Morning Bell 3 August

Jessica Amir
August 3, 2020

The Aussie share market is set to open flat this morning with a fall of 0.2% expected at the open, this comes despite a positive end on Wall Street on Friday.

Across the ocean, European stocks posted their first monthly drop since March amid fears of a second COVID-19 wave.

What to watch today:

  • With Victoria declaring a ‘State of Disaster’ after a spike in COVID-19 cases, keep an eye on the stocks that are likely to be impacted. For example, Coles (ASX:COL) could see a lift today following reports of panic buying, while on the flipside Crown Resorts (ASX:CWN) could come under pressure, given its Melbourne casinos and hotels are unlikely to re-open until mid-September.
  • Keep an eye on energy producers including Santos (ASX:STO) and Woodside Petroleum (ASX:WPL), following the oil price jumping higher.
  • At one point on Friday night, we saw the gold price break above US$2,000 an ounce for the first time on record. Keep an eye on gold miners like Newcrest Mining (ASX:NCM) and Northern Star Resources (ASX:NST) today.

Companies reporting this week:

  • On Tuesday, BWP Trust (ASX:BWP) reports.
  • On Wednesday, Resmed (ASX:RMD) and ALE Property Group (ASX:LEP).
  • On Friday, Insurance Australia Group (ASX:IAG) reports .

Local trading ideas:

  • Following Nickel Mines (ASX:NIC) releasing its June 2020 quarter report, Bell Potter has Nickel Mines as its top pick in the Diversified Metals & Mining sector. Bell Potter maintains its Buy rating on the stock and has a price target of $1.07.
  • Analysts at Goldman Sachs believe Goodman Group’s (ASX:GMG) share price is overvalued and the broker has a sell rating on the stock. GMG shares closed 0.5% lower on Friday to $16.93. Goldman Sachs however has a price target of $11.25 on the property company’s shares. It believes the market is pricing in an unrealistic earnings per share growth rate of ~9% per annum between FY 2020 and FY 2024. They believe a growth rate of 6% per annum is more realistic.
Read Transcript

Good morning this Monday the 3rd of August.

I’m Paulina Peters, a market analyst with Bell Direct.

Well Aussie equities are set to open flat this morning with a fall of 0.2% expected at the open, if you go by the futures.

This comes despite a positive end on Wall Street. U.S. stocks wiped out earlier losses and closed higher on Friday as big tech companies and market leaders including Apple, Amazon and Facebook all posted stellar quarterly results.

Apple shares soared 10.4% higher, hitting a new all-time high.

Apple has now taken over Saudi Aramco to become the world’s most valuable company.

Amazon shares jumped 3.7% following its sales skyrocketing during the pandemic and Facebook posted revenue growth of 11%, which saw its shares rally more than 7%.

With this in mind, we saw the U.S. market close with the Dow rising 110 points, the S&P500 climbing 0.7% and the Nasdaq gaining 1.4%.

Across the ocean, European stocks posted their first monthly drop since March amid fears of a second COVID-19 wave, with the Eurozone economy contracting by 12.1% in the second quarter of 2020 compared to the first three months of the year.

Looking at commodities, the oil price rose on Friday and finished the month higher, benefiting from news that U.S. oil output cuts in May were the largest on record.

Brent crude was up 0.7%at US$43.18 a barrel, the iron oil price trades at US$109, remaining in year high territory.

In terms of what to watch, with Victoria declaring a ‘state of disaster’ after a spike in COVID-19 cases, keep an eye on the stocks that are likely to be impacted, for example Coles (ASX:COL) could see a lift today following reports of panic buying, while on the flip side, Crown Resorts (ASX:CWN) could come under pressure given its Melbourne casinos and hotels are unlikely to reopen until mid September.

With the oil price jumping higher, keep an eye on energy producers including Santos (ASX:STO) and Woodside Petroleum (ASX:WPL).

At one point on Friday night we saw the gold price break above US$2,000 an ounce for the first time on record, so keep an eye on gold miners like Newcrest Mining (ASX:NCM) and Northern Star Resources (ASX:NST).

Finally a quiet reporting season week ahead.

On Tuesday BWP Trust (ASX:BWP) reports, on Wednesday ResMed (ASX:RMD) and ALE Property Group (ASX:LEP) and finally on Friday, Insurance Australia Group (ASX:IAG) reports.

Now to finish on two trading ideas, Nickel Mines (ASX:NIC) released its June 2020 quarter report, delivering another strong production performance.

Nickel Mines is Bell Potter’s top pick in the diversified metals and mining sector, given its clear production growth catalyst.

Bell Potter maintains its buy rating on the stock and has a price target of $1.07.

Finally, Goodman Group (ASX:GMG). Analysts at Goldman Sachs believe GMG’s share price is overvalued and the broker has a sell rating on the stock.

GMG shares closed 0.5% lower on Friday to $16.93.

Goldman Sachs however has a price target of $11.25.

On the property company shares, it believes the market is pricing in an unrealistic earnings per share growth rate of around 9% per annum between FY2020 and FY2024.

They believe a growth rate of 6% per annum is more realistic.

I’m Paulina Peters with Bell Direct, happy trading and stay safe.

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