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The Aussie share market sees its best weekly gain in five weeks, with the ASX200 gaining 2.3%, the All Ordinaries rising 2.4%, and the Small Ordinaries soaring 3.2% (Monday to Thursday). With the curve flattening, people are taking to the road, steadily increasing both oil demand and the oil price.
In this week’s wrap, Jessica covers:
As a reminder, during this unique and uncertain time, Bell Potter research is now available to all Bell Direct clients. You can access the Bell Potter research bank here.Read Transcript
You’re watching the weekly wrap, I’m Jessica Amir a Market analyst with Bell Direct.
Well the Australian share market is tracked higher for the second straight week from Monday to Thursday, the ASX200 gained 2.3%, the broader All Ordinaries up 2.4%, while smaller companies outperformed with the ASX small Ordinaries up 3.2%.
As for the sectors, IT lead the charge up 10% followed by Materials and Energy gaining 3% each, now the gains in Mining were supported by 1. The rise in commodity exports, 2. The 0.5% lift in the gold price and 3. While the iron ore price remained unchanged on the weak iron ore has gained 7% from its February low.
Now as for the gains in Energy, while they were helped by a 40% surge in the oil price this week as supply finally dropped and oil demand begins to claw back with more cars on the road and new car sales in China even lifting.
Now as for stocks, Afterpay (ASX:APT) charged up the most 35% to $39.50, just a whisker of pre-COVID-19 levels.
Going the other way, NRW holdings (ASX:NWH) lost the most 8.4% to $1.46. As for Afterpay, while they moved higher while the Chinese tech giant Tencent announced they bought 5% of the company and that means Afterpay has potential to get into the Chinese market.
For my 10 cents worth, knowing how Afterpay forms businessassociations, you’d think Afterpay could be offered on Tencent’s product lists like their games Call of Duty and Fortnight and the reason I say this is Tencent’s most recent annual report said they’re focused on expanding their online gaming business via external partnerships, they also want to offer new products and services.
Now Citi expects Afterpay could be added as a payment option on WeChat pay, so look out for Tencent’s announcement on May 13.
Now Afterpay is a Bell Potter Buy, for Citi it’s a Hold as they say the rise of Klarna will pressure Afterpay’s shares back to $27.
Now as for NRW Holdings, UBS and Citi remain bullish on the stock, Citi expects NRW’s shares to rise almost a 150% in a year, as mining construction in WA ramps up.
Now what to watch next week, well CBA results are out on Wednesday, the bank is expected to rain profitable just like the other three banks but expect a higher yearly dividend compared to the other banks given CBA has got stronger cash flows.
But the big question is will CBA defer their interim dividend or raise cash which could dilute its shares.
Regardless, despite COVID-19 uncertainties, CBA looks undervalued on a long-term basis.
Morningstar and Bell Potter say CBA is worth $71 – 72.
And on the economic front, next week Australian March Home Loan data is out on Tuesday, loans are tipped to have fallen by 3%.
Meanwhile April employment data is out Thursday, now unemployment is expected to see its largest surge in over 20 years forecast to jump 7.2% in April with 411,000 expected to have lost their jobs.
It’s really important to remember gloomy forecast like these have already been priced into the market, but if the numbers are worse than expected keep a close eye on bank shares as they may see short-term pressure.
Now for some trading ideas, well this week Bell Potter rated or reiterated the following stocks as a Buy expecting their shares to grow over 15% in a year.
Now they include Virgin Money (ASX:VUK), Macquarie (ASX:MQG), IPH (ASX:IPH), Altium (ASX:ALU), Independence Group (ASX:IGO), Galaxy Resources (ASX:GXY), A.P Eagers (ASX:APE) and PRW Holdings (ASX:PWH).
Now finally, to help you stay informed during this heightened uncertainty period, we made Bell Potter’s stock research available to all Bell Direct clients, the research can be accessed via research and tools on the drop-down menu once you log into your trading account.
Thanks for your company this week, I’m Jessica Amir with Bell Direct happy trading and stay safe.Close Transcript