Between the Bells

The Aussie share market is eyeing a lift of 0.4% at the open. All eyes will be on the cyclical sectors tied to economic growth like Energy and Financials which are up the most this week.

Aussie shares are on pace for the best week since April 10 thanks to budget stimulus. U.S. equities are having a good week too on the back of a potential $1,200 payment to individuals.

What to watch:

• The oil price rose 3% to US$41.29, its highest level in almost 5 weeks.
• Gold rose 0.3% after U.S. President Trump said he would not do the second presidential debate next week unless it’s face to face, despite Trump being diagnosed with COVID-19 about a week ago.
• The RBA Financial Stability review will be released today at 11:30am. 
• Companies going ex-dividend today: Harvey Norman (ASX:HVN), while ETFs going ex-div include IAF, IOF, IGB, and IHD.

Local trading ideas:

• BINGO (ASX:BIN) was reiterated as a UBS buy, with the international bank increasing BIN’s target price of $3.00.
• UBS maintained Ramsay Health Care (ASX:RHC) as a hold with a $71.20 target.
• Pinnacle Investment Management (ASX:PNI), ReadyTech (ASX:RDY) and FINEOS (ASX:FCL) are all showing bullish charting signals according to Trading Central.

The Aussie market looks set to open 0.4% higher. So far the market has already gained 4.3% this week, its best gain in 20 weeks – so the key is sustaining that.

Overnight, U.S. equities got a kick after U.S. President Trump back peddled in a Tweet, urging Congress to approve COVID-19 stimulus measures like airline support, support for small business and a $1,200 payment to individuals. 

Commodities:

• The oil price is back above US$40 despite having a volatile night. 
• Gold has slipped almost 3% in two days to US$1,890 on the back of stimulus hopes, with traders ploughing back into equities instead.

What to watch today

• Companies going ex-dividend today: include Pengana International Equities (ASX:PIA), and ARB (ASX:ARB). ARB was initially one of yesterday’s best performers and its shares surged to an all-time high when the car accessory business reported sales growth of 18% in the September quarter. But today, ARB could see a pull back as companies usually trade lower on ex-div days. 

Trading ideas:

• Commonwealth Bank of Australia (ASX:CBA) was reiterated as a Bell Potter Buy, with a target price of $73.50, suggesting it will rally 11% from yesterday’s close, supported by yesterday’s budget announcement to help individuals, pensioners, and businesses.
• Saracen (ASX:SAR) is a UBS Buy with a $6.75 target, following the proposed merger with Northern Star (ASX:NST).  
• JB Hi-Fi (ASX:JBH), Nick Scali (ASX:NCK) and Vita Group (ASX:VTG), are all showing bullish charting signals - according to Trading Central. 

The Aussie market looks set to open 0.3% lower. U.S. President Donald Trump announced that the White House will halt negotiations of a further stimulus package until after the election. The U.S. market was initially marching forth until his announcement, then began to wipe out some of the prior day's gains.

Commodities:

-          Oil jumped 1.8% to US$39.91.

-          Gold eased from its two-week high, falling about 2% to US$1,882.

What to watch today:

-          The focus will be on the budget and how investors and businesses will react.

-          For individuals: low and middle-income earners will be entitled to a tax offset of up to $2,745. 

-          Wage subsidies: employers will get $200 a week for hiring people under 30 and $100 a week for hiring people between 30 and 35, and they must work at least 20 hours a week.

-          Businesses with > $5 billion turnover: ability to buy and write off the entire cost of any depreciating asset they buy before June 30, 2022.

-          Infrastructure: $3 billion will go to shovel ready infrastructure projects.

Trading ideas:

-          UBS maintained BHP (ASX:BHP) as Buy stock, with a $41 target. After the mining giant announced it’s buying an extra 28% stake in oil assets in the deep-water Gulf of Mexico assets for US$505 million, which will take its holding to 72%.

-          Whitehaven Coal (ASX:WHC) and Coronado Global Resources (ASX:CRN) were both reiterated as Bell Potter Buy's, but both had their price targets reduced amid a damper coal price outlook.

-          Northern Star (ASX:NST), Saracen Minerals (ASX:SAR) and Resimac Group (ASX:RMC) are all showing bullish charting signals - according to Trading Central.

Well after the ASX ended 2.5% higher yesterday, its best day since June 16 ahead of the budget boost. The Aussie market is likely to lift 0.4% today.

U.S. President Donald has been released from hospital and ahead of the news, U.S. markets rallied. Adding to that positive injection, U.S. lawmakers voted in favour of a $2.2 trillion Democratic coronavirus stimulus package. It now needs to pass through the Republican-held Senate to become law.  

What to watch?

1. The RBA meets - rates are tipped to remain on hold, with the RBA hinted there is no point in reducing rates as it would only accelerate Aussie’s saving more than spending, something that the pandemic has heighted.
2. The Federal Budget will be handed down this evening – we’re expecting an extension of JobKeeper and JobSeeker, phased tax cuts, and an extra $40 billion in infrastructure.
3. Keep an eye on commodity stocks as the oil price jumped 6% on stimulus hopes to US$39.
4. Gold put on 0.6% to US$1,919.  

Trading ideas:

1. Mesoblast, (ASX:MSB) was maintained as a speculative Buy by Bell Potter, with a slimmer $7.00 target, implying 98% growth. 
2. Santos (ASX:STO) is a buy stock for UBS, Bell Potter, Credit Suisse, Morgan Stanley. STO is also a Citi buy with a $7.15 target. 
3. Wesfarmers (ASX:WES), Orbital Corp (ASX:OEC) and BetMakers Technology (ASX:BET) - are all showing bullish charting signals - according to Trading Central. 

The futures are suggesting a lift of 1.2% or 67 points, but trading is expected to be thin given it’s a public holiday in NSW, SA, ACT, QLD – so expect industrials and economic recovery stocks to be stronger, and tech stocks to follow Wall Street lower. 

It’s also going to be one of the busiest weeks economically since the pandemic - with the Australian Federal Budget being handed down tomorrow night and the RBA meeting with rates expect to remain on hold, while Westpac has gone out in a limb expecting a cut of 0.1%. 

What to watch today?
• Oil tracks steady, US$37, Gold holds at US$1,908.  
• On the economic side: NAB confidence numbers are out along with services sector data.  

Trading ideas:
• Integrated Research (ASX:IRI) was upgraded as a Buy by Bell Potter, with a new $4.25 target, on the back of the company releasing new products and renewing licences. Bell Potter is forecasting EPS growth of 10%, 11% and 15%, over the next three years.
• AFT Pharma (ASX:AFP) was rated a Hold by Bell Potter, with an increased $5.11 target after seeing a strong rise in sales in over-the-counter medicines associated with the protection of COVID-19 infections.
• Keep an eye on Black Cat Syndicate (ASX:BC8) and Amaysim (ASX:AYS) – both showing bullish charting signals - according to Trading Central. 

With the impending U.S. election, and COVID-19 cases rising in Europe, October is likely to be the bumpiest month yet. We saw the Aussie share market fall 1.5% (Mon-Thu), as fund managers and investors adjusted their portfolios, selling down defensive sectors and buying into tech.

In this week’s wrap, Jessica covers:

- (0:20) The revolving door of sectors: Tech up 2.8%, while Utilities and Consumer Staples fall more than 4% each
- (0:38) Standout stock: Premier Investments (ASX:PMV) rises 12%
- (1:34) The final countdown - what to expect in Q4 2020
- (2:34) Fund managers putting cash to work
- (4:17) Sectors to watch in 2021
- (4:44) 16 trading ideas worth a look 

The Aussie share market is eyeing a fall of 0.5% at the open.

For the first day of October in the U.S. it was a bumpy one, with equities briefly dipping into the red after a U.S. stimulus vote was delayed to next Thursday, with traders hoping it would be done sooner.

What to watch today:

• On the economic side, retail sales are out today and are expected to fall 4.2%.
• The oil price has fallen 4% to US$38.
• Gold rebounded, lifting 0.9% to US$1,912. 
• The iron ore price lifted 2%. 

Trading ideas:

• Alumina (ASX:AWC) was upgraded by Citi as a buy with a new $1.80 target.
• SSR Mining (ASX:SSR) was initiated as a UBS buy with a $33 target, following its merger with Alacer.
• Sezzle (ASX:SZL), Netwealth (ASX:NWL) and Paradigm Biopharmaceuticals (ASX:PAR) are all showing bullish charting signals according to Trading Central.

The Aussie futures are suggesting a modest 0.2% or 11 point gain. It’s worth looking out for how stimulus talks develop, as well as the U.S. futures – as that that could affect our afternoon session.

After U.S. equities pulled back for a day, they’ve sprung back into action overnight on better than expected jobs and home sales data. On the political side, the U.S. Treasury Secretary and House Speaker Nancy Pelosi are attempting to craft a fifth stimulus package. All of this saw economic recovery stocks like banks and cruise operators lead the rally, with the Dow rising 1.2%, the broader S&P500 gaining 0.8%, while the tech heavy Nasdaq rose 0.7%.

What to watch today?

• It should be a better day for oil stocks after they declined over 4% yesterday. A rebound looks in order, as the oil price jumped almost 2% overnight to just shy of US$40.
• Gold stocks could see another pull back as the precious metal traced lower again.
• The Aussie Prime Minister’s budget next week plans to invest $1.5 billion into manufacturing, i.e. resources, critical minerals, food and beverages, medical products, recycling and clean energy, defence and space manufacturing. So it could be worth looking at companies in those areas.

 
Trading ideas:

• Elders (ASX:ELD) was upgraded by Bell Potter as a buy with a new $12.25 target, implying 12% upside from yesterday’s close.
• Santos (ASX:STO) was reiterated as a Buy by UBS with a $6.50 target. Yesterday STO closed at $4.88. Santos was granted NSW environmental approval for the Narrabri Gas Project.
• Alliance Aviation (ASX:AQZ), Medusa Mining (ASX:MML) and Shine Justice (ASX:SHJ) - all showing bullish charting signals - according to Trading Central. 

The Aussie share market is eyeing a fall of 0.9% or 56 points ahead of the first of three Trump vs. Biden debates.

U.S. stocks fell to their lows for the day after the New York City Mayor said NY’s daily COVID-19 cases are back above 3%, for the first time in months. That spooked airline investors, and airliners led the decline, with American Airlines, United and JetBlue falling about 4%.

U.S. consumer confidence surged to its highest level since the start of the pandemic, with confidence levels seeing their biggest rebound in 17 years. This reflects that Americans are optimistic about the U.S. recovery being on track.

What to watch today?

• Options expiry - fund managers and investors are unwinding their positions, which will add to the volatility today.
• It should be a positive day for gold stocks, after the gold price lifted over 1% for the second day, to US$1,903, with COVID-19 cases rising in Europe
• Oil stocks may come under pressure as the oil price fell 3.7%, back to under US$40.
• What else to watch: ASX (ASX:ASX) holds its AGM today, Freedom Foods (ASX:FNP) is due to hand down results and this evening in the U.S., GDP growth is released with the market expecting second quarter growth to fall 31.7%, following the 5% fall in Q1.

 
Trading ideas:

• Corporate Travel Management (ASX:CTD) was upgraded as a Buy by UBS with a new $18.70 price target. UBS thinks CTD has been one of the best performing travel stocks.
• Australian Finance Group (ASX:AFG) was initiated as a Buy by Citi with a $3 price target. AFG control about 40% of the mortgage broking industry, and a cyclical recovery looks to be on the cards, given the reregulation of the industry.
• Accent (ASX:AX1), Macmahon Holdings (ASX:MAH) and American Pacific Borates (ASX:ABR) - all showing bullish charting signals - according to Trading Central. Of those AX1’s fundamental calls almost mirror Trading Central’s technical analysis, meaning its shares could rally to $1.95 - 2.01 over the next 25 days. Bell Potter targets $1.85. Morgans targets $1.84