Morning Bell 3 June

Jessica Amir
June 3, 2020

Aussie shares look set to rise for the third straight day with the ASX200 expected to lift 0.5% at the open, ahead of Australia’s economic data being released.

Trading ideas for today:

  • Following Zip Co’s (ASX:Z1P) 39% gain yesterday after announcing a 90% acquisition of a New York buy now pay later group, as well as raising capital with a major U.S firm, UBS rated Zip Co as a buy.
  • Following Virgin Australia proceeding to the next stages of Administration with Bain Capital or Cyrus Capital, UBS says Qantas (ASX:QAN) looks more favourable and will likely see more demand with a target of $4.65.
  • Aristocrat Leisure (ASX:ALL) was reiterated as a buy by Citi with a target of $30.10. Investors will be watching GDP data which is out for the first time in 2020.
Read Transcript

Good morning, well the Australian share market looks set to rise for the third straight day with the SPI futures suggesting a 0.5% lift at the open, ahead of Australia’s economic data being released later today.

The Aussie dollar has scaled to its highest level in four and a half months almost US$0.70.

After yesterday, Australia recorded its largest ever trade surplus, which is the difference between Australian exports minus imports hitting a record of $8.4 billion in the first quarter of 2020, plus optimism was also boosted after the RBA said it would do all it can to support jobs income and businesses.

Overnight markets, were strong too with investors buying up stocks that are linked to economies reopening despite the risk of a second COVID-19 wave amid the civil protests that are underway around the world.

Bank stocks like the Bank of America and Citi Group rose about 1% while Gap gained 8% and in news that came out of China buying U.S soybeans also helped optimism in the U.S.

The Dow gained almost 270 points, the Nasdaq rose 0.7% and the S&P500 ended 0.8% higher now 40% percent up from its March lows.

The oil price rose a 4% to $36.81 U.S a barrel ahead of OPEC considering further production cuts and the iron ore price rose over 3% to a new 10 month high $102 a ton, while the gold price slipped 1% to $1,734 an ounce.

Now what to watch today, well GDP is out for the first time this year, the market expects economic growth to fall 0.3% in the first quarter.

While yesterday the ABS said the record trade surplus would add 0.5% to GDP’s bottom line, so keep an eye on the figures at 11:30am.

If the figures are better than the market expects, cyclical stocks like Banks and Real Estate stocks are likely to do well while if GDP is worse than expected, watch defensives like Utilities, Telcos and Staples, which should see increase buying.

Now three local trading ideas, while following a Zip Co’s (ASX:Z1P) almost 40% gain yesterday after announcing a 90% acquisition of a new New York buy now pay later group, as well as raising capital through a major U.S firm, UBS rated Zip as a buy.

And secondly, following Virgin Australia proceeding to the next stages of administration with either Bain Capital or Cyrus Capital, UBS has raided Qantas (ASX:QAN) as a buy saying it looks more favorable and will likely see more demand.

UBS gave Qantas a target of $4.65.

And thirdly, Aristocrat Leisure (ASX:ALL)  was reiterated as they buy by Citi with the broker saying Aristocrat is its preferred gaming business as it has a strong balance sheet and surplus capital.

Aristocrat is also set to benefit from New South Wales pubs, clubs and casinos reopening on Monday and that accounts for about half of Australia’s poker machines, while U.S casinos continue to reopen despite the civil unrest.

Citi targets say $30.10 target for Aristocrat.

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

Close Transcript

Weekly Wrap 18 September

Jessica Amir
September 18, 2020

Morning Bell 18 September

Bell Direct
September 18, 2020

Morning Bell 17th September

Jessica Amir
September 17, 2020

Morning Bell 16th September

Jessica Amir
September 16, 2020

Morning Bell 15 September

Jessica Amir
September 15, 2020

Morning Bell 14 September

Jessica Amir
September 14, 2020

Weekly Wrap 11 September

Jessica Amir
September 11, 2020

Morning Bell 11 September

Jessica Amir
September 11, 2020

Morning Bell 10 September

Jessica Amir
September 10, 2020

Morning Bell 9 September

Jessica Amir
September 9, 2020