Morning Bell 16 July

Jessica Amir
July 16, 2020

The Aussie share market is eyeing a 0.3% lift at the open, which will be a nice addition to this week’s 2.3% gain.

Following better than expected economic news, industrial production rose 5.4% in June quarter, much more than expected, spelling its biggest rise since 1959. Meanwhile New York manufacturing numbers came out, also much stronger than expected, showing the biggest gain since 2018. All of this supports the V-shape economic recovery.

What to watch today:

  • It’s Aussie employment data day. 113,000 jobs are expected to be added in June, which could mark an encouraging recovery from the 228,000 jobs lost in May. On the flip side, the unemployment rate is also expected to rise to 7.4%.
  • Later this evening U.S. retail sales data is out, which is expected to rise again.

Trading ideas:

  • UBS increased Woodside Petroleum’s (ASX:WPL) buy rating and price target to $27.00, seeing upside in its multi-billion dollar growth projects. Yesterday Woodside announced second quarter revenue fell 30% due to LNG prices, that was weaker than expected, which is why it’s shares fell 2.2% to $20.96.
  • Bell Potter rose Afterpay’s (ASX:APT) price target to $83.00. APT confirmed its services will now be available in Apple Pay and Google Pay wallets.
  • Bell Potter reiterated Senex Energy (ASX:SXY) as a buy, increasing its target to $0.35.

 

Read Transcript

Good morning, well yesterday we spoke about the U.S. biotechnology company Moderna and their human COVID-19 trials delivering really promising results, which sent its shares higher in

after-hours trade.

Now that provided a springboard for the U.S. session overnight, Moderna shares themselves rose 7% but given the potential vaccine for COVID-19 is around the corner economic recovery stocks shot up with American Airlines and Royal Caribbean cruises up over 14% each.

Retailers like GAP followed about 13% higher.

Also better than expected economic news came through and that really helped a dynamic duo of data, industrial production was up 5.4% in the June quarter, that was much better than expected and was also the biggest rise since 1959.

In New York, manufacturing numbers there also came out much better than expected as well, showing the biggest lift in manufacturing since 2018.

Now all this supports the V-shaped economic recovery that we’ve been speaking about.

Company quarterly earnings results also came through from Goldman Sachs and JP Morgan, with large rises in trading revenue.

That helped Goldman Sachs shares rise about 1.4%.

As for how the broad indices finished, the Dow Jones and the S&P500 put on about 0.9% and the Nasdaq nudge 0.6% higher, dancing around record higher ground.

On the commodity front, the oil price lifted 2% to US$40.99, as U.S. inventories fell, but keep an eye on OPEC and its allies’ plans to stop easing supply from August.

Elsewhere the gold price inched ahead not even by a tenth of a percent, but gold is now at US$1,816 an ounce and the iron ore price hit it’s highest level since August last year it’s now at US$107.45 after rising 0.5%.

Now what to watch today, well the Aussie market is expected to lift 2.3% if you go by the futures, a nice addition to the week gain of 2.3%.

Aussie employment data is out today.

We’re expecting 113,000 jobs to be added in the month of June which could be an encouraging recovery from the almost 230,000 jobs that we saw taken out of the economy in May.

On the flip side, the unemployment rate is also out today and is expected to nudge up to 7.4%, so keep an eye on that.

Later this evening in the U.S., they get their retail sales numbers out which are expected to push ahead.

3 trading ideas for today – well UBS increase Woodside Petroleum (ASX:WPL) rating and price target to $27 seeing in the multi-billion dollar growth projects, yesterday, Woodside announced second quarterly revenue fell 30% due to LNG prices.

Now that was weaker than expected, which is why we saw Woodside shares fall 2.2% yesterday, to $20.96.

Secondly, Bell Potter rose Afterpay’s (ASX:APT) price target to $83 yesterday, and it closed 2.4% up yesterday at $68.16, 7% off its all-time high, that it hit the same time last week.

Now Afterpay has confirmed that its services will now be available in Apple pay and Google pay wallets, after Afterpay roll out into physical stores in the U.S. as well.

Now thirdly Bell Potter reiterated its buy rating for Senex Energy (ASX:SXY), also increasing its price target to $0.35.

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

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