Morning Bell 27 October

Jessica Amir
October 27, 2020

The local futures are pricing in that the market could fall 0.9% at the open. Overnight on markets, the undertone was mostly negative, with COVID-19 cases spiking in the U.S., China and Europe. The Dow fell 2.3%, marking its worst fall in 8-weeks. the S&P 500 shed 1.9% and the Nasdaq fell 1.6%.

Commodities were weaker. Oil fell over 3% to US$38.55 with Libyan output rising. Gold steadied at US$1,904, as investors topped up their bond exposure instead.

What to watch today:

  • Boral (ASX:BLD) agrees to sell its 50% stake in USG Boral for A$1.43 billion
  • Northern Star (ASX:NST) announced first quarter gold sales are at the top end of guidance.
  • Evolution Mining (ASX:EVN) announced quarter results. Pointsbet Holdings (ASX:PBH) is due to hand down theirs today.
  • AGMs: Bendigo and Adelaide Bank (ASX:BEN), Nick Scali (ASX:NCK), Bega Cheese (ASX:BGA), Boral (ASX:BLD) & Link Market Services (ASX:LNK).

Trading ideas:

  • Bell Potter upgraded Technology One’s (ASX:TNE) Buy rating, increasing its price target to $10, implying 14.4% upside in a year.
  • Bell Potter downgraded Stanmore Coal (ASX:SMR) as a Sell, dropping its price target to $0.50, implying a fall 31% in a year.
  • UBS reiterated Flexigroup (ASX:FXL) as a Buy with a $1.45 price target.
  • UBS reiterated Westpac (ASX:WBC) as a Buy with a $20.50 price target. Bell Potter targets WBC as a hold with a $20 target.
  • Perenti Global (ASX:PRN), Arena REIT (ASX:ARF), and IDP Education (ASX:IEL) are all showing bullish charting signals – according to Trading Central.

 

Read Transcript

Good morning, thanks for your company this Tuesday the 27th of October, I’m Jessica Amir, market analyst with Bell Direct.

Well there’s just seven days till the U.S. election, four days until the Queensland election and tonight Victorian hospitality and retail restrictions ease.

Excitement for some, disappointment and uncertainty for many.

Overnight on markets the undertone was mostly negative though with COVID-19 cases sparking in the U.S., China and Europe.

Also weighing was Germany’s SAP abandoning its medium-term profit forecasts saying its business would take longer than expected to recover from the COVID-19 pandemic.

Now in Europe SAP stock fell about 22%.

Now this sour sentiment flowed to the U.S. and indeed to tech stocks adding that fiscal stimulus unease crept back in after White House economic adviser Larry Kudlow said that talks had slowed.

And it’s easy to say why traders have trimmed profits off the table the Dow Jones lost 2.3% marking its worst fall in about eight weeks, the S&P500 lost 1.9% and the Nasdaq fell 1.6%.

Not all doom and gloom though we did see Zoom shares rise 1.2%, heart pump company ABIOMED rose 2.4% and utilities also did well with American Electric up 1.9%.

Commodities were weaker though the oil price lost 3% with the WTI price getting as low as US$38.55 with Libyan output rising this.

Safe haven gold has steadied at about US$1,904, announces investors are instead topping up their safe haven bond exposure instead.

As for local trade the futures are pricing in a fall this morning of 0.9% at the open there’s lots of accompany announcements and results out today including fresh company news out for Boral (ASX:BLD) which has just announced they’ve agreed to sell their 50% stake in USG Boral which is an Australian business, it’s Australian and Asian building supply business for $1.43 billion and Northern Star (ASX:NST) has announced the first quarter gold sales are at the top end of their guidance results.

Also out today for Evolution Mining (ASX:EVN) their quarterly results have just been announced and Pointsbet Holding (ASX:PBH) is due to hand down their results later today.

AGMS, well AGM season continues Bendigo and Adelaide Bank (ASX:BEN), Nick Scarli (ASX:NCK), Began Cheese (ASX:BGA), Boral (ASX:BLD), Link Market Services (ASX:LNK) hold theirs today.

No economic news as such but look out for RBA deputy governor Guy Debelle, an assistant governor of financial systems Michelle Bullock they’ll be speaking before the senate of economics legislative committee today.

As with trading ideas that could be worth a look there’s plenty of upgrades and downgrades, Bell Potter upgraded Technology One (ASX:TNE) their buy rating increasing their target to $10 implying 14.4% upside in a year.

Bell Potter also downgraded at the same time as Stanmore Coal (ASX:SMR) as they sell dropping its target to $0.50 that implies a 31% fall in a year for Stanmore Coal.

Meantime UBS reiterated Flexigroup (ASX:FXL) the buy now pay later company as a buy with a $1.45 target saying that although Flexigroup is not the leader this strategic shift towards buy now pay later as well as the use of its hum business in a high growth market coupled with budgetary support all means that flexigroup is a value play that’s according to UBS.

And UBS also reiterated Westpac (ASX:WBC) as a buy with a $20.50 target, Bell Potter targets Westpac as a hold though with a $20 target just shy of UBS’s target.

And lastly keep an eye on three stocks Perenti Global (ASX:PRN), Arena REIT (ASX:ARF) and IDP Education (ASX:IEL) all showing bullish charting signals according to Training Central.

I’m Jessica Amir, with Bell Direct, thanks to your company happy trading.

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