Morning Bell 13 July

Jessica Amir
July 13, 2020

The Aussie share market is eyeing a 1.6% gain at the open, which will help us recoup some of the 2.3% lost last week.

Millions of Australians will receive a second $750 payment from today, with the one-off cash payment going to eligible pensioners, carers and students, which will cost the government over $4 billion. Free childcare ends today after three months, while some parents will receive 100 hours per fortnight subsidised until October 4.

Despite COVID-19 cases in the U.S. rising to a record high, U.S. stocks charged ahead on Friday after Gilead reported its COVID-19 treatment candidate showed an improvement in clinical recovery and 62% reduction in the mortality rate compared to the level of care.

What to watch today:

  • Expect stocks linked to the economic recovery to attempt a slight claw back following Wall Street’s lead.
  • Tomorrow NAB (ASX:NAB) will report its business confidence for June, Consumer confidence data is out on Wednesday and unemployment data is out on Thursday with consensus expecting unemployment will lift from 7.1% to 7.4%, less than the RBA’s forecast of 10%. If data is better than expected, expect the market to rally along with banks and consumer discretionary stocks.

Local Trading ideas:

  • UBS reiterated Nine Entertainment (ASX:NEC) as a buy with a $1.70 target, after the CFO announced his resignation after a family member passed away. At the same time, Nine announced its full year earnings (EBITDA) for FY20 should be $390-$410 million beating UBS’ expectations.
  • Bell Potter increased its buy rating and price target of NAB (ASX:NAB) to $19.90.
  • Bell Potter initiated coverage of Calix (ASX:CXL) as a speculative buy with a $1.10 target as it’s growing organic revenue amid its U.S. expansion into differentiated water treatments. All in all, Calix has five targets, from CO2 emissions in cement manufacture to commercialising its aquaculture and crop protection with a total combined market of $70 billion.
Read Transcript

Good morning, well the Aussie share market is eyeing a lift of 1.6% today that’s if you go by the futures, now that’ll help us definitely recover some of the 2.3% loss of last week.

Today millions of Aussies will receive a second $750 payment.

The one-off cash payment will go to eligible pensioners, carers and students.

Now it’ll cost the Government about $4 billion and free childcare ends today after three months.

While some parents will continue to receive 100 hours per fortnight subsidised until October 4.

Looking at the U.S., despite COVID-19 cases there rising to a record high, U.S. stocks charged ahead on Friday after Gilead reported its COVID-19 candidate showed a significant improvement in clinical recovery and 62% reduction in the mortality rate compared to the current level of care.

The Dow Jones rose 369 points or 1.4%, the S&P500 up 1.1% and the Nasdaq charging 0.7%.

Standout stocks included Netflix which turned up 8% rallying after Goldman Sachs announced Netflix shares will grow 30% in 12 months and Amazon shares rose to another all-time high after Citi increased their price target for logistics giant.

On the commodity front, the oil price lifted 2% to US$40.55, gold has steadied to US$1,801 and the iron ore price last traded 0.9% higher to US$105, that’s in 12 month high neighbourhood and in New York, BHP rose 1.1%.

What to watch today, well expect stocks linked to the economic  recovery to attempt a slight clawback following Wall Street’s lead.

There’s no economic news out today but it will flow from tomorrow with NAB’s business confidence out for June, Wednesday Consumer confidence is out and Thursday, unemployment data.

Consensus is expecting unemployment will lift from 7.1% to 7.4%, that’s less than the RBA’s forecast of 10%.

If the data is better than expected, expect the market to rally along with banks and consumer discretionary stocks.

Now to local trading ideas, UBS has reiterated Nine Entertainment (ASX:NEC) as a buy with a $1.70 target after the CFO announced his resignation after a family member passed away.

At the same time, Nine announced its full-year earnings  (EBITDA) for FY20 should be $390 – $410 million, that’s better than UBS is expecting.

Secondly Bell Potter increased its buy rating and target for NAB (ASX:NAB) to $19.90, wholly based on valuation change given NAB lost 4.7% last week.

Thirdly Bell Potter initiated coverage of Calix (ASX:CXL) as a speculative buy with a $1.10 target after its growing its organic revenue amid its U.S. expansion into differentiated water treatments.

All in all, Calyx has five targets, from CO2 emissions in cement manufacture to commercializing aquaculture and crop protection, with a total combined market of $70 billion.

I’m Jessica Amir with Bell Direct, thanks for your company and happy trading.

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