Morning Bell 19 August

Jessica Amir
August 19, 2020

Overnight U.S. stocks erased their COVID-19 losses, knocking the top off the previous record with the S&P500 rising 0.2%. This is following the U.S. Treasury Secretary saying Trump wants to move forward with more economic stimulus.

The fall of the U.S. dollar has helped the Aussie dollar gain 1% this week and overnight it hit 72.40 U.S. cents, its highest level since February last year.

The Federal Government inked a deal to produce a COVID-19 vaccine with AstraZeneca. We know CSL is already in talks with AstraZeeneca to develop the vaccine, so keep your eyes peeled on CSL (ASX:CSL).

Companies reporting today: CSL (ASX:CSL), Inovcare (ASX:IVC), Brambles (ASX:BXB), Amcor (ASX:AMC), Dominos Pizza (ASX:DMP), Tabcorp (ASX:TAH), Dexus (ASX:DXS), Stockland (ASX:SGP) and Vicinity Centres (ASX:VCX).

ANZ (ASX:ANZ) reported a strong rebound in the third quarter which was a stark differennce to Westpac (ASX:WBC) that reported yesterday.

Keep a watch on Treasury Wine Estates (ASX:TWE) and Orora (ASX:ORA), which are expecting further downside today. This is following the announcement of China’s Ministry of Commerce kicking off an investigation into Australian businesses allegedly dumping wine at discounted prices.

Local trading ideas:
– Monadelphous’ (ASX:MND) buy rating and price was upgraded after its results yesterday revealed it has a brighter future.
– Westpac (ASX:WBC) was maintained as a hold by Bell Potter, even though the bank scraped its final dividend.
РAustralia’s largest miner, BHP (ASX:BHP) was maintained as a buy by UBS with a $40 price target.

Read Transcript
Good Morning and thanks for your company this Wednesday the 19th of August.

I’m Jessica Amir, market analyst with Bell Direct.

Well, overnight we saw the U.S. stock market erase its COVID-19 losses, knocking the top of the previous record high after the S&P500 rose 0.2%.

It comes as the U.S. treasury secretary said that Trump wanted to move forward with providing more economic stimulus.

Now this good news is supporting that U.S. equities are continuing to move higher coupled with the fact that we’ve seen stronger than expected economic news on the commodity side of things.

Good news as well the gold price rose over 1% back above US$2,000 an ounce after earlier hitting a new one-week high.

Now this is coming as investors are continuing to rotate out of the most liquid of all liquid safe havens the USD and instead invest in gold.

Now this has caused the USD to fall to its lowest level since May 2018, while the gold price
has rallied over 30% this year.

Now this fall of the USD has helped the aussie dollar lift 1% this week overnight and it’s
Hit 72.40 U.S. cents, its highest level since February last year.

What to watch today, well earnings season results really turn it on today over a dozen companies
are reporting, we’ve also heard from ANZ (ASX:ANZ) reporting quarterly numbers a strong rebound in the third quarter with statutory profit after tax hitting $1.3 billion in the June quarter just shy of what it reported in the first half of $1.5 billion.

Cash profit from continuing operations improved hitting $1.5 billion up from $1.4 billion in the first half ANZ also declared a final dividend of $0.25 cents a stark difference to Westpac (ASX:WBC) which scrapped its interim dividend yesterday although the future remains uncertain for Westpac’s final dividend.

CSL (ASX:CSL) is due to hand down their results later today disruptions from the pandemic are
likely to affect plasma collection and availability as well as CSL’s costs we’re expecting profit of $2.1 billion.

CSL is a Goldman Sachs buy with a target of $326.

Invocare (ASX:IVC) the funeral business has just reported four-year results declaring it will pay its final and deferred interim dividends.

Brambles (ASX:BXB) the pallet business and
packaging business Amcor (ASX:AMC) report results as well as Domino’s
pizza (ASX:DMP) Tabcorp (ASX:TAH) Dexus (ASX:DXS) Stockland (ASX:SGP) Vicinity Centers (ASX:VCX).

On the gold front we’ve seen silver like resources report their results profit is up almost 700%
on the back of the gold prices rally.

On the vaccine side of things, the federal government inked a deal to produce a COVID-19 vaccine with AstraZeeneca, if COIVD-19 trials proved successful from oxford uni, we know that CSL is already in talks with astrazeneca to develop a vaccine in Melbourne.

So keep your eyes peeled on CSL.

The Aussie government will also need to of course buy syringes so keep an eye on medical company providers that can supply syringes and the like.

On the downside today keep your eye on Treasury Wine (ASX:TWE) and Orora (ASX:ORA) the beverage packaging company expecting further downside.

The reason for this is because China’s ministry of commerce yesterday announced that it’s kicking off a year-long investigation into Australian businesses allegedly dumping wine at discounted prices in China.

Now what’s feared is this will potentially impact Aussie wine exports into China in the coming
months and put a dent on TWE’s better than expected growth outlook that they announced last week, growth outlook saying that their outlook was strong in Asia and
China.

Now for the economy, the Australian economy exports in wine amount to about $1 billion in value so keep your eyes peeled on this China and Aussie latest round of tension because the majority of the wine exports from Australia are from Treasury Wine.

As for trading ideas just three quick ones today, Monadelphous’ (ASX:MND) they had their buy rating and price target upgraded after handing down results yesterday a brighter than expected future.

Australia’s second largest bank, Westpac (ASX:WBC) was maintained as a hold stock by Bell Potter given that the half year dividend was scrapped and the final is likely to be walked away from and Australia’s largest miner BHP (ASX:BHP) was maintained as a UBS buy with a $40 target

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