Between the Bells

The futures are suggesting the ASX200 will fall 1.1% following Wall Street’s close in the red and comes despite NSW restrictions being eased from tomorrow, with restaurants, cafes, pubs and clubs able to take group bookings of up to 30 people per group.

U.S. investors lost patience that a fresh U.S. stimulus package would eventuate before the election in almost 11 days. But it’s important to note, regardless of who wins the presidential race, more stimulus will come from either party to bring their economy back to life. Netflix reported less subscribers than expected, which saw its shares lose about 7%. Meanwhile, Snap shares soared 28% to an all-time high on a smashing quarterly report. 

On the Commodity front: Oil fell 4% US$40.01 with Libya ramping up production, while U.S. inventory figures showed gas demand weakened. So that could hurt oil stocks today. While Gold made its first notable move in days, rising 1% to US$1,927.  

What to watch today:

• Quarterly results from AMP (ASX:AMP), Qantas (ASX:QAN), Mirvac (ASX:MGR) and OZ Minerals (ASX:OZL). 
• AGMs today: Suncorp (ASX:SUN), Webjet (ASX:WEB), Magellan (ASX:MFG) and Crown (ASX:CWN).
• RBA’s Deputy Governor, Guy Debelle will take part in a Fireside Chat – on the Future of the FX Global Code – at FX Week Australia 2020

Trading ideas: 

• Bell Potter upgraded Praemium’s (ASX:PPS) Buy rating, increasing its price target to $0.85, implying 41% upside. Praemium’s quarterly results were much stronger than expected supported by its Powerwrap acquisition. 
• Bell Potter also upgraded MyState’s (ASX:MYS) Buy rating, increasing its price target to $4.50 implying 15% upside on MYS’ net interest margin. Bell Potter expects cash and NPAT growth to continue in FY22 and beyond. 
• UBS upgraded Megaport (ASX:MP1) from a neutral to a Buy with a new $16.45 price target. UBS sees more strength in the second half of this financial year, with growth from North American after its customers rose 63%.
• Red 5 (ASX:RED), Bigtincan Holdings (ASX:BTH) and Galaxy Resources (ASX:GXY) are all showing bullish charting signals - according to Trading Central.

The ASX futures are suggesting the market will lift 0.2%  - with the focus on Daniel Andrews opening Victoria’s boarders. This comes after seven of Australia’s largest companies, including BHP, Wesfarmers, CBA and CSL called on the government to open the boarders, saying ‘the current situation is not sustainable’. 

Hopes are high for a new U.S. fiscal rescue package to be reached, with  House of Representatives Speaker Nancy Pelosi just hours away from handing a deal to the Trump Administration, to hopefully be passed before the election. The benchmark S&P500 ended 0.5% higher, the Dow lifted 0.4% and the Nasdaq rose 0.3%. As for commodities: Oil gained 1.7% to US$41.51 and Gold maintained its foothold around US$1,909.  

What to watch today:

1. More quarterly results are out today, including for: Lynas Corporation (ASX:LYC), Megaport (ASX:MP1), Sandfire Resources (ASX:SFR), Syrah Resources (ASX:SYR), Atlas Arteria Group (ASX:ALX), and Coronado Global Resources (ASX:CRN). 
2. AGMs today: AGL Energy (ASX:AGL), MyState (ASX:MYS), Orora (ASX:ORA), Service Stream (ASX:SSM) and Temple & Webster (ASX:TPW).
3. Ex-dividends: Acrow Formwork & Construction Service (ASX:ACF), Australia & International Holdings Limited (ASX:AID) and Sandon Capital Investments (ASX:SNC). 
4. Preliminary retail data is out today. Not likely to move the needle though.  

Trading ideas:

• Bell Potter upgraded costume jewellery business Lovisa (ASX:LOV) as a Buy, increasing its price target to $10.00 , implying 15% upside. LOV held its AGM yesterday, noting same store sales are almost back in the black, while Metro Melbourne stores are set to open on 1 November.
• Zip (ASX:Z1P) was reiterated as a UBS Sell, with a $5.50 price target, after Zip launched ‘Tap and Zip’ allowing people to shop anywhere that accepts Zip.
• Bell Potter downgraded Pacific Smiles (ASX:PSQ) from a Buy to a Hold, but increased its target to $2.05. However Morgan Stanley maintained Pacific Smiles as a Buy with a $2.40 target as the group is expecting fee growth of 20%.  
• Uniti Group (ASX:UWL), Structural Monitoring Systems (ASX:SMN) and West African Resources (ASX:WAF) are all showing bullish charting signals - according to Trading Central.

The futures are suggesting the Aussie share market will pull back 0.7% after the ASX200 scaled to a new 7-month high yesterday, its highest level since the 6th of March 2020. But remember the market is in a technical break out point, trading above its 200 and 50 day moving average, indicating the market is likely to explore higher levels.

What to watch today:

• Reporting today: BHP’s (ASX:BHP) quarterly results with all eyes on China’s alleged Australian coal ban, and Sydney Airport (ASX:SYD) reports September traffic numbers. 
• AGMs: Bapcor (ASX:BAP), Cochlear (ASX:COH), Lovisa (ASX:LOV), McMillan Shakespeare (ASX:MMS), Stockland (ASX:SGP) & Tabcorp (ASX:TAH)  .
• RBA Assistant Governor of Financial Markets speaks about monetary policy today and the tools to stimulate the economy at 10am.
• RBA minutes will be released at 11:30am. 

Trading ideas:

• South32 (ASX:S32) has been reiterated as a UBS Buy, with a $3.00 price target, after it handed down quarterly results yesterday, bumped up its outlook and reinstated its share buyback program. 
• Bell Potter upgraded car repair and aftercare business AMA’s (ASX:AMA) Buy rating, increasing its price target to $0.95, implying 39% upside. Bell Potter says with Victoria’s lockdowns easing, AMA should be able to increase its earnings, forecasting higher earnings than AMA expects. 
• Ansell (ASX:ANN) was maintained as a Citi Buy with a $41 target given demand for medical gloves from COVID-19 is tipped to remain high for some time. 
• OZ Minerals (ASX:OZL), Orica (ASX:ORI) and Zoono Group (ASX:ZNO) are all showing bullish charting signals - according to Trading Central 

The ASX200 is set to gain 0.6% at the open with Victoria’s restrictions beginning to ease from today.

There are 16 days until the U.S. election, but the focus for many remains on stimulus and economic news. Earnings are back in focus this week with IBM, Netflix and Tesla to report.

China’s GDP growth numbers are out today and Flash PMI numbers for Australia, the U.S., the UK and Europe are out later this week.

What to watch today:

• South32 (ASX:S32) reports production results today.
• Companies going ex-div: Cadence Capital (ASX:CDM), Frontier Diamonds (ASX:FDX), Wam Global (ASX:WGB), WAM Leaders (ASX:WLE) and K&S Corp (ASX:KSC).

Local trading ideas:

• Citi downgraded Zip Co. (ASX:Z1P) to a sell with a reduced price target of $6.55. Citi sees downside risks from increased international competition.
• Woolworths (ASX:WOW) has been reiterated as a buy by UBS with a $43.50 price target. WOW quarterly results are due on the 4th of November, which could be the next catalyst for the business.
• Ahead of NAB (ASX:NAB) releasing its financial year results on the 5th of November, Bell Potter revised NAB’s buy rating with a new $21.00 price target, implying 9% upside.
• Weebit Nano (ASX:WBT), Navigator Global Investments (ASX:NGI) and Vista Group International (ASX:VGL) are all showing bullish charting signals according to Trading Central.

The Aussie share market kicked up 1.8% (Mon-Thu) following better than expected economic news and government stimulus. With uncertainty around the world, the risks appear manageable given the momentum behind economic growth.
 
 In this week’s wrap, Jessica covers:

• (0:22) The Tech sector powering up 4% to a 20-year high
• (0:50) Afterpay (ASX:APT) hitting an all-time high & getting upgraded after AUSTRAC clearance
• (2:05) The ASX200 forming a Golden Cross bullish trend
• (3:39) The RBA dropping its dire 10% unemployment rate forecast
• (4:25) Momentum behind economic growth outpacing uncertainty
• (5:09) Four trading ideas across Health Care, IT & Industrials 

The ASX200 is set to fall 0.2% at the open following some of the European Government reinstating COVID-19 restrictions. This saw London’s FTSE fall 1.7%.

As for Commodities, the oil price fell back to US$40.99 after rising 4% in the two prior sessions.

What to watch today:

• Rio Tinto (ASX:RIO) reports quarterly results today with all eyes on statements relating to coal as China allegedly suspended orders.
• SKYCITY Entertainment Group (ASX:SKC) holds its AGM today.

Local trading ideas:

• Radiology and software company, Pro Medicus (ASX:PME), was downgraded to a sell by Bell Potter following its 12% rally this week to $31.23 yesterday.
• Citi reiterated Alumina (ASX:AWC) as a buy with a $1.80 target given the improving global aluminium demand.
• Citi reiterated Newcrest Mining (ASX:NCM) as a buy but dropped its price target by $1 to $36.
• MoneyMe (ASX:MME), Redbubble (ASX:RBL) and Fortescue Metals (ASX:FMG) are all showing bullish charting signals according to Trading Central.

The futures are suggesting a pull-back of 0.2%, which will trim off some of this week’s gain of 1.3%.

U.S. equities pulled back for the second session overnight, as investors came to grips that an American COVID-19 stimulus deal wouldn’t be reached before the November 3 presidential election.

As for Commodities: The oil price lifted over 2% for the second day, nudging over US$41.11. Gold firmed 1% higher to US$1,905. 

What to watch today:

1. The future for coal exports to China: BHP (ASX:BHP) confirmed that Chinese customers have deferred orders of Australian coal. 
2. Reporting today: Alumina (ASX:AWC) and Whitehaven Coal (ASX:WHC).
3. AGMs today: Audinate Group (ASX:AD8), ARB Corporation (ASX:ARB) and Perpetual (ASX:PPT).
4. The unemployment rate is expected to rise from 6.8% to 7.1% with 35,000 jobs expected to be lost in September amid Victoria being the second most populated state in lockdown. 
5. Data from the Australian Banking Association tells us that repayments have resumed for about half of the deferred loans.

Trading ideas:

• Afterpay (ASX:APT) had its price target increased to $121.00 by Bell Potter. We have not heard from other brokers yet but are expecting more upgrades given APT passed the external monetary laundering AUSTRAC audit, with the body saying it would not investigate Afterpay further. 
• UBS restamped Zip (ASX:Z1P) as a sell with a $5.50 target. We know Zip’s results yesterday at face value were strong, but Zip’s results were weaker than what the market was expecting given it’s taken over QuadPay.
• Following CSL’s (ASX:CSL) AGM yesterday, Citi maintained the blood therapy business as a Buy with a $325 target, with the market focused on FY21 and the strong demand for plasma and blood therapies.
• Adairs (ASX:ADH), Whisper (ASX:WSP) and MNF Group (ASX:MNF) are all showing bullish charting signals - according to Trading Central

After five days of straight gains, it looks like some profit taking is in order today. The futures are suggesting a fall of 0.9% today. 

The reason sentiment is likely to be weak today is because global equities pulled back overnight with the UK recording its highest daily rise in COVID-19 deaths.

In the U.S., Johnson & Johnson’s COVID-19 vaccine study was paused due to an unexplained illness in a patient study, seeing J&J shares slide 2.3%.

What to watch today:

• The oil price gained 2% to US$40.17, while Gold fell about 2% to US$1,894.
• Afterpay (ASX:APT) received finalisations and clearance from AUSTRAC’s audit.
• Bank of Queensland (ASX:BOQ) reported its net profit fell 61%. Auckland International Airport (ASX:AIA) and Aurizon Holdings (ASX:AZJ) also report. 
• AGMs today: CSL (ASX:CSL), Cleanaway Waste Management (ASX:CWY) and Aurizon Holdings (ASX:AZJ).
• Overnight, the International Monetary Fund (IMF) revised its global economic growth forecasts higher to a 4.4% contraction, up from negative 4.9% growth for 2020. 

Trading ideas:

• Orica (ASX:ORI), a leading explosives manufacturer was reiterated as a Citi Buy with a new increased target of $19.50. Citi is expecting medium-term earnings growth underpinned by higher pricing, increased technology sales and better plant utilisation. 
• Following Telstra’s (ASX:TLS) AGM yesterday UBS maintained Telstra as a Buy with $3.70 target. 
• BCI Minerals (ASX:BCI), Silver Lake Resources (ASX:SLR) and Ramelius Resources (ASX:RMS) are all showing bullish charting signals - according to Trading Central.

Another positive day is on the cards for the Aussie share market, with the ASX200 set to lift 0.8%. 

Overnight in the U.S., optimism was high ahead of third quarter earnings being released with JPMorgan Chase and Delta Air reporting as early as tomorrow. Sentiment is also high on hopes of a stimulus package being inked, which will provide individuals with $1,200 of pocket money. 

What to watch today:

1. The oil price fell 3% to US$39.53 as U.S. production began to be restored after being shut off after Hurricane Delta. 
2. Gold slipped from its three-week high and trades at US$1,927.
3. Iron ore fell 1.2% to US$124.
4. AGM season ramps up locally, with CBA (ASX:CBA), Telstra (ASX:TSL) and EBOS Group (ASX:EBO) holding theirs today.

As for Trading ideas that may be worth a look:

• UBS increased Bapcor’s (ASX:BAP) price target to $8.55. Citi also reiterated the car part accessory business Bapcor as a Buy with a revved up $8.80 target. 
• Ahead of ANZ reporting financial year results in two weeks, Bell Potter upgraded the big four bank with a $20.50 target, and reiterated its Buy rating. 
• Alliance Aviation Services (ASX:AQZ), Emvision Medical Devices (ASX:EMV) and Catapult Group (ASX:CAT) are all showing bullish charting signals - according to Trading Central.

Last week the Aussie share market had a cracking week, closing 5.4% higher, its best weekly gain since April. Today the Aussie futures are suggesting a fall of 0.1% at the open.

U.S. equities saw their best weekly gain since July with the NASDAQ and S&P500 closing higher.

What to watch today:

• Diggers and Dealers, a mining forum kicks off today with 164 companies presenting.
• Energy stocks closed 9% higher last week, the best week since early April.
• Frontier Digital Ventures (ASX:FDV) goes ex-dividend today and Opthea (ASX:OPT) holds its AGM.

Local trading ideas:

• Liontown Resources (ASX:LTR) was upgraded by Bell Potter as a speculative buy with an increased target of $0.32.
• Citi has upgraded Newcrest Mining (ASX:NCM) to a buy with a $37 target, as its second stage NSW Cadia project has been approved.
• Silver Lake Resources (ASX:SLR), Musgrave Minerals (ASX:MGV) and Auswide Bank (ASX:ABA) are all showing bullish charting signals according to Trading Central.