Morning Bell 14 October

Jessica Amir
October 14, 2020

After five days of straight gains, it looks like some profit taking is in order today. The futures are suggesting a fall of 0.9% today.

The reason sentiment is likely to be weak today is because global equities pulled back overnight with the UK recording its highest daily rise in COVID-19 deaths.

In the U.S., Johnson & Johnson’s COVID-19 vaccine study was paused due to an unexplained illness in a patient study, seeing J&J shares slide 2.3%.

What to watch today:

  • The oil price gained 2% to US$40.17, while Gold fell about 2% to US$1,894.
  • Afterpay (ASX:APT) received finalisations and clearance from AUSTRAC’s audit.
  • Bank of Queensland (ASX:BOQ) reported its net profit fell 61%. Auckland International Airport (ASX:AIA) and Aurizon Holdings (ASX:AZJ) also report.
  • AGMs today: CSL (ASX:CSL), Cleanaway Waste Management (ASX:CWY) and Aurizon Holdings (ASX:AZJ).
  • Overnight, the International Monetary Fund (IMF) revised its global economic growth forecasts higher to a 4.4% contraction, up from negative 4.9% growth for 2020.

Trading ideas:

  • Orica (ASX:ORI), a leading explosives manufacturer was reiterated as a Citi Buy with a new increased target of $19.50. Citi is expecting medium-term earnings growth underpinned by higher pricing, increased technology sales and better plant utilisation.
  • Following Telstra’s (ASX:TLS) AGM yesterday UBS maintained Telstra as a Buy with $3.70 target.
  • BCI Minerals (ASX:BCI), Silver Lake Resources (ASX:SLR) and Ramelius Resources (ASX:RMS) are all showing bullish charting signals – according to Trading Central.

 

Read Transcript

Good morning, thanks for your company this Wednesday the 14th of October, I’m Jessica Amir, market analyst with Bell Direct.

Well after 5 days of straight gains, the ASX200 did see its best gain in about 6 months last week.

Today looks like we’re going to see some profit taking, the futures are suggesting a pullback of about 0.9% and the reason for the weakest sentiment is that global equities actually fell into the red overnight for a couple of reasons, the UK recorded their highest daily rise in COVID-19 deaths since June and in Europe their markets retreated.

The German market, the DAX was down the most there about 0.9%.

Across the Atlantic in the U.S. a bit of sour news came out from Johnson & Johnson with their COVID-19 vaccine study, it was paused due to an unexplained illness but although their shares did fall 2.3% overnight they’ve been performing quite well of late and J&J shares are up about 33% from the COVID-19 low.

As for how the major U.S. indices wrapped up, the Nasdaq was down the least 0.1% and that was supported by rallies in Zoom shares which were up about 5% as well as eBay and PayPal up about 3% while the broader S&P500 fell 0.6%.

Now what to watch today on the commodity side of things a bit of a rebound is in order for some oil stocks given the oil price did rise 2% overnight after China’s top crude importer bought about 12 million barrels per day in September from the U.S. and that’s up about  6% from the prior month also up about 18% from a year ago.

Elsewhere the gold price has eased again it’s down about 2%  to US$1,894 an ounce.

As for company news to watch Afterpay (ASX:APT) has received the finalization and clearance from AUSTRAC from the audit which of course examined the company’s anti-money laundering and counter-terrorism financing so it’s great news for Afterpay as well as shareholders and potential shareholders as well.

Reporting results today we just heard from the Bank of Queensland (ASX:BOQ) they reported net profit after tax fell 31%, other results today out for Auckland International Airport (ASX:AIA) as well as Aurizon Holdings (ASX:AZJ) they also report September rail numbers and speaking of AZJ they also hold their AGM today.

Also AGMS to watch CSL (ASX:CSL) and Cleanaway Waste Management (CWY).

On the macro side of things overnight the IMF revised its global economic growth forecast higher expecting global growth to only fall 4.4%  instead of the 4.9% expected for the year.

At the same time national debt in advanced economies is set to reach 125% of GDP by the end of next year but Australia is in a much better place, our national debt to GDP is about 11% and it’s tip to peak at 23% so that means our government has got plenty more room to stimulate the economy and you think that as we’re in better shape with a lot less debt to GDP we’re likely to track more foreign investment as well so keep that in mind.

Trading ideas that could be worth a look Orica (ASX:ORI) leading explosive manufacturer reiterated as a Citi buy with a new increased target of $19.50.

Citi is expecting medium term earnings growth underpinned by higher prices increased technology sales and better plant utilization so that’s ORI a Citi buy and following Telstra’s (ASX:TLS) AGM yesterday UBS has maintained Telstra as a buy with a $3.70 target.

Interestingly the chairman did say that he wants to maintain that $0.16 per share dividend but is willing to temporarily exceed the guidance and parameters in FY21 but a key catalyst to watch for Telstra’s shareholders will be investor day coming up on the 12th of November the market will be awaiting more idea and ideas and and really paving out the road of what we can expect in terms of further upside from company growth in particular what the NBN payments have been nevertheless that’s still Telstra a UBS buy.

And lastly keep an eye on BCI Minerals (ASX:BCI), Silver Lake Resources (ASX:SLR) and Ramelius Resources (ASX:RMS) all showing bullish charting signals according to Trading Central.

Stay safe happy trading I’m Jessica Amir.

 

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