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Morning Bell 20 August

Jessica Amir
August 20, 2020

Aussie futures are suggesting a retreat of 0.3%, which will trim some of yesterday’s gain of 0.7% and the week to date gain of 0.7%. The S&P500 scaled to a brand new record high, its second in two straight days before falling 0.4%. The Nasdaq met the same fate, scaling to a record before turning negative in the final few hours. Meanwhile, Apple became the first US. company to reach a market cap of $2 trillion, doubling its valuation in two years.

In commodities and FX, the U.S. dollar rose, which saw gold lose 1.6%, down to US$1,939. The oil price fell 0.2% to US$42.76. The Aussie dollar fell 1% and hit 71.85 US cents – falling from its fresh high.

 

What to watch:

  • Afterpay (ASX:APT) upgraded its guidance levels expecting EBITDA to be $43 million, that’s almost double what APT previously expected.

 

Companies reporting today:

  • Qantas (ASX:QAN) just reported its profit dived to a $2 billion after tax loss in 2020 financial year, a 334% fall on last year’s profit.
  • Star Entertainment (ASX:SGR) just reported a full year net loss after tax of $95 million after falling 148%.
  • Wesfarmers (ASX:WES) the owners of Bunnings, Kmart and Officeworks also just reported results
  • Other companies which have reported include Perpetual (ASX:PPT), Domain (ASX:DHG), Medibank Private (ASX:MPL), and South32 (ASX:S32).

 

Trading ideas:

  • Ingenia (ASX:INA) is showing that it’s formed a technical short-term bullish uptrend, according to Trading Central’s charting. Goldman Sachs backs INA as a buy with a $5.40 target.
  • BHP (ASX:BHP) was reiterated as a UBS buy with a $40 target.
  • ANZ (ASX:ANZ) was reiterated as a Bell Potter buy following its quarterly update, while its price target increased to $20.

 

Read Transcript

Good morning thanks for your company this Thursday the 20th of August I’m Jessica Amir, a market analyst with Bell Direct.

Well it looks like the Aussie share market is on for a bit of profit taking this Thursday.

The futures are suggesting a fall of 0.3% which will trim some of yesterday’s gain of 0.7 of a %, and that’s also where we’re sitting week to date as well with a lift of 0.7%.

Now it comes as U.S. equities took a breather overnight with the S&P500 scaling to a brand new record all-time high, its second in two straight days before it fell into the red in the final hours, losing 0.4%.

The Nasdaq met the same fate, scaling to yet again another record all-time high, but quickly turned into negative territory in the final hours as well, closing 0.6 of a % lower.

It comes as investors weighed up the Federal Reserve’s meeting minutes which didn’t really hint on any further stimulus at all.

What was noteworthy though on the stock front, early in the session Apple became the first U.S. company to reach a market cap of US$2 trillion, doubling its valuation in two years.

This year alone, Apple shares have already surged 54%, and just looking at the gain from the COVID-19 low it’s up over 100%.

Elsewhere, we saw the U.S. dollar rise, so that in turn put pressure on the gold price, and gold lost 1.6% falling below the key US$2,000 mark.

While the oil price saw a bit of profit-taking falling 0.2% to $42.76 U.S.

As a result of the U.S. dollar gaining ground, the Aussie fell as a result losing 1% and the Aussie dollar is now 71.85 U.S. cents, falling from that fresh record that it scaled to yesterday.

What to watch today, well there’s plenty.

After the market close last night, we saw the tech stock and arguably the fastest growing company in Australia Afterpay (ASX:APT) – they upgraded their guidance levels expecting earnings, or what’s known as EBITDA to be $43 million.

That’s almost double what APT previously expected, and in the last six weeks it’s also drastically reduced its loss levels, and also it’s also noted that it’s bad debt levels are some of the lowest levels that they’ve ever been despite COVID-19.

It also has a lot of drivers that are driving future growth, including its entrance into the UK the U.S., also its deal with eBay and Tencent in China.

APT’s price target was lifted by Bell Potter to $92.50 as a result.

Morgan Stanley we haven’t heard from them, but their last price target was $101.

After the close we also saw a Japanese bank Mitsubishi UFJ become a major holder in Afterpay.

This is another reason why you’d expect APT’s shares to gain today and if you look at the price matches, it’s showing that APT shares will already lift 2% at the open.

As for who else is reporting, well there’s a lot Qantas (ASX:QAN) just handed down its results, and its profit dived to a $2 billion dollar after tax loss in the 2020 financial year.

That’s over 300% fall on last year’s profit, with revenue falling 21% to $14 billion dollars in the year.

What’s key here is the loss is far less than feared which is a bit of a good news for Qantas the flying kangaroo.

Elsewhere, Star Entertainment (ASX:SGR) just reported.

Its profits threw the dice down to a fall year net after tax loss of $95 million dollars.

After that headline result fell about 150%. What was interesting though, was VIP gaming revenue only fell 51% compared to the same time last year.

Elsewhere Wesfarmers (ASX:WES), the owner of Bunnings, Kmart and Officeworks just reported results – we’ll have a full report on them shortly so stay tuned.

Perpetual (ASX:PPT), Domain (ASX:DHG) and Medibank Private (ASX:MPL) and

South32 (ASX:S32) have just reported.

So keep an eye on those.

And this evening, in the U.S. look out for weekly jobless claims, which are expected to have fallen over the last four weeks in terms of their weekly average.

As for trading ideas, three quick ones; Ingenia (ASX:INA) is showing that it’s formed a technical short-term bullish uptrend, that’s according to Trading Central’s charting.

The bullish signal indicates that the stock may rise from its close price yesterday of $4.80 to between $5.35 and $5.45 over the next 14 days that’s if you use standard technical analysis principles.

Goldman Sachs already backs INA Ingenia (ASX:INA), with a $5.40 target.

Secondly BHP (ASX:BHP) was reiterated as a UBS buy with a $40 target with M&A activity being a key driver of future growth for this mining magnate.

Really given that the iron market is set to experience disruptions and the metallurgical coal and copper businesses are quite mature.

And ANZ (ASX:ANZ) was reiterated as a Bell Potter buy following its quarterly update that it provided yesterday, upgraded with a price target to $20.

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

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