Morning Bell 29 December

Jessica Amir
December 29, 2020

The Aussie share market is set to kick off its shortest and last trading week of the year on solid footing. The futures are suggesting a lift of 0.5% at the open.

It comes as European markets closed higher on Monday and US equities soared to brand new record highs – for two key reasons. Firstly, US President Donald Trump unexpectedly signed the $900 billion COVID-19 relief bill into law, that includes paying most Americans $600. Secondly, the UK is expected to approve Oxford-Astra Zeneca’s COVID-19 vaccine this week. This is all supportive of stocks and the V-shape economic recovery.

Commodities:

  • Oil fell 1% to US$47.70 as supply looks to increase with OPEC to boost output by 500,000 barrels per day in Jan.
  • Iron ore rose 0.2% to US$155 – a new high. Expect iron ore majors to continue their charge, like Fortescue Metals (ASX:FMG), Rio Tinto (ASX: RIO) and BHP (ASX:BHP).
  • Inversely, expect selling today in Gold stocks as the safe haven came under pressure again, down 0.3% to US$1,877 on US stimulus being rolled out.

What else to watch:

  • No economic news today. All eyes will be on local company news.
  • Whether or not the US House vote on increasing the $600 payout to Americans to $2,000. It’s not expected go through. But if it does go through, expect down beaten parts of the market to see extra buying.

Trading ideas:

  • UBS increased Fortescue Metals’ (ASX:FMG) buy rating and target price to $24.
  • UBS also reiterated CSL (ASX:CSL) as a buy with a $346 target.
  • Could be worthwhile looking at travel and tourism companies like Qantas (ASX:QAN) which looks likely to rally once travel restrictions ease. QAN is Buy stock for UBS and Morgan Stanley.
  • Resimac Group (ASX:RMC), EMvision Medical Devices (ASX:EMV) and People Infrastructure (ASX:PPE) are all showing bullish charting signals according to Trading Central.

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