Between the Bells

The Aussie futures are eyeing a fall of 0.2% at the open, despite U.S. stocks on Friday scaling to another fresh record high, with the S&P500 up 0.3% and the Nasdaq up 0.4%.

Trump announced he’s considering fast tracking AstraZeneca’s vaccine before the election, while he also authorised plasma treatment in COVID-19 patients. On the economic side, green shoots continued to sprout as the U.S. service sector grew at its quickest pace in 17-months.

What to watch today:

• Afterpay (ASX:APT) reported that it’s expanding into Europe.
• Companies reporting this week: Fortescue Metals Group (ASX:FMG), Nearmap (ASX:NEA), nib (ASX:NHF), St Barbara (ASX:SBM), Super Retail Group (ASX:SUL) and Chorus (ASX:CNU).

Local trading ideas:

• Inghams (ASX:ING) buy rating and price target was upgraded by Bell Potter to $4.10, implying 21% share price growth from Friday’s close. Profit was in line with forecasts and no guidance was given.
• MyState (ASX:MYS) was reiterated as a Bell Potter buy while dropping its price target 9% to $4.10, mainly as a result of not paying a final dividend which drops its payout ratio. What’s important is it didn’t cancel the dividend due to performance but to conserve capital. Bell Potter expects 11% share price growth from Friday’s close.
• Car cooling system company, PWR Holdings (ASX:PWH), had its buy rating and price target upgraded by Bell Potter, giving it a price target of $5.25 after it delivered much stronger results than forecasted last week. Although it didn’t given guidance, PWR is expecting a strong rebound in FY21.

The Aussie share market has slipped 0.1% this week (Mon-Thur), its first fall in three weeks as investors sift through 30 company reports - the busiest reporting season week so far.

In this week’s wrap, Jessica covers:

• (0:21) Seven companies that beat market expectations
• (0:33) WiseTech Global (ASX:WTC) sky rockets 38% after reporting
• (1:10) 16 companies that reported in-line
• (1:33) Seven that missed market expectations
• (1:54) Three emerging themes worth thinking about
• (3:22) What to consider if you want to generate above average returns
• (3:51) Over to the U.S.: Apple becomes a US$2 trillion company
• (4:43) What to expect from Fortescue Metals (ASX:FMG), Woolworths (ASX:WOW) & Afterpay (ASX:APT) next week

The Aussie share market is expected to gain 0.2% at the open, meaning the ASX200 could end slightly higher this week as it’s tracking 0.1% lower Monday to Thursday.

Overnight, U.S. weekly unemployment claims soared back to 1 million, this was far more than expected. Despite that, U.S. stocks bounced back from their prior day’s fall, with investors focused on maximising returns amid the record low interest rate environment.

What to watch today:

• Companies reporting: Alumina (ASX:AWC), BWX (ASX:BWX), Mayne Pharma Group (ASX:MYX), Suncorp Group (ASX:SUN), Healius (ASX:HLS), Inghams (ASX:ING) and Redbubble (ASX:RBL).
• In terms of economic news, we’ll get a preview of manufacturing and services data for August from CommBank, with both gauges expected to have eased as Victoria remains in hard lockdown.

Local trading ideas:

• UBS reiterated Tassal (ASX:TGR), Origin Energy (ASX:ORG) and Pro Medicus (ASX:PME) as a buy following their results yesterday.
• Bell Potter upgraded Pro Medicus (ASX:PME) from a hold to buy, with a price target of $28.50. Yesterday it fell 2.5% to $24.68 after delivering weaker than expected profit. However going forward, strong revenues and earnings are expected in FY21 as there are no other competitors in the medical streaming technology space and the company is continuing to invest $7m - $8m in R&D each year to maintain this tech advantage.
• Perpetual (ASX:PPT) delivered a 20% drop in profit yesterday in line with expectations. On the negatives, it didn’t flesh out details about its U.S. fund manager acquisitions and cost guidance is not clear. However on the positives, it’s expanding its high net worth (private client business). Bell Potter downgraded PPT’s price target to $43.80 but maintained its buy recommendation.
• The ASX (ASX:ASX) is showing that it’s formed a technical bullish uptrend, what’s known as an ‘upside break’ according to Trading Central’s charting. ASX is a UBS sell with a $75 target, it was also reiterated as a Citi sell.

Aussie futures are suggesting a retreat of 0.3%, which will trim some of yesterday’s gain of 0.7% and the week to date gain of 0.7%. The S&P500 scaled to a brand new record high, its second in two straight days before falling 0.4%. The Nasdaq met the same fate, scaling to a record before turning negative in the final few hours. Meanwhile, Apple became the first U.S. company to reach a market cap of $2 trillion, doubling its valuation in two years.

In commodities and FX, the U.S. dollar rose, which saw gold lose 1.6%, down to US$1,939. The oil price fell 0.2% to US$42.76. The Aussie dollar fell 1% and hit 71.85 US cents – falling from its fresh high.

What to watch:
• Afterpay (ASX:APT) upgraded its guidance levels expecting EBITDA to be $43 million, that’s almost double what APT previously expected.

Companies reporting today:
• Qantas (ASX:QAN) just reported its profit dived to a $2 billion after tax loss in 2020 financial year, a 334% fall on last year’s profit.
• Star Entertainment (ASX:SGR) just reported a full year net loss after tax of $95 million after falling 148%.
• Wesfarmers (ASX:WES) the owners of Bunnings, Kmart and Officeworks also just reported results
• Other companies which have reported include Perpetual (ASX:PPT), Domain (ASX:DHG), Medibank Private (ASX:MPL), and South32 (ASX:S32).

Trading ideas:
• Ingenia (ASX:INA) is showing that it’s formed a technical short-term bullish uptrend, according to Trading Central’s charting. Goldman Sachs backs INA as a buy with a $5.40 target.
• BHP (ASX:BHP) was reiterated as a UBS buy with a $40 target.
• ANZ (ASX:ANZ) was reiterated as a Bell Potter buy following its quarterly update, while its price target increased to $20.

In today’s morning bell, Jessica discusses:
 - U.S. markets (0:24)
 - Commodities and FX update – (1:19)
 - All about Afterpay (ASX:APT) – (1:49)
 - Companies reporting today: Qantas (ASX:QAN), Star Entertainment (ASX:SGR), Wesfarmers (ASX:WES), Perpetual (ASX:PPT), Domain (ASX:DHG), Medibank Private (ASX:MPL), and South32 (ASX:S32)– (2:57)
 - Trading ideas: Ingenia (ASX:INA) – (4:14), BHP (ASX:BHP) - (4:38), ANZ (ASX:ANZ) (4:57)

Overnight U.S. stocks erased their COVID-19 losses, knocking the top off the previous record with the S&P500 rising 0.2%. This is following the U.S. Treasury Secretary saying Trump wants to move forward with more economic stimulus.

The fall of the U.S. dollar has helped the Aussie dollar gain 1% this week and overnight it hit 72.40 U.S. cents, its highest level since February last year. 

The Federal Government inked a deal to produce a COVID-19 vaccine with AstraZeneca. We know CSL is already in talks with AstraZeeneca to develop the vaccine, so keep your eyes peeled on CSL (ASX:CSL).

Companies reporting today: CSL (ASX:CSL), Inovcare (ASX:IVC), Brambles (ASX:BXB), Amcor (ASX:AMC), Dominos Pizza (ASX:DMP), Tabcorp (ASX:TAH), Dexus (ASX:DXS), Stockland (ASX:SGP) and Vicinity Centres (ASX:VCX)

ANZ (ASX:ANZ) reported a strong rebound in the third quarter which was a stark differennce to Westpac (ASX:WBC) that reported yesterday.

Keep a watch on Treasury Wine Estates (ASX:TWE) and Orora (ASX:ORA), which are expecting further downside today. This is following the announcement of China's Ministry of Commerce kicking off an investigation into Australian businesses allegedly dumping wine at discounted prices.

Local trading ideas:
 - Monadelphous' (ASX:MND) buy rating and price was upgraded after its results yesterday revealed it has a brighter future.
 - Westpac (ASX:WBC) was maintained as a hold by Bell Potter, even though the bank scraped its final dividend.
 - Australia’s largest miner, BHP (ASX:BHP) was maintained as a buy by UBS with a $40 price target.

The Aussie share market looks like it will attempt to erase some of yesterday’s 0.8% fall, with the futures suggesting a lift of 0.5% at the open. 

Overnight the U.S. stocks ended mostly higher, with the NASDAQ hitting another new all-time high after rising 1%. Broad sentiment was high as U.S. homebuilder levels climbed to their highest points in 21 years, supported by record-low interest rates which boosted building demand. 

What to watch today:

•  On the economic front, the RBA meeting minutes will be released. 
• Companies reporting: BHP (ASX:BHP), Coles (ASX:COL),  Cochlear (ASX:COH) and Westpac (ASX:WBC).
• BHP (ASX:BHP) reported that its underlying attributable profit fell 1% to US$9.06 billion. At a first glance, it looks like that’s in line with Citi’s expectation, but weaker than what the market was expecting. Total dividends for the year fell from US$1.23 to US$1.20, including a US55¢ final dividend. 
• Coles (ASX:COL) reported full year results with profit better than expected from continuing activities up 7% to $951 million.
• Westpac (ASX:WBC) cancelled its interim dividend and reported a quarter cash profit of $1.3 billion.  

Local trading ideas:

• JB Hi-Fi (ASX:JBH) announced strong results yesterday but was downgraded by Bell Potter from a hold to a sell with a $44.00 target. Despite JB Hi-Fi and The Good Guys delivering double-digit sales growth on the back of COVID-19, the stock is now looking expensive at 20 times earnings, that’s why it was downgraded to a sell. Yesterday JBH rocketed up 4.9% to $49.60. 
• Altium (ASX:ALU) also reported better than expected result yesterday. However, ALU did allude to slowing growth for the next five years, which is why Bell Potter reiterated ALU as a sell with a $31.25 target. Yesterday it rose 1.3% to $33.92. 
• Imdex (ASX:IMD) earnings were in line with expectations, but net profit was below expectations due to higher depreciation costs. Bell Potter reiterated the stock as a hold and increased its price target to $1.38. Yesterday it gained 2.9% to $1.42.

The benchmark S&P/ASX200 looks set to start the week in the red with the futures suggesting a 0.95% drop at the open. This follows a reasonably underwhelming finish to the week on Wall Street, with stocks closing flat on Friday. 

The Gold price fell 1% to US$1,949.80 an ounce on Friday night, this led to the precious metal having its worst week in almost six months.

What to watch this week:

• With the oil price falling, keep an eye on energy producers like Santos (ASX:STO) and Woodside Petroleum (ASX:WPL).

Companies reporting this week:

• The companies reporting today include, WAAAX stock Altium (ASX:ALU), Bendigo & Adelaide Bank (ASX:BEN) and oil and gas production company Beach Energy (ASX:BPT).
• Consumer goods retailer JB Hi-Fi (ASX:JBH) will be releasing its full year results, its share price will be on watch today following the release. Goldman Sachs analysts expect the retailer to report sales of $8.03 billion, this is compared to its guidance of $7.86 billion. 
• Other companies reporting this week, include BHP (ASX:BHP), Coles (ASX:COL) and Westpac (ASX:WBC) tomorrow. On Wednesday, look out for the second biggest company on the ASX, CSL (CSL) who reports, and on Thursday, Wesfarmers (ASX:WES) reports.

Local trading ideas:

• On Friday, National Australia Bank (ASX:NAB) provided a limited 3Q 20 trading update. Bell Potter believes NAB has the foundations in place to cope with COVID-19. They forecast a final FY20 dividend of 20¢ and FY21 interim and final dividends of 40¢ each. Bell Potter’s price target remains at $19.90 price target and their Buy rating also remains unchanged.
•  Bell Potter has increased investment management company Praemium’s (ASX:PPS) price target by 5% to 62 cents and maintains its Buy rating on the stock. Praemium reported last Friday. It’s FY20 EBITDA of $14.2m exceeded Bell Potter’s $13.8m estimate. Bell Potter believes PPS has delivered a good result in a difficult environment. Specifically, it is benefitting from increased investment in its Australian business. The company has gained scale and has a material merger with Powerwrap (ASX:PWL) if it is successful with its bid. 

The Aussie share market rose 1.4% (Mon-Thu) however, momentum is slowing with investors focused on earnings and dividend growth for 2021.

In this week’s wrap, Jessica covers:

• (0:39) Employment rises more than expected in July. What's next?
• (1:13) The U.S. reports: S&P500 a shade off its record high
• (1:45) Aus earnings season: Banks to see declines & Miners to deliver
• (2:10) Reporting season wrap so far: CBA, Telstra & Transurban report 
• (3:00) Stock watch: Treasury Wine Estates (ASX:TWE) guzzles up 18%
• (4:00) Mesoblast (ASX:MSB) falls Mon-Thu, then rockets after FDA vote
• (5:49) BHP (ASX:BHP), Coles (ASX:COL) and Westpac (ASX:WBC) all set to report next week

The Aussie share marked is eyeing a flat start to today’s session, after rising 1.4% Monday to Thursday. The lack of gas behind us today, comes as global markets closed mixed overnight, while U.S. futures are now suggesting a slight gain tonight.

In terms of economic news, we saw green shoots emerge in the U.S. showing its economy is clawing back. U.S. weekly job claims rose less than expected. What’s key is the number of those filing for benefits is now under 1 million for the first time since the pandemic started.

 What to watch today:

• On the economic front, the RBA Governor will give a speech later today and New Home sales numbers are out for July.
• On the company news side, we mentioned Mesoblast (ASX:MSB) yesterday, well it’s back in focus today with the FDA advisory committee underway voting on MSB product’s efficacy in treating graft versus host disease in children with blood cancer, so keep an eye on the FDA’s vote due Friday 14th. MSB is a speculative buy for Bell Potter with a $6 target.
• Companies reporting today: Baby Bunting Group (ASX:BBN) and Adacel Technologies (ASX:ADA), both Bell Potter buys will report results. Other companies reporting including Newcrest Mining (ASX:NCM), Abacus Property Group (ASX:ABP) and Charter Hall Retail REIT (ASX:CQR).

 Local trading ideas:

• Breville Group (ASX:BRG) was downgraded from a buy to a hold by Bell Potter with a $26.00 price target. UBS also downgraded BRG but expects its share price to continue to grow to $29.50. Breville has a strong balance sheet and is continuing to expand into Europe as planned. It also delivered a better than expected financial year result despite COVID-19.
• Macquarie downgraded AMP’s (ASX:AMP) price target to $1.30 following its financial results being handed down. While Bell Potter again went out on a limb, maintaining its buy rating and actually increased AMP’s price target to $2.60, expecting 70% share price growth.

The Aussie share market is set to gain 0.7% at the open, which should erase yesterday’s fall of 0.1%. Tech stocks on Wall Street rebounded rising 2.1%, with the S&P500 in striking distance of a record high. The UK market rose 2%, with the other major indices following. A big reason for this is global COVID-19 cases are continuing to fall.

What was notable in commodities was that the oil price jumped 2% to US$42.56, its highest level since early March after U.S. oil supply dropped.

What to watch today:

• Australian unemployment data is out for July, it is expected to worsen from 7.4% to 7.8% last month.
• Companies reporting today: AGL Energy (ASX:AGL), AMP (ASX:AMP), Breville (ASX:BRG), Evolution Mining (ASX:EVN), Goodman (ASX:GMG), Telstra (ASX:TLS), QBE (ASX:QBE), Treasury Wine (ASX:TWE) and Woodside Petroleum (ASX:WPL).

Local trading ideas:

• Mesoblast (ASX:MSB) was reiterated as a Bell Potter speculative buy with a $6.00 target.
• Bell Potter downgraded CBA (ASX:CBA) from a buy to a hold with a $78 target.
• WiseTech (ASX:WTC) was downgraded by Citi to a sell.