight, August in the U.S.  closed about 7% higher in particular the S&P500 and the Dow up by about 7% each. That’s their best monthly gain since the 1980s.

In Australia a different story. The ASX200 closed higher for the fifth straight month yesterday up 2.24%. That was our best August return and best five-month return since 2009.

On the commodities front not much movement there, Gold is holding steady where it traded yesterday 1,974 US. The oil price did lose a touch of steam it’s now 42.82 USD but the devaluation of the US dollar should in theory support oil prices and fuel demand in theory though.

What to watch today, well the Aussie futures were earlier suggesting a 58 point fall or a fall of about 1% and the reason for that is because the Aussie dollar is continuing to strengthen. Secondly, we did see Australia-China tension take another turn overnight with an Australian journalist being detained in China but importantly on the economic horizon today the RBA meets. Rates of course tipped to remain on hold at 0.25%, where the bank said is it’s lower bound but the focus will be on commentary and what we can expect from our national growth going forward. This will be closely watched why because GDP data is out tomorrow expected to show that Australia entered its first recession in 30 years. What else to consider, well BHP’s listed New York version fell 1.4% and RIO there fell by about 1.2%.

Three trading ideas just quickly online furniture business Temple and Webster (ASX:TPW), their shares soared 18% yesterday to a record high to $9.69 after delivering much stronger results than expected. The reason for that is sales ticked up 161%. TPW importantly has got no debt and cash of over 80 million dollars and that opens up further growth opportunities. All in all that’s why Bell Potter upgraded TPW’s buy rating and price target to $11.40, implying 18% share price growth for TPW.

Secondly, PointsBet (ASX:PBH), their shares fell about 7% yesterday but they managed to hold on to record territory they’re trading at about $13.03. That’s where they closed yesterday but Bell Potter sees further upside and upgraded PointsBet buy rating and target to $18.40 and that implies over 30% share price growth so why is that. Well PointBet’s media partnership with NBC Universal and proposed 300 million dollar equity raising completes its strategy of enabling it to potentially generate 1 billion dollars in annual revenue by 2025 with a plan to also have 10% market share in each of the U.S. states.

Thirdly Sezzle (ASX:SZL), their shares fell 9.4% yesterday down to $10.27 after reporting that their loss sank from 4.8 to 8.2 million in the half year to 30 June. On the positive side though active merchants and customers increased by in the order of 220% to 340%. Now Sezzle offers a very similar service to Afterpay in the U.S. and Canada also integrates Google Pay and Apple Pay just like Afterpay. Overnight, Ord Minnett increased Sezzle’s price target to $11.80 and Trading Central’s charting also indicates its shares are giving off more bullish than bearish tones but do your own homework.

Happy trading, stay safe.

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