Morning Bell 29 October

Jessica Amir
October 29, 2020

The futures are suggesting that the ASX200 is eyeing a fall of 1.7% or 103 points at the open.

There’s five days until the U.S. election, and as its history goes, the risk-off environment continues. The Dow sank over 900 points, or 3.4%, its biggest retreat since June. The tech-heavy Nasdaq fell 3.7%, but it’s still up 21% this year.

Commodities mirrored equities; Oil fell 5% to US$37.34, and Gold lost 1.8% to US$1,877.

What to watch today:

  • Quarterly results are out today for: ANZ (ASX:ANZ), Fortescue Metals Group (ASX:FMG), Newcrest Mining (ASX:NCM), Orocobre (ASX:ORE), Janus Henderson (ASX:JHG) and IOOF Holdings (ASX:IFL).
  • ANZ’s results showed their statutory profit fell 40% to $3.58 profit.
  • AGMs: Australian Ethical (ASX:AEF), Challenger (ASX:CGF), JB Hi-Fi (ASX:JBH), Jumbo Interactive (ASX:JIN), Pinnacle Investment Management (ASX:PNI), Reece (ASX:REH), Reliance Worldwide Corporation (ASX:RWC).

Trading ideas:

  • Bell Potter upgraded Life360’s (ASX:360) Buy rating, increasing its price target to $7.70 implying 92.5% upside in a year.
  • Afterpay (ASX:APT) was also upgraded by Bell Potter, increasing its Buy rating and price target to $137. That implies 33% upside in a year. Morgan Stanley targets $121.
  • UBS upgraded Qantas Airways’ (ASX:QAN) Buy rating, increasing its price target to $5.25 with the focus on Australian travel growth.
  • Champion Iron Ltd (ASX:CIA), Vulcan Energy Resources (ASX:VUL) and ResMed (ASX:RMD) are all showing bullish charting signals according to Trading Central

Thanks for your company for the Morning Bell this Thursday the 29th of October, I’m Jessica Amir, market analyst with Bell Direct.

Well there’s just five days until the U.S. election and as history goes a risk off environment is continuing.

Now add in the fact that investors are questioning how fresh European lockdowns will impact the global economic recovery and it’s easy to see why global equities sharply pull back overnight.

Now it comes as Germany is preparing for a partial one-month shutdown while France enters a national lockdown on Friday.

All this as China reported its highest ever new daily cases in over two months and in the U.S. there’s record COVID-19 hospitalizations in the mid-west.

The silver lining, although the world health organization said last week COVID-19 cases were a record high, death rates have importantly been minimised compared to the first wave nevertheless in Europe Germans market was down the most 4.2%, France followed 3.4% lower and U.S. equities followed suit, the Dow sinking over 900 points or 3.4%.

That’s the Dow’s biggest retreat since June while the tech heavy Nasdaq in the U.S. lost the most 3.7% but still holds its year-to-date gain of 21%.

Now commodities mirrored equities are falling further into the red, the oil price lost 5% to US$37.34 a barrel, that’s a three-week low for oil while the safe haven gold sank almost 2% to US$1,877 an ounce really as investors are favoring the most liquid of all liquid instruments the USD which has pushed the USD up about 0.5%.

As for local trade today the futures are suggesting the market will pull back 1.7% or 103 points that’s if the futures are correct, do keep in mind after an election result is known many are expecting a recovery in equities bear in mind over the past 40 years in the year after a U.S. presidential election the Aussie share market has rallied between 6.5% and 40.24%.

But 2021 could be different of course a vaccine is not expected to be available widely until mid next year so consider that.

What else to watch today quarterly results are out for quite a lot of top 200 companies including ANZ (ASX:ANZ) Fortescue Medals (ASX:FMG), Newcrest Mining (ASX:NCM) as well as Orocobre (ASX:ORE) and Janus Henderson (ASX:JHG) and IOOF (ASX:IFL).

Now speaking about ANZ results well their results showed statutory profit tumbled 40% to $3.58 billion although that seems dire it is important to note that that profit actually beat what the market was expecting the market on the expected profit of $3.44 billion so keep that in mind when you’re pulling apart ANZ results.

AGMs today well there’s plenty including Australian Ethical (ASX:AEF) their shares have importantly outperformed the market this year with AEF up 11%.

Other AGM’s today that are taking place will be for Challenger (ASX:CGF), JB Hi-Fi (ASX:JBH), Jumbo Interactive (ASX:JIN), Pinnacle Investments (ASX:PNI) as well as Reece (ASX:REH) and Reliance Worldwide (ASX:RWC).

Trading ideas that could be worth a look well Bell Potter upgraded this family tracking app called life360 (ASX:360) upgrading their buy rating increasing their target to $7.70.

Now that implies about 93% upside in a year on the back of life360 improving their cash flows and their monthly active users are now growing again.

Now importantly Bell Potter tips 360 as the hottest tech stock to watch meantime speaking about hot tech stocks Afterpay (ASX:APT) the tech stock darling was upgraded by Bell Potter increasing its buy rating to $137 now that $137 target implies 33% upside in a year and it’s the most bullish target in the market behind Morgan Stanley’s $121 target.

And UBS upgraded Qantas (ASX:QAN) airways thereby rating increasing their target for the flying kangaroo to $5.25 with the focus on Australian travel growth.

Keep in mind UBS thinks that as a second carrier Virgin is now privately owned Virgin’s focus will be on profit not on growing market share now this bodes well for Qantas.

Lastly keep an eye on three stocks Champion Iron (ASX:CIA), Vulcan Energy (ASX:VUL) and ResMed (ASX:RMD) all showing bullish charting signals over the next seven to twenty three days and that’s according to Trading Central.

I’m Jessica Amir with Bell Direct stay safe thanks for coming.

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