Between the Bells

This week marked, not only the last but, the busiest week this reporting season. Despite most companies beating expectations, the Aussie share market dropped 1.2% this week (Mon-Fri) after the 10-year bond yield jumped 1.6% to a one-year high.
In this week’s wrap, Jessica covers:

• (0:16) Why the market dipped despite a good report card
• (0:45) The Energy sector leading the way, rising 5%
• (1:31) What caused the Tech sector to see its biggest drop in a year
• (2:16) The economic forecast: what to expect in the future
• (3:06) The stock upgrades and downgrades following reporting season

US stocks saw their biggest pull back since October with the Nasdaq falling 3.5% and the Dow losing 1.8%. It comes as investors are concerned that long-term interest rates, as measured by the US treasury yield rose 1.6% to a one-year high. 

Following the pull back in global equities, the Aussie share market is tipped to fall 1.4%, which will erase this week’s rise. 

What to watch today:

• Tech stocks are expected to pull back. The tech index is already down 8% this week, which is its biggest fall drop since COVID-19 hit in March 2020.
• Afterpay (ASX:APT) looks like it will come out of a trading halt. APT announced its increased its capital raising to $1.5b and plans to list in Singapore to launch in Asia.
• It’s the last official day of Earnings Season. Kogan (ASX:KGN) reported its profit more than doubled in the half year to $23.6m, after revenue jumped 90%. 
• Other results to watch: HSN, AEF, AFG, ORE, LYC, OPT, PNV, CUV, HVN, BUB, BWX, EOS and ASB.
• Commodity stocks will see mixed results today as the oil price rose 0.4% to US$63.47 – its highest level in a year and Copper fell from its 9.5 year high, falling 1.9%. Gold slipped 1.6% .

Trading ideas:

• Alcidion (ASX:ALC) had it Buy rating upgraded by Bell Potter, with an increased $0.30 target - on rising levels of demand, particularly in the UK and Europe, where it’s gaining new contracts. 
• Eagers Automotive (ASX:APE) was reiterated as a Bell Potter Buy with a $15.50 price target after the company said its order book is remaining strong, despite COVID-19. 
• Galan Lithium (ASX:GLN), Chalice Mining (ASX:CHN) and Piedmont Lithium (ASX:PLL) are giving off bullish charting signals according to Trading Central.

The broad Aussie share market is down 0.2% this week, but the futures are suggesting a 0.7% rebound. 

Local tech stocks are down 8.5% this week, that’s the tech sectors biggest drop since March last year. 

What to watch today:  

• Afterpay (ASX:APT) reported net transaction margin rose much more than expected, while it reported a loss when the market expected a profit. They also announced a $1.25 billion capital raise.
• Other company results to watch: Z1P, LNK, FLT, QAN, RRL, GXY, ILU, SFR, GOZ, MSB, HUB, PGL, IFM, SXL, QUB, SSM, and TPG. 
• Commodity stocks are expected to rally again 
• Engineering, construction and developing companies could turbocharge in Queensland as Brisbane has been named as the ‘preferred city’ to host the 2032 Olympic Games.

Trading ideas:

• Bell Potter upgraded Acrow Formwork & Construction Services’ (ASX:ACF) Buy rating with an increased $0.42 target as ACF continues to benefit from the lift in construction and infrastructure developments.  
• Bell Potter upgraded City Chic Collective’s (ASX:CCX) Buy rating with a price target of $4.60 after the company saw earnings rise more than expected.
• oOh!media (ASX:OML), Gascoyne Resources (ASX:GCY) and Hastings Technology (ASX:HAS) are all giving off bullish charting signals according to Trading Central.

The Aussie share market is likely to pull back 0.4% - which could rub out half of yesterday’s gain of 0.9%.

Commodity stocks are expected to charge again today, while tech stocks will likely move to a lower-gear following moves in overseas markets. 

 What to watch today:

• The Iron Ore price hit a brand new 9.5-year high - US$175.50 – a level not seen since September 2011 as China demand remains strong and doubts about Brazilian shipments from Vale, the world’s top producer, linger on. 
• Copper rose 1.6%; the Coffee price hit a 2.5 year high and Oil holds steady at US$61.64.
• Appen (ASX:APX) upgraded its outlook for FY21 expecting earnings to lift up to 28%. 
• Blackmores’ (ASX:BKL) profit beat expectations coming in at $18.9 million, beating the $9.1m expected
• Woolworths (ASX:WOW) has declared its strongest half-year dividend in six years. 
• Mount Gibson Iron’s (ASX:MGX) half-year profit surged 67% on higher iron ore prices, despite sales falling.  
• Silver Lake Resources (ASX:SLR) profit rose 48%.
• Other companies reporting: Sydney Airport (ASX:SYD), WiseTech Global (ASX:WTC), Healius (ASX:HLS), Viva Energy (ASX:VEA), Helloworld (ASX:HLO).

Trading ideas:

• Bell Potter upgraded Mader Group’s (ASX:MAD) Buy rating with an increased $1.28 price target.
• Bell Potter upgraded Monadelphous’ (ASX:MND) Buy rating with a price target of $14.40.
• Austral Gold (ASX:AGD), Uniti Group (ASX:UWL) and Iron Road (ASX:IRD) are giving off bullish charting signals according to Trading Central.

The Aussie share market futures are suggesting a 0.2% rebound. Commodity stocks are set to lift the market, while the vaccine rollout continues to lift sentiment - with Australia awaiting the second shipment of Pfizer vaccines today.

What to watch today:

• Commodity stocks will dominate headlines and will likely continue to do so this year as prices continue to rise on Chinese demand and lack of supply.
• Iron ore darling stocks like Fortescue Metals (ASX:FMG), BHP (ASX:BHP), Rio Tinto (ASX:RIO) and Mineral Resources (ASX:MIN).
• Oil stocks will be in focus – Oil price jumped 4% to US$61.69 – with the price likely to continue to push up, as US oil rigs remain shut due to a cold weather snap, while oil demand continues. 
• Silver and copper stocks also on the radar – Silver rose 3.5% and Copper surged 1.5% 
• Results out of the gate today:
  • Adbri (ASX:ABC) - NPAT hit $93.7m, which is weaker than the $104m expected.
  • Alumina (ASX:AWC) announced profit fell 31% to $US147m. Disappointing shareholders expecting US$183m. 
  • HUB24 (ASX:HUB) announced its profit rose 19% in the half-year and it declared a record dividend. 
  • Macmahon Holdings (ASX:MAH) announced its profit rose 56% in the half-year to $44.8 million. 

Trading ideas:

• Bell Potter upgraded Costa Group’s Ltd (ASX:CGC) Buy rating with an increased $5.10 price target after CGC’s profit rose 100%.
• Bell Potter reiterated Senex Energy’s (ASX:SXY) Buy rating with a price target of $0.46.
• Champion Iron (ASX:CIA), Piedmont Lithium (ASX:PLL) and NZME (ASX:NZM) are all giving off bullish charting signals according to Trading Central.

The Aussie share market futures are suggesting a 0.2% fall. 

Australia’s vaccine rollout begins today and it’s the final hurrah week of reporting season with results out from LendLease Group (ASX:LLC) and NIB Holdings (ASX:NHF) today, plus Afterpay (ASX:APT) and Zip (ASX:Z1P) on Thursday. 

Australian wage data is out for the quarter on Wednesday – expected to show wage growth slowed from 1.4% to 1.1% over the year. 

What to watch today: 

• Copper – the Copper price rose 3.9% to a new nine-year high on strong Chinese demand – so watch large caps: BHP (ASX:BHP), OZ Minerals (ASX:OZL), Sandfire Resources (ASX:SFR) and in small caps watch: Castillo Copper (ASX:CCZ), Aeris Resources (ASX:AIS) and Hot Chili (ASX:HCH).
• BlueScope Steel (ASX:BSL) reported its first-half net profit after tax jumped 78% from a year ago, to $330.3m, beating expectations of $311m.
• Costa Group (ASX:CGC) reported a massive 108% increase in NPAT to $59.4m in 2020, surging past expectations.
• Other results to watch: BIN, CNU, EVT, GDI, LLC, NHF, NWH, OML, RWC.
• Keep an eye on some of the most traded stocks from Friday: Pursuit Minerals (ASX:PUR) which gained 32% and Integrated Payment Technologies (ASX:IP1) which fell 28%.

Trading ideas:

• Citi upgraded QBE Insurance’s (ASX:QBE) Buy rating with an increased $10.95 price target.  
• Bell Potter upgraded Adacel Technologies’ (ASX:ADA) Buy rating with a higher price target of $1.25.
• Centaurus Metals (ASX:CTM), NRW Holdings (ASX:NWH) and Weebit Nano (ASX:WBT) are giving off bullish charting signals according to Trading Central.

The Aussie share market hit a new yearly high, for the fourth week in a row, after lifting 1.2% (Mon-Thu). The rally has been spurred on by positive economic news, like the unemployment rate falling to a nine-month low.

In this week’s wrap, Jessica covers:

• (0:58) Materials rising 4.2% following stronger than expected results and record high dividends
• (1:15) EML Payments' (ASX:EML) shares charging on record revenue
• (2:43) The underdogs of 2020 shining this reporting season
• (3:50) What the rising Aussie dollar means for investors...
• (4:43) How the oil price climb could affect your portfolio

The Aussie share market is likely to close over 1% higher this week, and hopefully erase last week’s fall.

What to watch today: 

• Australia’s biggest industrial and logistics property group Goodman Group (ASX:GMG) reported a 29% jump in profit to $1 billion in the half-year, almost double what the market expected. 
• Cochlear’s (ASX:COH) half-year profit rose 50% to $236.2m, despite the pandemic, while the market was only looking for profit of $64.4m.
• Jewellery chain Lovisa (ASX:LOV) reported a half-year profit after tax of $21.5m, that’s a fall of 23%. But LOV’s profit is stronger than the $18.1m the market expected. 
• Other companies reporting include: Cleanaway (ASX:CWY), Inghams (ASX:ING), Medical Developments International (ASX:MVP), Pact Group Holdings (ASX:PGH), QBE Insurance (ASX:QBE) and Smartgroup Corporation (ASX:SIQ). 
• Preliminary retail sales are out today – expected to show a 2.1% rise. 

Trading ideas: 

• IPH Limited (ASX:IPH) was upgraded by Bell Potter with a new $8.15 price target following improved earnings in Asia.
• Santos (ASX:STO) had its Buy rating upgraded by UBS with a new $7.90.
• Veem (ASX:VEE), Andromeda Metals (ASX:ADN) and Dicker Data (ASX:DDR) are all giving off bullish charting signals according to Trading Central.

The ASX200 is eyeing a fall of 0.3% at the open.

Locally, Victoria’s 5-day COVID-19 lockdown has finished, and Facebook has restricted news viewing and sharing in Australia.

Unemployment data will be released at 11:30am with the rate expected to fall from 6.6% to 6.5% in January.

Australian Banking Associated reported 91% of pandemic deferred loans are now being repaid.

Results highlights:

• CSL (ASX:CSL), Australia’s third biggest company on the ASX declared a record dividend of US$1.04 per share in the half year after net profit jumped 45% to US$1.8 billion. CSL is a UBS buy with a $339 target.
• Rio Tinto (ASX:RIO) reported a full year dividend of US$4.64 per share. RIO is a buy for Macquarie and Citi.

Companies reporting today:

• Fortescue Metals (ASX:FMG), Pilbara Minerals (ASX:PLS), Coca-Cola Amatil (ASX:CCL), Star Entertainment (ASX:SGR), Wesfarmers (ASX:WES), Santos (ASX:STO), Woodside Petroleum (ASX:WPL) and Origin Energy (ASX:ORG).

Yesterday’s top traded stocks:

• Province Resources (ASX:PRL) rose 457%, Credit Intelligence (ASX:CI1) rose 31%, Cirralto (ASX:CRO) gained 16% and Fatfish (ASX:FFG) fell 33%.

Local trading ideas:

• Corporate Travel Management (ASX:CTD) was upgraded by Bell Potter with a new $22 price target.
• Bell Potter reiterated Domino's Pizza (ASX:DMP) as a buy with a $122.00 price target.
• Pact Group (ASX:PGH), Maca (ASX:MLD) and Archer Materials (ASX:AXE) are giving off bullish charting signals according to Trading Central.

The ASX200 is eyeing a fall of 0.3% at the open.

The Therapeutic Goods Administration (TGA) approved AstraZeneca’s COVID-19 vaccine for use in Australia with it being produced in Melbourne by CSL (ASX:CSL).

Bitcoin has reached US$50,000 after skyrocketing from US$5,000 2-years ago.

Companies reporting:

• Fortescue Metals (ASX:FMG), Rio Tinto (ASX:RIO), Mount Gibson Iron (ASX:MGX), Whitehaven Coal (ASX:WHC), Sonic Healthcare (ASX:SHL), Coles (ASX:COL) and Domino’s Pizza (ASX:DMP).

Local trading ideas:

• UBS upgraded BHP (ASX:BHP) with a new $50 price target.
• Empired (ASX:EPD), Evolution Mining (ASX:EVN) and Zip (ASX:Z1P) are giving off bullish charting signals according to Trading Central.