Morning Bell 20 October

Jessica Amir
October 20, 2020

The futures are suggesting the Aussie share market will pull back 0.7% after the ASX200 scaled to a new 7-month high yesterday, its highest level since the 6th of March 2020. But remember the market is in a technical break out point, trading above its 200 and 50 day moving average, indicating the market is likely to explore higher levels.

What to watch today:

  1. Reporting today: BHP’s (ASX:BHP) quarterly results with all eyes on China’s alleged Australian coal ban, and Sydney Airport (ASX:SYD) reports September traffic numbers.
  2. AGMs: Bapcor (ASX:BAP), Cochlear (ASX:COH), Lovisa (ASX:LOV), McMillan Shakespeare (ASX:MMS), Stockland (ASX:SGP) & Tabcorp (ASX:TAH)  .
  3. RBA Assistant Governor of Financial Markets speaks about monetary policy today and the tools to stimulate the economy at 10am.
  4. RBA minutes will be released at 11:30am.

Trading ideas:

  • South32 (ASX:S32) has been reiterated as a UBS Buy, with a $3.00 price target, after it handed down quarterly results yesterday, bumped up its outlook and reinstated its share buyback program.
  • Bell Potter upgraded car repair and aftercare business AMA’s (ASX:AMA) Buy rating, increasing its price target to $0.95, implying 39% upside. Bell Potter says with Victoria’s lockdowns easing, AMA should be able to increase its earnings, forecasting higher earnings than AMA expects.
  • Ansell (ASX:ANN) was maintained as a Citi Buy with a $41 target given demand for medical gloves from COVID-19 is tipped to remain high for some time.
  • OZ Minerals (ASX:OZL), Orica (ASX:ORI) and Zoono Group (ASX:ZNO) are all showing bullish charting signals – according to Trading Central

 

Read Transcript

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

Well that new U.S. COVID-19 stimulus package is still up in the air would you believe even though the U.S. election is under 15 days away in fact house speaker Nancy Pelosi is working to a 48-hour countdown to come up with a deal and hand it to the Trump administration to potentially be passed before the election so it’s easy to see why traders and investors are indeed on tender hooks.

Investors then absorbed news from the Washington Post that a deal was not sounding imminent and we saw U.S. equities fall to their session lows for the day after that news broke.

Now this is all despite better than expected economic news coming through with U.S. home builder sentiment soaring to a record all-time high, the benchmark S&P500 lost 1.6%, the Dow down released 1.4%, the Nasdaq down the most 1.7%.

As for commodities a bit of a sour night for them ho-hum in fact the oil price lost 0.2% falling to US$40.73 and the gold price dipped, it rallied and then fell back to where it was yesterday.

It’s now US$1,906 an ounce.

As to what to expect locally the futures are suggesting the market will retreat 0.7% considering the ASX200 did scale to a new 7 month high yesterday that’s something indeed to take into consideration that it’s at its highest level since the 6th of March.

It’s important to remember as well that the market is in a technical breakout point trading above it’s 250 day moving averages indicating the market is likely to explore higher levels and this is something that Morgan Stanley is expecting as well it’s calling on the market or saying that the market will rally in the medium term as well so that’s a key consideration to watch.

What else to watch well reporting results today are out for BHP (ASX:BHP) their quarterly numbers all eyes will be on detail about China’s alleged Australian coal ban and Sydney Airports (ASX:SYD) reports September traffic numbers.

As for AGMs they’re continuing to roll through thick and fast Bapcor (ASX:BAP), Cochlear (ASX:COH), Lovisa (ASX:LOV), McMillan Shakespeare (ASX:MMS), Stockland Corporation (ASX:SGP) and Tabcorp (ASX:TAH) all hold AGMs today.

As for economic news well no economic news but plenty of speeches, the RBA assistant governor of financial markets speaks about monetary policy today and the tools to stimulate the economy so close attention will be paid to that speech at 10am given the unemployment rate still has a fair way to drop and the RBA minutes will be released today at 11:30am.

As for trading ideas that could be worth a look South32 (ASX:S32) has been reiterated as a UBS buy $3 target after they handed down quarterly results yesterday bumped up their outlook and reinstated their share buyback program, so that’s South32 a UBS buy.

And Bell Potter upgraded car repair and after care business AMA (ASX:AMA) their buy rating increasing their price target to $0.95 and that implies almost 40% upside.

Bell Potter says given Victoria’s lockdown is easing or lockdowns are easing AMA should be able to increase its earnings well above what AMA is expecting.

And Ansel (ASX:ANN) has been maintained as a Citi buy with a $41 target, the PPE manufacturer held its capital markets day last week the first one in fact since 2017 and Ansel unveiled its new targets.

As such Citi increased its earnings per share growth forecasts to between 6-12% from this financial year up to 2023 which is supported by demand for medical gloves from COVID-19 with demand tipped to remain high for some time.

Lastly keep an eye on Oz Minerals (ASX:OZL), Orica (ASX:ORI)  and Zoono Group (ASX:ZNO) all showing bullish charting signals according to Trading Central.

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

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