Morning Bell 21 July

Jessica Amir
July 21, 2020

The Aussie share market is eyeing a 0.7% lift at the open, following a positive night in the U.S. on hopes of further economic stimulus there.

Across the ocean, UK’s Oxford University with AstraZeneca reported a strong immune response in a large early-stage human trial, according to medical journal The Lancet.

What to watch today:

  • The RBA Governor will give a speech later today and the RBA minutes will be released.
  • The Government is expected to announce that JobKeeper and JobSeeker payments have been extended for another six months, but both payments will be reduced as the Government has found they could act as disincentives to work as the economy recovery. This is on top of the new $2 billion job package that was announced to help the unemployed and school-leavers. So stay tuned to the Prime Minister and Treasurer’s announcements.
  • Quarterly results today are due out for BHP (ASX:BHP) and Oil Search (ASX:OSH).

Local trading ideas:

  • Following South32’s (ASX:S32) quarterly results being handed down, UBS reiterated the stock as a buy with a with a $2.60 target following yesterday’s close of 2.3% lower at $2.17. South32 ended FY20 better than expected, with yearly production records set by Brazil Alumina, Hillside Aluminium and Australian Manganese.
  • Fleet leasing business Eclipx Group (ASX:ECX) had a cracking day on the ASX yesterday up 7.3% to $1.40 after announcing the sale of Right to Drive for up $26.5 million, to be completed on 17 August 2020. UBS reaffirms Eclipx Group as a key buy with a $1.45 target, with upside to earnings.
  • Bell Potter upgraded Catapult Group (ASX:CAT), a wearable software athlete tracker company, with a $1.50 target. Yesterday it closed 11.4% higher at $1.42 after delivering FY20 earnings stronger than expected, also generating free cashflow of $9 million which was well ahead of the estimated $100,000.
Read Transcript

Good morning, thanks for your company this Tuesday the 21st of July.

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

Well the Aussie share market is eyeing a 0.7% lift at the open, following a positive night in the U.S. on hopes of further economic stimulus there and hopes of a COVID-19 vaccine.

Almost in a reverse of what we saw last week, the tech heavy Nasdaq charged up the most putting on 2.5%, the S&P500 rose 0.8% and the Dow rose slightly.

A big standout on the stock front was Amazon shares rising 7.9% after Goldman Sachs upgraded Amazon with a price target of US$3,800.

Amazon shares closed at US$3,197.

So plenty more upside to come.

Tech majors like Adobe followed up 5.3% and Microsoft up over 4%.

Pfizer and BioNTech shares also rose after reporting early positive data on their joint vaccine candidate.

While across the ocean UK’s Oxford University with AstraZeneca reported a strong immune response in a large early stage human vaccine trial, according to medical journal, The Lancet.

The duo are set to move into larger trials which will be really telling of how effective so far they have been.

Also in Europe, investors also monitored EU talks about a proposed $750 billion Euro recovery fund.

Elsewhere and on the commodity front, the oil price had a choppy session but ended 0.3% higher to US$40.71 a barrel on vaccine hopes.

The gold price edged to another near nine month high of US$1,818.

What else to watch today, well several key things.

Firstly the RBA Governor will give a speech later today, the RBA minutes will be released.

Secondly, the Government is expected to announce JobKeeper and JobSeeker payments have been extended for another six months, but both payments will be reduced as the Government has found that they could act as a disincentive to get people back into the economy as it recovers.

Now this is on top of the new $2 billion jobs package that was announced last week to help the unemployed and school leavers, so stay tuned to the Prime Minister and Treasurer’s announcements.

Also keep an eye on quarterly results on the company news side of things out for BHP (ASX:BHP) and Oil Search (ASX:OSH) today.

Now ending on three trading ideas, well firstly following South32’s (ASX:S32) quarterly results being handed down yesterday UBS reiterated South32 as a buy with a $2.60 price target.

Yesterday it closed 2.3% lower to $2.17.

South32 ended FY20 up better than expected with yearly production hitting records in Brazil Alumina, Hillside Aluminium and Australian Manganese.

Secondly the fleet leasing business Eclipx Group (ASX:ECX) had a cracking day on the ASX yesterday up 7.3% to $1.40 after announcing the sale of one of their businesses called Right to Drive for up $26.5 million, to be completed on 17 August this year.

UBS reaffirms Eclipx Group as a key buy with a $1.45 target, with upside in earnings and UBS says it’s also attractively valued at 10x forward earnings.

Thirdly, Bell Potter upgraded Catapult Group (ASX:CAT) a wearable software athlete tracker business with a $1.50 target.

Yesterday it closed a massive 11.4% higher at $1.42 after delivering FY20 earnings stronger than expected, also generating free cashflow of $9 million which was well ahead of the estimated $100,000.

Despite COVID-19 demand has continued and the business has continued to win new customers and retain existing ones.

So that’s why Catapult is a Bell Potter buy.

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

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