Morning Bell 21 August

Jessica Amir
August 21, 2020

The Aussie share market is expected to gain 0.2% at the open, meaning the ASX200 could end slightly higher this week as it’s tracking 0.1% lower Monday to Thursday.

Overnight, U.S. weekly unemployment claims soared back to 1 million, this was far more than expected. Despite that, U.S. stocks bounced back from their prior day’s fall, with investors focused on maximising returns amid the record low interest rate environment.

What to watch today:

  • Companies reporting: Alumina (ASX:AWC), BWX (ASX:BWX), Mayne Pharma Group (ASX:MYX), Suncorp Group (ASX:SUN), Healius (ASX:HLS), Inghams (ASX:ING) and Redbubble (ASX:RBL).
  • In terms of economic news, we’ll get a preview of manufacturing and services data for August from CommBank, with both gauges expected to have eased as Victoria remains in hard lockdown.

Local trading ideas:

  • UBS reiterated Tassal (ASX:TGR), Origin Energy (ASX:ORG) and Pro Medicus (ASX:PME) as a buy following their results yesterday.
  • Bell Potter upgraded Pro Medicus (ASX:PME) from a hold to buy, with a price target of $28.50. Yesterday it fell 2.5% to $24.68 after delivering weaker than expected profit. However going forward, strong revenues and earnings are expected in FY21 as there are no other competitors in the medical streaming technology space and the company is continuing to invest $7m – $8m in R&D each year to maintain this tech advantage.
  • Perpetual (ASX:PPT) delivered a 20% drop in profit yesterday in line with expectations. On the negatives, it didn’t flesh out details about its U.S. fund manager acquisitions and cost guidance is not clear. However on the positives, it’s expanding its high net worth (private client business). Bell Potter downgraded PPT’s price target to $43.80 but maintained its buy recommendation.
  • The ASX (ASX:ASX) is showing that it’s formed a technical bullish uptrend, what’s known as an ‘upside break’ according to Trading Central’s charting. ASX is a UBS sell with a $75 target, it was also reiterated as a Citi sell.
Read Transcript

Good morning, happy Friday the 21st of August.

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

Well a soft lift of 0.2% is expected today for the Aussie market, meaning the ASX200 could end slightly higher this week, as currently we’re tracking 0.1% lower Monday to Thursday.

Overnight in the U.S. we saw dreary economic news come through with U.S. weekly unemployment claims soaring back above one million, far more than expected.

Despite that, we saw U.S. stocks bounce back from their prior days fall with investors focus on maximizing returns amid the record low interest rate environment while FOMO also played a part.

To the Dow snapped its three-day losing streak rising 0.1%, the broader S&P500 up 0.3%, while the show stopping NASDAQ jumped 1% hitting a brand new record close of 11,265 points thanks to Apple, Facebook, Netflix, Alphabet and Microsoft shares, all rising at least 2%.

Tesla shares also revved up over about 7% closing above US$2,000 for the first time in history.

Elsewhere, investors bought into gold, pushing it up by US$6 to US$1,939 an ounce, as weekly jobs claims rose.

Now those fears flew to other commodity markets, which is why we saw the oil price fall for the second session losing about 1% to US$42.58 a barrel.

What to watch today, well for companies that are reporting or who have reported so far Alumina (ASX:AWC), BWX (ASX:BWX), Mayne Pharma Group (ASX:MYX), Suncorp Group (ASX:SUN), Healius (ASX:HLS), Inghams (ASX:ING) and Redbubble (ASX:RBL) all report and have reported today.

For BWX, their results so far the most notable as the beauty business reported a 60% lift in profit with strong growth expected to continue in FY21.

In terms of economic news, we’ll get a preview of manufacturing and services numbers for August from Commbank, with both gauges expected to have eased as the second most populated state, Victoria, remains in hard lockdown.

This evening in the U.S., it looks like the U.S. market will lift again as the U.S. futures for the three major indices are all pointing to positive gains.

Now as for a couple of trading ideas, while UBS reiterated Tassal (ASX:TGR), Origin Energy (ASX:ORG) and Pro Medicus (ASX:PME), all those are buys following their results being handed down yesterday.

Staying on Pro Medicus, Bell Potter upgraded PMS from a hold to a buy with a target of $28.50.

Yesterday PMS fell about 2.5% to $24.68 after delivering weaker-than-expected profit.

However going forward, strong revenues and earnings are expected this financial year as there’s no other competitors in the medical streaming technology space and the company PME is also continuing to invest about $7 million – $8 million per year in R&D to maintain their tech advantage.

Secondly, Perpetual (ASX:PPT) delivered a 20% drop in profit yesterday, that was in line with market expectations.

On the negative front, though Perpetual didn’t flesh out details about the U.S. fund manager acquisition and cost guidance was not clear.

However on the positives, Perpetual is expanding its high net worth or private client business and Bell Potter downgraded PPT’s price target to $43.80 but it maintained Perpetual as a buy recommendation.

A stock to think about is the ASX (ASX:ASX), showing that it’s formed a technical bullish uptrend, what’s known as an ‘upside break’ now this is according to Trading Central’s charting.

This bullish signal indicates that it may rise extending yesterday’s lift of 2.7% to $89.91 over the next 55 days.

It’s expected that its shares could grow to $95 to $96.25 and that’s according to standard technical analysis principles.

But what is important tonight though, earnings are expected to slightly rise in its cash equity trading business but overall earnings for the ASX are expected to fall next year and then recover the following two years.

I suspect this is why the ASX is a UBS sell with a $75 target, but it was reiterated as a Citi sell as well overnight.

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

Please stay safe.

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