Morning Bell 14 July

Jessica Amir
July 14, 2020

The ASX200 is set to fall 0.8% at the open, trimming off some of yesterday’s 1% gain after U.S. equities turned positive for the year. The S&P500 hit its highest level since COVID-19 began before falling and losing those gains.

What to watch today:

  • Whitehaven Coal (ASX:WHC) releases Q2 2020 production.
  • NAB business confidence for June is out today with forecast to improve from May’s reading of negative 20 given payrolls in May and retail spending is recovering. Keep a close eye on stocks linked to the economic recovery like the big four banks, Suncorp (ASX:SUN), Auswide Bank (ASX:ABA), Goodman Group (ASX:GMG) & Centuria (CIP).
  • NSW will cap the number of people allowed in pubs following an outbreak at the Crossroads hotel. This won’t affect the Clubs or Star City Casinos (ASX:SGR). Keep an eye on the biggest owner of pub properties ALE Properties (ASX:LEP).
  • Westpac (ASX:WBC) names Michael Rowland as its new CFO, joining from KPMG.

Local trading ideas:

  • UBS reiterated Oil Search (ASX:OSH) as a buy with a $4.30 price target.
  • Bell Potter increased its buy rating and price target of Praemium (ASX:PPS) to $0.59 expecting a stellar FY22 on the back of an EPS lift.
  • UBS reiterated Qantas (ASX:QAN) as a buy with a $4.60 price target, expecting an improvement in numbers from September. But keep in mind flights in and out of Melbourne represent 21% of Australian capacity and international flights are on hold. Given this, expect earnings to return in 2022.
Read Transcript

Good morning, well there’s lots to take in today.

The Aussie share market is expected to trim some of yesterday’s 1% gain and edge 0.8% lower if you go by the futures.

It comes as U.S. equities had a wild ride turning positive for the year with the S&P500 hitting its highest level since COVID-19 began before falling and evaporating those gains.

A big part of the rise and fall was the fact that Tesla shares throttled 16.2% higher before ending 3% lower.

What a wild ride?

On the back of speculative trading, markets stalwarts like Facebook, Amazon, Netflix and Alphabet all closed at least 1.7% lower though erasing earlier gains.

The Dow ended flat, the S&P500 losing 0.9% and the Nasdaq fell 2.1% from its all-time high.

As for standout stocks, Pfizer and BioNTech were granted fast track FDA approval for their four COVID-19 vaccine candidates and that sent Pfizer shares over 4% higher and BioNTech up the most 11%.

After the market closed we saw Trump health officials come out saying drug makers will be able to start COVID-19 vaccine production by the end of August.

So expect a bounce this evening when Wall Street reopens.

On the commodity front the oil price fell 1% below that psychological point of US$40 that it’s been tracking at for some time now, it fell ahead of OPEC meeting later this week with output unfortunately likely to increase while demand of course is subdued.

Elsewhere the gold price got comfy at US$1,814 an ounce and the iron ore price remains in 12 month high neighborhood, while BHP in New York fell 0.6%.

What to watch today, three things.

Whitehaven Coal (ASX:WHC) production numbers are out for the quarter. NAB business confidence on the economic front is out for June, forecast to improve from May’s negative reading given payrolls are up and retail spending is recovering.

So keep an eye on stocks linked to the economic recovery like the big four banks as well as Suncorp (ASX:SUN) and Auswide Bank (ASX:ABA), as well as industrial property stocks like Goodman Group (ASX:GMG) and Centuria Industrial REIT (ASX:CIP).

New South Wales will cap the number of people allowed in pubs from today after an outbreak at the Crossroads Hotel, now it won’t affect clubs or Star City Casino (ASX:SGR) but keep an eye on Australia’s biggest owner of freehold pubs ALE Properties (ASX:LEP).

In the corporate side of things, Westpac (ASX:WBC) has named Michael Roland as its new Chief Financial Officer joining the group from KPMG.

Now three trading ideas, well firstly UBS reiterated Oil Search (ASX:OSH) as a buy with a $4.30 target awaiting project growth in PNG and Alaska.

Bell Potter increased its buy rating and price target of the software provider platform to $0.59 expecting a cracking FY22 on the back of an earnings per share lift, a continuation of flows into the platform and it’s UK business breaking even next year.

Thirdly, UBS overnight reiterated Qantas (ASX:QAN) as a buy with a $4.60 target expecting an improvement in numbers from September, but keep in mind flights in and out of Melbourne amount to 21% of Australian capacity and international flights are on hold now given this expect earnings to return in 2022.

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

Close Transcript

Morning Bell 5 August

Geoff Beeston
August 5, 2020

Morning Bell 4 August

Jessica Amir
August 4, 2020

Morning Bell 3 August

Jessica Amir
August 3, 2020

Monthly Wrap July 2020

Jessica Amir
July 31, 2020

Morning Bell 31 July

Jessica Amir
July 31, 2020

How to: Get a stock quote

Bell Direct
July 30, 2020

How to: Review your portfolio

Bell Direct
July 30, 2020

How to: Set a trading alert

Bell Direct
July 30, 2020

How to: Place, amend or cancel a trade

Bell Direct
July 30, 2020

How to: Open a trading account

Bell Direct
July 30, 2020