Weekly Wrap 19 June

Jessica Amir
June 19, 2020

The ASX200 rose 1.5% this week (Mon-Thur), continuing the COVID-19 claw back. With massive infrastructure investment planned in both Australia and the U.S., and global oil prices recovering from their virus induced hangover, investing and trading ideas continue to emerge from the woodwork.

In this week’s wrap, Jessica covers:

  • Compare the pair: the U.S. vs the Australian outlook (0:11)
  • High sentiment charges the Tech sector up 5.9% (1:13)
  • Healthcare stocks lead the way however with Clinuvel Pharmaceuticals (ASX:CUV) & Healius (ASX:HLS) up over 20% each (1:22)
  • Key themes: the infrastructure $1bn fast track package; oil price; and global equities poised to rise (1:41)
  • Trading ideas: Boral (ASX:BLD), BHP (ASX:BHP) and NRW (NWH) are picks for thematic infrastructure trading (3:11)
  • Trading the oil trend – stock ideas from the major investment banks (3:51)
  • The case for U.S. corporate bonds, outperforming the ASX200 (5:13)
Read Transcript

Thanks for your company for the weekly wrap, I’m Jessica Amir a market analyst with Bell Direct.

Well a positive news ‘sixfecta’ pushed equities back to positive territory this week.

Aussie shares are up 1.5% to Thursday and the U.S. benchmark S&P500 up 2.5% after: 1 – The US Federal Reserve announced it would buy corporate bonds on top of buying ETFs. 2 – Team Trump weighed up $1 trillion infrastructure plans to boost the economy and jobs. 3 – US retail sales surged 18% in May beating 10% the market expected. 4 –  Locally, the Aussie government announced $1 billion in infrastructure spending. 5 – The RBA said economic growth could be ahead of the curve which is why it wrapped up $50 billion of bond purchases, which helped to drop the three-year bond rate to a record low of under 0.2%.  6 – The ATO revealed payroll numbers actually rose 1% in Maine despite the official unemployment rate rising more than expected, so you’d think the worst could be behind us particularly as the Aussie government expects 850,000 people will be re-employed by next month.

So with sentiment high, the Tech sector surged the most this week, 5.9%, Energy follows 3% higher, Health stocks led the charge with Clinuvel Pharmaceticals (ASX:CUV) and Healius (ASX:HLS) up 21% each.

Shell-fuel-supplier  Viva Energy (ASX:VEA) rose 13%, while Afterpay (ASX:APT) rose 12% taking Ramsay Health Care’s (ASX:RHC) place as the 22nd biggest company on the ASX200.

Now moving to strategy and ideas to consider next week, one of the things to consider is the infrastructure bonanza with the Prime Minister Scott Morrison announcing the fast tracking of 15 major projects $1 billion of spending on projects including railroads the Tassie-Vic link and of course the expansion of BHP’s (ASX:BHP) Olympic Dam projects in South Australia, also including a $500 million dollars of road safety works.

Secondly, consider the oil price slicking up about 9% taking WTI up to 38.15 and Brent up $41 USD a barrel on Thursday with demand recovering and OPEC countries sticking to their production cuts as expected.

Now despite short term risks, Citi expects the oil price to gain $12 this year and $22 next to $57 a barrel.

Thirdly, consider adding international investments to your portfolio to diversify and access some of the fastest-growing economies, like China, which is just 50% urbanized.

Now adding international investments to your portfolio typically decreases volatility.

Vanguard projects U.S. equities will rise 5.5 – 5.7% per annum over the next ten years, while global equities, excluding U.S., will gain 9.5 – 10.5% both outpacing Aussie shares expected return of 4.5 – 6.5%.

Now to trading ideas, to take advantage of the infrastructure bonanza, think about the companies that will benefit like building material giant Boral (ASX:BLS) or cement business Adelaide Brighton (ASX:ABC).

Now both are backed by UBS as buys, giving their strong balance sheets.

With the government expanding BHP’s (ASX:BHP) copper, gold and silver mine, it’s important to note UBS and Goldman both back BHP as a buy. Now NRW Holdings (ASX:NWH) is already working at a BHP’s Olympic Dam doing an upgrade there.

NRW Holdings is backed by UBS as well as a buy and this week it’s gained 5%.

You could also consider the equipment maintenance company Mader (ASX:MAD).

Secondly, the oil price continuing to rally.

It’s still vital to consider solvent creditworthy and strong balance sheet companies.

Citi’s picks are Woodside Petroleum (ASX:WPL), Santos (ASX:STO) and Senex Energy (ASX:SXY), which carries high risk though.

If you’re looking for value, Goldman Sachs picks Woodside Petroleum, Oil Search (ASX:OSH) and Origin Energy (ASX:ORG).

UBS pics for value include Origin Energy and Worley Parsons (ASX:WOR).

Thirdly, to invest in international shares you could buy (ASX:IEM) for exposure to emerging markets, accessing 800 different stocks across 12 emerging market economies.

Now (ASX:IEM) will get you invested into businesses like Alibaba, the Fortnight and Call of Duty parent Tencent, Samsung and the world’s leading semiconductor business Taiwan Semiconductor.

You could also buy  (ASX:IAA) or even (ASX:ASIA) which is up 18% this year.

Secondly to invest in developed global markets you could invest in (ASX:VGAD), getting you exposure to 1,500 stocks across 20 developed economies with stocks like Apple, Microsoft, Amazon, Facebook, Johnson & Johnson and Visa, just to name a few.

Or you could look at other popular international investments like (ASX:IVV) which invests in the U.S..

Lastly with the U.S. Federal Reserve buying corporate bonds, the investment grade bond index has pushed up to an all-time high so to cushion your portfolio from a fall in equity markets you could buy the global corporate bond (ASX:IHCB).

Its hedged the Aussie dollar to minimise currency fluctuations and this year (ASX:IHCB) sits up 0.6%, while the ASX200 is down 11% or for access to Aussie corporate bonds you could buy (ASX:PLUS), (ASX:RCB) or the mfund (ASX:ACA02).

On behalf of everyone here at Bell Direct, have a happy and safe weekend.

I’m Jessica Amir, we’ll see you next week.

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