Morning Bell 11 June

Bell Direct
June 11, 2020

Aussie equities have gained for 7 straight days and closed at a new 3-month high yesterday, but the futures are suggesting a fall of 1% at the open following the S&P500 and the Dow losing 0.5% and 1% respectively overnight.

What to watch today:

  • Kathmandu Holdings (ASX:KMD) received some heavy weight buy in, with fund managers Harbour Asset Management buying 8.3% of its shares.
  • Newcrest Mining (ASX:NCM) announced positive drill results at its WA and Canadian mines with plans for expansion.
  • Alliance Aviation (ASX:AQZ) entered a trading halt pending capital raising. Its shares have gained 221% from COVID-19 lows, hitting a new all time high.

Local trading ideas:

  • Bell Potter upgraded intellectual property firm IPH’s (ASX:IPH) price target to $8.70 after the firm announced the purchase of a well established IP NZ business for $7.4 million. IPH is a Bell Potter buy, but Macquarie is more bullish with a $9.60 target.
  • Bell Potter upgraded building and construction business Johns Lyng Group’s (ASX:JLG) price target to $2.90 after JLG announced record job volumes in the second half.
  • UBS reiterated WorleyParsons (ASX:WOR) as a buy with a $11.75 target after the company unveiled a new cost cutting project.
Read Transcript

Good morning, well all the equities have gained for 7 straight days and closed at a new 3-month high yesterday, but today the futures are suggesting a 1% fall after the S&P500 and the Dow Jones lost 0.5% and 1% respectively overnight.

But the tech-heavy Nasdaq continued to go out on a limb closing above the 10,000 point milestone for the first time ever.

Elsewhere, the oil price rose to a 3-month high $38.41 a barrel while the gold price rose 1.5% high to $1,747.

But investors today have a lot to digest, 1 – the OECD says Australia will be the fastest nation to recover from COVID-19 expecting GDP to fall just 5% this year and that’s better than analysts have forecast. Other OECD says world economic growth will fall 6% this year. 2- The Federal Reserve has pledged to keep interest rates there close to zero for the next two years and the central US bank will also keep buying bonds to stimulate growth injecting new money into the economy, expecting -6.5% GDP this year and a 5% recovery next. 3 – Better than expected US economic news came out overnight with US mortgage demand ticking up 13% annually and lastly something to consider the VIX Volatility Index is creeping back up as US President Donald Trump announced he’ll kick off his presidential election campaign next week and if the Democratic favorite Joe Biden gains the upper hand volatility is expected to increase.

Now what watch today, well Katmandu Holdings (ASX:KMD) received some extra heavyweight buying with a fund manager called Harbor Asset Management buying 8.3% of their shares.

Now secondly, Newcrest Mining (ASX:NCM) has announced positive drill results from its WA and Canadian mines and plans to expand its WA mine as well.

Now thirdly, Alliance Aviation (ASX:AQZ) entered a trading hold pending an announcement about a capital raising.

Now this is one of just many companies that’s upgraded their earnings guidance for the year in the face of COVID-19 and their shares have gained a massive 221% from the COVID-19 lows.

Alliance Aviation shares has also hit an all-time high of late, now this is definitely one company to watch they provide fly-in fly-out services including to the mining industry which is definitely starting to take off again.

Now to local trading ideas, Bell Potter upgraded intellectual property firm IPH’s (ASX:IPH) price target to $8.72.

The firm announced the purchase of a well-established IP NZ business. Now IPH is a Bell Potter buy but Macquarie is more bullish on the stock, expecting its price to grow to $9.60.

Now secondly Bell Potter upgraded the building and construction business John’s Lyng Group (ASX:JLG) their price over to $2.90 announced record job volumes in the second half, setting up a healthy pipeline for JLG.

And thirdly, UBS reiterated Worley Parsons (ASX:WOR) as a buy with $11.75 price target that’s undervalued based on what it’s currently trading at and after the company announced a new heavy cost-cutting measures also a focus on offshore wind etc. projects.

It also reduced the headcount by 8% and reduce their leverage as well.

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

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