Between the Bells

The Aussie market is eyeing a 0.6% or 38-point lift following U.S. rally. Equities rallied for the second session, and started a brand new week in the green, with banking stocks leading the rally. Elsewhere on the street, other deals were being made, which boosted sentiment. Devon Energy and WPX Energy announced their merger is progressing, which sent their shares over 11% higher. The S&P500 rose 1.6%, while the Nasdaq ended rose 1.9%.

What to watch today?

• The oil price lifted 0.8% to US$40.58, and gold gained 1.1% to US$1,886
• Following the Federal government’s plan to invest $800 million in improving the government’s digital technologies, and digital face recognition, it’s worth looking at artificial intelligence and face recognition companies. A company to watch in this space is Appen (ASX:APX) and BrainChip (ASX:BRN) that was just added to the tech index.
• Companies going ex-dividend today include Centuria Industrial REIT (ASX:CIP), Charter Hall Long WALE REIT (ASX:CLW), Cromwell Property Group (ASX:CMW), Centuria Office REIT (ASX:COF), Meridian Energy (ASX:MEZ) and Kirkland Lake Gold (ASX:KLA).

 
Trading ideas:

• Downer EDI (ASX:DOW) was upgraded to a Buy by UBS with a new $5.00 target. The reason for upgrade is its restructure will deliver $300 million in enhanced cash flows, boosting its yield.
• The a2 Milk Company (ASX:A2M) was downgraded by Bell Potter to a Sell with a $13.75 target. Revenue is expected to fall with no recovery in the Daigou channel expected yet.
• Afterpay (ASX:APT), FlexiGroup (ASX:FXL) and Pental (ASX:PTL) are all giving off bullish charting signals - according to Trading Central. Of those Afterpay’s (APT) fundamental calls mirroring Trading Central’s technical analysis, saying it’s shares could rally to $102 to $107, over the next 22 days. Morgan Stanley targets $101 and Bell Potter targets $99.10. 

The Aussie share market is eyeing a 0.4% lift at the open following the 1.7% gain last week. 

Today in Victoria, childcare centres reopen, primary schools return and the curfew is scraped, with 127,000 people allowed to return to work. Supermarkets, food distribution centres, abattoirs, seafood and meat processing plants also increase capacity, which is good news for the economy. While at the same time the JobKeeper payment reduces from $1,500 to $1,200 a fortnight.

What to watch today:

• Keep an eye on economic recovery stocks like banks, which saw a huge rally on Friday with Westpac (ASX:WBC) up over 7% and CommBank (ASX:CBA) up 3%, on reduced lending requirements that are likely to be revealed in tomorrow’s budget.  
• A lot of property groups go ex-div tomorrow, like Centuria Industrial REIT (ASX:CIP), Charter Hall Long WALE REIT (ASX:CLW), Centuria Office REIT (ASX:COF) and Cromwell Property Group (ASX:CMW).

Local trading ideas:

• Smiggle, Just Jeans and Peter Alexander owner Premier Investments (ASX:PMV) was reiterated by Bell Potter as a buy with a bumped up price of $22, implying 16% growth from Friday’s close. UBS also reiterated PMV as a buy with a $20.50 target.
• Business tech platform, Technology One (ASX:TNE) was reiterated by Bell Potter as a buy with a $9.50 target, implying 20% upside from Friday’s close.
• Mortgage Choice (ASX:MOC), Asaleo Care (ASX:AHY) and SciDev (ASX:SDV) are all giving off bullish charting signals according to Trading Central.

The Aussie share market sees a gain of 1.3% – the best weekly gain in seven weeks. European governments are dealing with their second wave of COVID-19, forcing Australian investors to buy into defensive stocks. Meanwhile, the USD pushed higher, putting pressure on commodities.

In this week’s wrap, Jessica covers:

• (0:12) The Sector Report: Healthcare gets a health kick, rising 4%
• (0:56) Service Stream (ASX:SSM) up 12%, upgraded to a Bell Potter buy
• (1:48) The delayed UK recovery and stocks to watch
• (2:38) Seven stocks to consider with lower for longer interest rates
• (4:28) What to watch: RBA, Federal Budget, Infrastructure spending
• (5:07) Four tips from an expert investor: Magellan’s Hamish Douglass

The Aussie share market is eyeing a red start with a fall of almost 1% at the open.

U.S. equities fell lower overnight as lawmakers struggled to progress a new stimulus deal, despite the Fed Reserve calling upon fiscal help to support the U.S. economy.

What to watch today:

• With the rise of the U.S. dollar, keep an eye on the ETF USD and companies that could benefit from the fall of the Aussie dollar including ResMed (ASX:RMD), CSL (ASX:CSL) and James Hardie (ASX:JHX).

Local trading ideas:

• Service Steam (ASX:SSM) was upgraded by Bell Potter as a buy with a $2.30 price target after NBN Co. announced $4.5b of new network investments, which will see additional fibre laid out for connections, upgrades to business networks and large-scale investments across regional areas which will provide tailwind for SSM.
• Agri chemical company Nufarm (ASX:NUF), was upgraded by UBS as a buy with a new $5.25 price target.
• Harvey Norman (ASX:HVN), Domino’s Pizza (ASX:DMP) and Reece (ASX:REH) are giving off strong bullish charting signals according to Trading Central.

Australia will start to reopen its boarders in a bid to get the economy back on track, while the UK enters tougher restrictions for potentially the next six months. In the U.S., existing home sales soared 2.4% in August, to the highest reading in 14 years, supported by record low interest rates.
 Strong earnings, economic news and stimulus hopes supported sentiment and saw U.S. equities attempt to rebound after four days of selling. The S&P500 lifted 1.1%, the Nasdaq was up 1.7%, while the blue chip gained 0.5%.

Commodities:

·        Oil nudged slightly higher to US$39.60

·        Gold continued to drop and trades at US$1,905 as investors continue to invest in the safe haven U.S. dollar.

·        With that the Aussie dollar fell 0.8% to 71.67 US - this has continued to pressure the Iron Ore price, which lost 0.9%.

 What to watch today?

·        The Aussie futures are suggesting a rise of 1%.

·        Services and manufacturing numbers will be in focus today with a preview of what to expect in September, before the official readings are out next month.

Trading ideas:

·        Harvey Norman (ASX:HVN) was maintained as a Buy by Citi with a $5.20 target price. HVN’s outlook remains upbeat with year on year July and August re-tax profit nearly tripling.

·        Saracen Mineral (ASX:SAR) and Northern Star Resources (ASX:NST) were upgraded by Macquarie with a $6.10 and $16.40 price target respectively.

·        Keep an eye on Elders (ASX:ELD), Wesfarmers (ASX:WES) and Base Resources (ASX:BSE) - all three are giving off bullish charting signals according to Trading Central. 

Overnight we saw a risk off environment unfold as the UK considers another national lockdown to slow rising infection rates. That saw tourism stocks move lower with Carnival shares down 6.7% and Delta Air falling 9.2%. Elsewhere, investors sold down banks as allegations swirled that a number of international banks have been moving illicit funds over the last two decades. But there was some light - technology shares slightly rebounded – U.S. tech darlings led Wall Street to a record high but the September-blues hit, so overnight investors bit into low hanging fruit. As for the US major indices, the S&P500 lost 1.2%, the Dow fell 1.8% and the Nasdaq fell just slightly, 0.1%.

Commodities:

• Oil lost 4% to US$39.31 after climbing 10% last week
• Gold fell 3% - US$1,910 as investors flowed funds into the safe haven U.S. dollar.

 
What to watch today?

• The Local futures are suggesting a pull back of almost 1% following Wall Street’s fall.
• Stocks in Hydrogen, batteries, green steel, carbon capture and storage, and soil carbon may be worth a look as they’ve been flagged as the federal government’s priority in low-emission technologies to develop over the next decade.
• The RBA Deputy Governor, Guy Debelle's speech on the Australian Economy and Monetary Policy will be in focus. So look for hints on negative interest rates and if the RBA thinks the second half of 2020 will show solid or tepid recovery.

Trading Ideas:

• Australian Pharmaceutical Industries (ASX:API), which owns Priceline, Soul Pattinson Chemist and Clear Skincare clinics was downgraded to a Bell Potter Sell with a $0.85 price target, implying a 17% pull back from yesterday’s close of $1.02.
• Laybuy Group (ASX:LBY) was initiated as Bell Potter speculative Buy with a $2.40 price target, implying 41% upside from in a year, from yesterday’s close of $1.71.
• And keep an eye on Johns Lyng Group (ASX:JLG), Shine Justice (ASX:SHJ) and Aspen Group (ASX:APZ) -all three are giving off bullish charting signals - according to Trading Central. 

The Aussie share market is eyeing a fall of 0.6% at the open following Wall Street’s decline.  

U.S. equities closed lower on Friday and saw their third straight weekly fall. On Wall Street, investors continued to sell out of the Tech sector and invest into the best performing sector this month, Materials.

What to watch:

• This week, manufacturing numbers will be released in the U.S., UK, the Eurozone and Australia, while Central banks will be meeting in China and New Zealand, deciding the future of interest rates.

Local trading ideas:

• Costa Group (ASX:CGC), Australia’s largest horticultural company, was initiated as a Bell Potter buy with a $4.05 price target, implying 24% growth in a year from Friday’s close of $3.27. Citi and UBS also have the stock as a buy.
• Uniti Group (ASX:UWL) was upgraded by Bell Potter with a $1.90 target, implying 29% growth in a year from Friday’s close of $1.47.
• Structural Monitoring Systems (ASX:SMN), Integrated Research (ASX:IRI) and Tesoro Resources (ASX:TSO) are all giving off bullish charting signals according to Trading Central.

There's light at the end of the tunnel this week, with 111,000 Aussies returning to work rather than the projected further loss of 35,000 jobs. Plus, the Aussie share market followed the U.S. blue-chip rise, closing 0.4% higher (Mon-Thu).

In this week’s wrap, Jessica covers:

• Three stocks to watch given home sales are up 3.6%
• The Sectors report: Real Estate rose 2.3%
• Five stand out stocks this week
• Aussie employment data beating expectations - sole traders and females leading the charge
• Victorian COVID-19 cases trending lower and likely to continue
• Two stocks to consider: Aristocrat Leisure (ASX:ALL) and Accent Group (ASX:AX1)

The Aussie share market is eyeing a 0.3% gain at the open with the focus on Victorian COVID-19 cases declining. The Aussie share market has gained 0.4% so far this week, this puts the market on pace to close higher for the first time in 6 weeks.

U.S. equities had their second straight negative session overnight, while stocks managed to end above their lows on Thursday. U.S. weekly job claims rose by 860,000 more than the expected 850,000, but the silver lining is that it’s the third week now unemployment numbers have been under 1 million.

Local trading ideas:

• Centuria Industrial REIT (ASX:CIP), Integrated Research (ASX:IRI) and NZME (ASX:NZM) are giving off bullish signals according to Trading Central’s charting.
• Immutep (ASX:IMM), an immunotherapy business fighting metastatic cancer, was initiated as a Bell Potter speculative buy with a $0.60 target, implying 179% price growth in a year.
• Beach Energy (ASX:BPT) has been called out a high risk buy by Citi with a $1.94 target as its generating a higher level of cash than its peers and selling higher amounts of gas. Citi estimates BPT will generate $1.1 billion in free cash flow, which is worth $0.30 a share.

The Aussie share market is eyeing a 0.2% fall at the open following Wall Street’s mixed lead.

U.S. stocks mostly fell overnight for the first time in three days, this came after the U.S. Federal Reserve dropped its economic growth forecast for next year to 4% from 5%, and shaved 2022’s GDP forecast to 3%.

What to watch today:

• The focus will be on employment numbers for August. We know 115,000 people gained jobs in July, but forecasts for August are dire as Victoria has been in lockdown. The unemployment rate is likely to worsen from 7.5% to 7.7%, but the RBA expects unemployment to surge to 10%. 
• After the oil price gained 8% in two days, keep an eye on oil stocks: Oil Search (ASX:OSH), Origin Energy (ASX:ORG), Santos (ASX:STO), Woodside (ASX:WPL) and WorleyParsons (ASX:WOR).

Local trading ideas:

• Temple & Webster (ASX:TPW), Netwealth (ASX:NWL) and Breville Group (ASX:BRG) are giving off bullish signals according to Trading Central’s charting.
• The British High Court has ruled in favour of QBE (ASX:QBE) in two of three COVID-19 insurance case payouts. This reduces QBE’s UK business interruption costs to US$70 million. Bell Potter reiterated QBE as a buy but shaved its price target to $11.10 as a result, this implies 21% share price growth in a year from yesterday’s close of $9.20. 
• The a2Milk Company (ASX:A2M) has been called out as a sell by Citi.