Morning Bell 9 June

Jessica Amir
June 9, 2020

Aussie equities are eyeing another stellar start to the week, and the 6th straight day of gains with the futures suggesting a 0.7% lift at the open. This lift will push the ASX200 above the 6,000-point milestone. In other smashing news, the Aussie dollar soared to a 11-month high, 70.17 US cents.

What to watch today:

  • Air New Zealand (ASX:AIZ) announced plan to start earning healthy profits again, even though it may be 70% less than pre-COVID-19 levels.
  • Wesfarmers (ASX:WES) announced Officeworks sales are up 28% in the second half, Bunnings rose 19%, Kmart sales rose 4% and Target which it’s winding down, sales walk 2% down.
  • OFX Group (ASX:OFX) goes ex-dividend today so we could see some selling.
  • NAB (ASX:NAB) business confidence for May

Local Trading ideas:

  • UBS rated Fortescue (ASX:FMG) as a Buy with a $14.50 price target, as its overseas competitor, Vales has been ordered to suspend operations in Brazil.
  • UBS rose Zip’s (ASX:Z1P) price target to $5.60 and downgraded the stock to a hold ahead of the Quadpay deal being executed.
  • Integrated Research (ASX:IRI) was rated a Buy by Bell Potter. Its shares to grow 16% to $4.25, the business expected to benefit from the shift to working from home
  • Credit Suisse expects Kogan’s (ASX:KGN) share price will fall to $11.82 following its share price surge of 211% from the March low.
Read Transcript

Good morning, well Aussie equities are eyeing another stellar rally to kick off the week and the sixth straight day of gains as the futures are suggesting a lift of 0.7% or 41 points this Tuesday morning, which will push the ASX200 above the 6,000 point milestone.

And in other smashing news outside of equities the Aussie dollar is soaring at an 11-month high 70.17 US cents.

Now back to equities, on Monday in the US, equities wiped out their 2020 loss for the year.

The S&P 500 is now in positive territory for 2020 as optimism is increasing with states continuing to reopen while in a touch of bad news, the former FDA has warned that the U.S. is not quite prepared for a second COVID-19 wave with hospitalizations on the rise.

Now stocks never the less ended on their session highs S&P500 up 1.2%, the Dow rising 461 points and the Nasdaq rose 1.1%. Now on the stock front United Airlines soared 15%, JetBlue up 14%, Carnivale up 16% while Zoom Video, Netflix and Microsoft saw a bit of profit taking, but they’ve both or all three have been on a stellar game.

Now across the sea the German DAX closed lower, but it’s almost in positive territory for the year as well just like the S&P500 and on the commodity front the oil price is trading at a 3-month high $38.1 a barrel, which will surely benefit our energy companies.

Today the oil price almost did clear $40 a barrel before Saudi Arabia said it would not make further voluntary production cuts.

The gold price has gained $22.30 it’s now $1,705 dollars an ounce, while the iron ore price holds above $100 a ton.

What to watch today, well New Zealand has dropped its COVID-19 restrictions and Air New Zealand (ASX:AIZ) has announced plans to start returning to healthy profits again even though it may be 70% less than COVID-19 levels.

The NZ carrier’s revenue dropped from about $6 billion last year to nothing just a couple of months ago, now it’s tipped that revenue will return but it’s likely to be about $3 billion as it expects to fly five million less customers per year.

Now to cope it’s running fewer aircrafts, 4,000 less staff as well and that will save the group $150 million in wages.

Now Wesfarmers (ASX:WES) has just announced Officeworks sales are up 28% in the second half, Bunnings sales up 19%, Kmart up 4% while Target which is winding down, saw sales walk backwards out the door by about 2%.

OFX is going ex-dividend today, so could see some selling and NAB business confidence numbers are out today for May.

Now ending on some local trading ideas, well UBS has rated Fortescue Metals (ASX:FMG) as a buy with a $14.50 price target as its overseas competitor Vales has been ordered to suspend operations in Brazil and Brazil also contributes the bulk of a world iron ore, 23% of the world’s iron ore in fact.

Now FMG is quite attractive, it’s on an attractive yield and growing its earnings as well.

Now UBS rose Zip’s (ASX:Z1P) price target to $5.60 and downgraded the stock from a buy to a hold really ahead of our the Quadpay deal being executed.

Integrated Research (ASX:IRI) was rated a buy by Bell Potter.

Its shares are expected to grow 16% to $4.25 expecting the business to benefit to the shift from working from home and the business is also expected to report better than expected profits.

Now Credit Suisse reckons Kogan’s (ASX:KGN) shares will fall to $11.82 following its share price surge of 211% from the March lows. Credit Suisse and UBS are expecting a slowdown in sales in the second half.

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

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