Morning Bell 30 July

Jessica Amir
July 30, 2020

The Aussie share market is eyeing a gain of 0.9% at the open, following a positive night for U.S. equities and commodities.

Overnight in the U.S., the Federal Reserve kept interest rates on hold at 0.25% as most expected.

Companies reporting today:

  • CIMIC (ASX:CIM) – half year results
  • Fortescue Metals (ASX:FMG) – quarterly production

What to watch today:

  • Rio Tinto (ASX:RIO) reported half year results after market close yesterday with its earnings dropping less than UBS expected.
  • Macquarie (ASX:MQG) holds its AGM today.
  • Building permits are out for June, expected to recover from -16% and show a rise of 1.5%. So watch building supplies companies like CSR (ASX:CSR) and Brickworks (ASX:BKW).

In the U.S. tonight, we’ll learn how much the economy fell in the second quarter, with growth estimated to fall from -5% in Q1 to -34.1% in Q2.

Local trading ideas:

  • Bell Potter upgraded family tracking and safety app, Life 360’s (ASX:360) buy rating and price target to $5.20, implying 60% share price growth from yesterday’s close price of $7.99. This month its shares recovered from its COVID-19 losses after gaining 59%. Life360 delivered maiden positive quarterly cash flows, a US$6.9 million turnaround due to tight cost controls and resilient subscription numbers during the lockdowns.
  • Bell Potter also upgraded Aussie car dealership giant, A.P Eagers’ (ASX:APE) buy rating and price target to $9.00, implying 13% share price growth from yesterday’s close price of $33.61. APE held its AGM yesterday, announcing first half profit before tax of $40.3 million, which was stronger than expectations. Its corporate debt was $7.6 million, far less than expected, emphasising APE’s strong management.
  • Following APRA’s capital management guidance released yesterday, easing restrictions around paying dividends, Bell Potter reiterated ANZ (ASX:ANZ), CBA (ASX:CBA) and NAB (ASX:NAB) as buys, reiterating holds for Westpac (ASX:WBC), Bendigo & Adelaide Bank (ASX:BEN) and Bank of Queensland (ASX:BOQ).
Read Transcript

Good morning, thanks for your company this Thursday the 30th of July.

I’m Jessica Amir, a market analyst with Bell Direct.

Well following a positive night for U.S. equities and commodities, the Aussie share market is suggesting to open 0.9% higher, a welcome addition as the market is so far down this week 0.1%.

Overnight in the U.S., the Federal Reserve kept interest rates on hold at 0.25% as most expected.

On the corporate side of things, CEOs from the top four largest tech companies Amazon, Apple, Facebook and Google all testified before congress defending anti-trust and competition issues.

Each of their stocks rose over 1% each and amid the busiest week for earnings season there, General Electric and Boeing both reported bigger quarterly losses than expected seeing their shares tumble 4.4%  and 3% respectively.

On the other side of things, chip developer Advance Micro devices shares rose about 13% after announcing stronger than expected earnings and forward-looking guidance.

The three major indices all clawed back from yesterday’s losses with the Nasdaq gaining 1.4%, the S&P500 up 1.2% and the Dow Jones rising 0.6%.

On the commodity front, the gold price surged back into record high ground at US$1,980, announced after the Fed failed to provide further economic support.

The oil price rebounded from its prior sessions losses gaining 0.6% to US$41.26, after U.S. crude supplies sharply fell.

Now what else to watch today, well Rio Tinto (ASX:RIO) reported their results after the market closed yesterday, earnings dropped less than expected in the half year and we’ve got a full report on Rio Tinto news in 60 seconds, so you can check that out.

For earning season today, half year results are due out for CIMIC (ASX:CIM) and quarterly production for Fortescue Metals (ASX:FMG).

What else to watch, Macquarie (ASX:MQG), they hold their AGM today, investors will be casting their votes on the CEO’s pay rise among other things.

On the economic side of things, building permits are out for June, expected to recover from the very sharp fall of 16% and show a rise of 1.5%, so watch building supply companies CSR (ASX:CSR) and Brickworks (ASX:BKW).

And in the U.S. this evening, we’ll learn how much the economy fell in the second quarter.

Estimates that growth would have fallen 34.1% following the negative reading of 5% in Q1.

Now to trading ideas, well firstly Bell Potter upgraded the family tracking and safety app Life360 (ASX:360), upgrading their buy rating and price target to $5.20, implying 60% share price growth from yesterday’s close price.

This month, 360 has already recovered all of its COVID-19 losses, gaining 59% and 360 delivered its maiden positive quarterly cash flows, a almost US$7 million turnaround due to tight cost controls and resilient subscription numbers despite the lockdown.

So that’s 360, a Bell Potter buy. And secondly, Bell Potter upgraded the Aussie car dealership giant A.P Eagers (ASX:APE), upgrading their buy rating and target to $9, that implies 13% share price growth from yesterday’s close.

Now its shares have already grown 18% this month and APE held its AGM yesterday announcing first half profit before tax came in at $40.3 million, much stronger than expected, while corporate debt was just $7.6 million, far less than expected.

Emphasising APE’s strong management.

So that’s A.P Eagers, a Bell Potter buy.

And following APRA’s capital management guidance released yesterday, easing restrictions around paying out dividends, Bell Potter reiterated both ANZ (ASX:ANZ), CBA (ASX:CBA) and NAB (ASX:NAB)as a buy, so they’re the three biggest banks as buys, also reiterating holds though for Westpac (ASX:WBC), Bendigo and Adelaide Bank (ASX:BEN) and Bank of Queensland (ASX:BOQ).

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

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