Morning Bell 4 June

Jessica Amir
June 4, 2020

The ASX200 is eyeing a lift of 1.2% at the open. This week the Aussie share market has gained 3.2% so far and yesterday closed 31% up from its bear market bottom.

Trading ideas:

  • Metals and mining company South32 (ASX:S32) was upgraded by UBS from a hold to a buy as the company is restarting its share-buy-back, returning money to shareholders.
  • Citi reiterated Aurizon Holdings (ASX:AZJ) estimating 10% share price growth to $5.40, following the company maintaining its earnings forecasts and clearing a funding hurler.
  • Citi also reiterated CSL (ASX:CSL) as a buy expecting 18% share price growth on the possibility that elevated flu sales could offset the drop in blood plasma donations.

What to watch today:

  • Retail trade data is out for April with the market pricing in a fall of 17.9% following the gain of 8.5% in April. If the figure at 11.30am misses the expectation, keep an eye on discretionary spending stocks.
  • Australia’s balance of trade data for April is out today. The market is pricing in that April’s trade balance will fall to a $7.5 billion surplus, so keep an eye on mining stocks like Fortescue Metals (ASX:FMG), BHP (ASX:BHP) and Rio Tinto (ASX:RIO).
  • Magellan (ASX:MFG) just announced funds under management grew $1 billion to $98 billion in May with the group receiving new retail inflows in the month.
Read Transcript

It’s Groundhog Day.

Good morning, Aussie shares are set for another smashing day following global equities and commodities higher, with the SPI futures suggesting a lift of 1.2% after the ASX200 has already collected a week today gain of 3.2% so far and yesterday closed 31% up from its bear market bottom.

Overnight, U.S and European equities closed strongly steam-trained ahead clawing back up from COVID-19 lows with the Dow up 530 points almost, the broader S&P500 gaining 1.4% claiming its longest winning streak since February.

Bank stocks like JP Morgan, Bank of America, Wells Fargo charged up again rising 4.6% each, while airliners like American Delta and United gained over 5.6% each.

Smaller companies cyclicals and industrials also did well too with the Russell 2000 rising 2.4% so you’d expect our respective sectors to follow suit today.

The Oil price lost about $0.10 compared to yesterday, falling to $36.75 U.S a barrel and the gold price has slipped 2% falling to $1,702 an ounce, while the iron ore price holds its 10 month high $102 dollars a ton and the U.S dollar has fallen 0.4% and both of these things have helped the Aussie dollar settled in five months high neighborhood at 69.10 U.S cents.

Now what to watch today, well retail trade data is out for April with the market pricing in a fall and 17.9% following the lift of 8.5% that we saw in April.

So if the figure at 11:30am misses the expectation keep an eye on consumer discretionary spending stocks.

Now secondly Australia’s balance of trade data is out for April today, the balance of trade being the difference between exports and imports is expected to pair back following the previous surplus in March of a record $10.6 billion,  after we saw exports surging 15%, supported by the rise in iron ore exports, while we did save broader imports into Australia falling 4% to a two-year low.

So today the market is pricing in April’s trade balance data will fall to a surplus of $7.5 billion so keep an eye on stocks like Fortescue Metals (ASX:FMG), BHP (ASX:BHP) and Rio Tinto (ASX:RIO).

Now another thing to keep an eye on is Magellan (ASX:MFG), they’ve just announced funds under management grew $1 billion to $98 billion in May, with the group receiving new retail inflows in the month. and now to some local trading ideas, metal and mining company South32 (ASX:S32) has announced that they’re going to reinstate their share- buy-back.

UBS upgraded the stock South32 from a hold to a buy, given the company is restarting that share-buy-back returning money to shareholders.

The buy-back was paused on the 20th of March due to COVID-19.

Another positive for South32 is they’ve agreed to a power contract for their alumina operations in Australia and this removes a lot of uncertainty so all in all, that’s why UBS upped South32 to a buy.

Secondly Citi reiterated Aurizon Holdings (ASX:AZJ) as a buy estimating 10% share price growth to $5.40 following the company maintaining their earnings a forecast for the year and also clearing a funding hurdle.

Now lastly Citi has reiterated CSL (ASX:CSL) Australia’s largest company on the ASX as a buy expecting a 10% share price growth on the possibility that elevated flu sales could offset the drop in blood plasma donations.

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

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