Between the Bells

The Aussie share market is eyeing a rise for the third straight day, a lift of 0.2%, after the ASX200 hit a two-month high yesterday.

Russia has claimed it has given regulatory approval for the world’s first COVID-19 vaccine. This news saw gold fall 5% to US$1,931, with silver falling 13% and copper down 0.8%. So the odds are stacked, gold stocks expected to fall with heavy weights likely to see some profit taking too.

Overnight, the broad U.S. indices stocks fell into negative territory in the final hours of trade with the S&P500 losing 0.8%, ending 7-days of gains, but still holding onto its yearly gain, while the Nasdaq underperformed, down 1.7%

Companies reporting today:

• Commonwealth Bank of Australia (ASX:CBA) - reported a 12.4% increase in its statutory profit to $9.6 billion.
• Transurban (ASX:TCL) reported a loss of $153 million.
• Computershare (ASX:CPU)
• Magellan (ASX:MFG)
• Mineral Resources (ASX:MIN)
• Seek (ASX:SEK) reported full year results with revenue weaker than expected, which UBS reiterated as a buy.

Local trading Ideas:

• Ramsay (ASX:RHC) is showing a strong bullish uptrend and is likely to rally along with Australian Pharmaceuticals (ASX:API) and Arena REIT (ASX:ARE), all according Trading Central’s charting and standard technical analysis.

The Aussie share market put on a show yesterday rising 1.8% to a three-week high, and today the futures suggest the market will see a flat start, falling 0.05% at the open. 

What to watch today:

• The RBA minutes will be released, which should reveal the details of how much money the central bank injected into the financial system, when the RBA purchased the Australian Government Securities earlier in August. The RBA did that to provide the government with capital and to also drop the bond yield to its target of 0.25%. 

Companies reporting today: 

• Challenger (ASX:CGF)
• Coronado Global Resources (ASX:CRN)
• James Hardie Industries (ASX:JHX)
• Janison Education (ASX:JAN)
• Shopping Centres Australasia Property Group (ASX:SCP)

Local trading ideas:

• Footwear business Accent Group (ASX:AX1) is showing a bullish uptrend according to Trading Central’s charting. Their chart suggests the stock could rise from yesterday’s close of $1.35 to $1.68 - $1.76 over 31 days. It’s a Bell Potter buy with a $1.80 price target. 
• Bell Potter upgraded mining equipment business Mader Group's (ASX:MAD) buy rating and target to $1.22, implying a 42% share price growth from yesterday’s close price on the back of growth in the iron ore and gold industries.
• Following Aurizon Holdings (ASX:AZJ) providing its financial results, Citi has reiterated the stock as a buy, but it dropped AZJ’s target to $5.15 due to a lack of transparency in the outlook for coal.

The Aussie share market is eyeing a lift of 0.7% at the open after global equities ended mostly on positive ground on Friday, as the U.S. reported early signs of an economic recovery.

The U.S. economy added 1.8 million jobs in July, smashing through expectations that only 1.4 million people gained a job. Meanwhile, traders and investors looked past the lack of fresh economic stimulus, with the White House and Democratic party not yet being able to agree on a new weekly payment to replace the $600 per week federal unemployment benefit that expired at the end of July.

Companies reporting today:

• Aurizon Holdings (ASX:AZJ) reported a 28% jump in its net profit after tax in the full year and also launched a $300 million buy back to return equity to shareholders.
• GPT Group (ASX:GPT) handed down their results, reporting a $519.1 million loss for the first half of the year, with its retail property valuations falling 10.5% as at 30 June.
• James Hardie Industries (ASX:JHX) reports their financial results today.

Local trading ideas:

• Flight Centre Travel (ASX:FLT) is showing a bullish signal according to Trading Central’s charting. On Friday, Flight Centre closed 6.3% up at $10.63 and Trading Central believes FLT’s share price may rise to between $12.70 - $13.20 in 25 days according to standard principles of technical analysis.
• UBS reiterated Insurance Australia Group (ASX:IAG) as a buy with a $6.10 price target. Despite IAG's outlook being impacted by headwinds, UBS sees value in IAG. FY21 will be a tough year for underlying profits, with recovery on the horizon post COVID-19. That’s where IAG should have greater ability to restore profit growth, through stronger repricing. So that’s IAG a UBS Buy.

The Aussie share market is set to open flat this morning, following U.S. shares shaking off a slow start with the Nasdaq finishing above 11,000 for the first time in history.  

The RBA statement on Monetary policy will be released at 11:30am today and the China trade balance for July will also be released. Tonight, U.S. July nonfarm payrolls will be released, which will shine further light on the employment situation in the U.S..

Gold extended its record rally for the fifth day in a row, with more indecision from U.S. lawmakers regarding a second COVID-19 stimulus package combined with a soft U.S. dollar, continued to support gold moving towards the US$2,100 mark.

Companies reporting today:

• Charter Hall Long Wale REIT (ASX:CLW)
• Insurance Australia Group (ASX:IAG)

Bell Potter Trading ideas:

• Life360 (ASX:360) is rated as a Buy by Bell Potter, yesterday the stock closed at $3.90, rising 8% from Wednesday.
• Looking at the small cap Agricultural REIT Vital Harvest (ASX:VTH), it is rated by Bell Potter as a buy. It recently provided second half distribution guidance of 1.5c, exceeding the Bell Potter forecast of 1.25c, putting this company on a historical cash yield of over 6% based on yesterdays close of $0.79c. 

Aussie equities are eyeing a 0.5% lift at the open, following a positive session overnight. We saw U.S. stocks rise on the back of Disney revealing it has 100 million streaming subscribers and COVID-19 vaccine hopes. 

Medical device company, Johnson & Johnson have struck up a $1 billion deal with the U.S. government to manufacture 100 million doses of its COVID-19 vaccine candidate, if it proves successful. Following this news, its share price rose 0.8%. 

What to watch today: 

• ResMed (ASX:RMD), they announced their fourth quarter fiscal 2020 earnings today. The highlights included a revenue increase of 9% to $770.3m and a net operating profit increase of 84% compared to the prior year period. The strong result is largely due to strong ventilator demand during the period.  
• Energy producers, like Beach Energy (ASX:BPT) and Woodside Petroleum (ASX:WPL) could push higher today following the lift in the oil price. Both stocks closed 0.7% lower yesterday. 
• And with the gold price once again hitting a new record overnight, up 1.5% to US$2,053 an ounce, keep an eye on gold miners like Northern Star Resources (ASX:NST) and Saracen Mineral Holdings (ASX:SAR). 

Local trading ideas: 

• Centuria Capital Group (ASX:CNI) is showing a bullish signal according to Trading Central’s charting. Yesterday, Centuria closed 5.5% up at $1.83 and Trading Central believes the stock’s share price may rise to between $1.89 - $1.93 in 24 days according to standard principles of technical analysis.
• Fortescue Metals Group (ASX:FMG), Bell Potter has lifted FMG’s price target by 17% to $12.50, but have lowered their recommendation of the stock from a Hold to a Sell following strong share price appreciation. A near term catalyst for FMG includes the release of its FY20 financial results and declaration of its final FY20 dividend on the 24th of August. The stock goes ex-dividend likely in early September. 

The Aussie share market is eyeing a fall of 0.6% at the open, as traders bid up stocks in global markets on the hope of a second Federal Reserve stimulus package.

The major exchanges in the U.S. all pushed higher overnight with the S&P500 up 0.36%, it is now less than 3% off its pre-pandemic record highs in February this year.

Companies reporting today:

• ALE Property Group (ASX:LEP) reports its full year results today.

Local trading ideas:

• The Funeral Services Provider Invocare (ASX:IVC) is rated by Bell Potter as a buy. As a market leader in the sector, Invocare has faced significant headwinds from COVID-19 related gathering restrictions. IVC reports its H1 2020 results on the 19th of August. Its major competitor, Propel Funeral Partners (ASX:PFP) provided the market with a trading update back in May, which showed an increase in their average revenue of 8%. Invocare has been sold off heavily since stage 4 COVID-19 restrictions have come into place in Victoria and is now trading at a near 7 year low.
• Life360 (ASX:360) is a mobile app in the U.S. and is available internationally. The midcap is rated as a buy by Bell Potter. Like Afterpay (ASX:APT), 360 has strong network effect characteristics, which is why Bell Potter expects the next catalyst for the stock will be when Life360 reports on August 20. 

The Australian share market looks set to rise 1.4% at the open, marking the second trading day for August. 

Overnight Microsoft shares lifted 5.6% to a brand-new record high, supported by U.S. President Trump calling on Microsoft to buy TikTok. 

What to watch today:

• The RBA will meet today with rates expected to remain on hold at 0.25%. While the focus will be on further bond buying and if that will kick off again, particularly as Victorian COVID-19 restrictions tightened to level 4 with a curfew in place. 
•  The Federal Government will introduce a $1,500 payment to workers in Victoria who are required to self-isolate. 

Companies reporting today:

• BWP Trust (ASX:BWP)

Local trading ideas:

• Bell Potter reiterated Tabcorp Holdings (ASX:TAH) as a buy following its solid FY20 result. Its shares are up 61% from the COVID-19 low. 
• Magellan Financial Group (ASX:MFG) was reiterated as a UBS hold, with a target price of $56.70. Yesterday MFG closed 0.3% higher at $61.16. Despite growing its inflows, UBS says maintaining inflows is becoming increasingly capital intensive as its business enters a more mature growth phase. 
• Cleanaway Waste Management (ASX:CWY) is showing a bullish uptrend according to Trading Central’s data. Its chart is showing a bullish signal, ‘by an inside bar’ chart, suggesting CWY’s stock price may rise from the close of $2.12. UBS has the stock as a hold with a $2.15 target.

The Aussie share market is set to open flat this morning with a fall of 0.2% expected at the open, this comes despite a positive end on Wall Street on Friday. 

Across the ocean, European stocks posted their first monthly drop since March amid fears of a second COVID-19 wave.

What to watch today:

• With Victoria declaring a ‘State of Disaster’ after a spike in COVID-19 cases, keep an eye on the stocks that are likely to be impacted. For example, Coles (ASX:COL) could see a lift today following reports of panic buying, while on the flipside Crown Resorts (ASX:CWN) could come under pressure, given its Melbourne casinos and hotels are unlikely to re-open until mid-September.
• Keep an eye on energy producers including Santos (ASX:STO) and Woodside Petroleum (ASX:WPL), following the oil price jumping higher.
• At one point on Friday night, we saw the gold price break above US$2,000 an ounce for the first time on record. Keep an eye on gold miners like Newcrest Mining (ASX:NCM) and Northern Star Resources (ASX:NST) today. 

Companies reporting this week:

• On Tuesday, BWP Trust (ASX:BWP) reports.
• On Wednesday, Resmed (ASX:RMD) and ALE Property Group (ASX:LEP).
• On Friday, Insurance Australia Group (ASX:IAG) reports .

Local trading ideas:

• Following Nickel Mines (ASX:NIC) releasing its June 2020 quarter report, Bell Potter has Nickel Mines as its top pick in the Diversified Metals & Mining sector. Bell Potter maintains its Buy rating on the stock and has a price target of $1.07.
• Analysts at Goldman Sachs believe Goodman Group’s (ASX:GMG) share price is overvalued and the broker has a sell rating on the stock. GMG shares closed 0.5% lower on Friday to $16.93. Goldman Sachs however has a price target of $11.25 on the property company’s shares. It believes the market is pricing in an unrealistic earnings per share growth rate of ~9% per annum between FY 2020 and FY 2024. They believe a growth rate of 6% per annum is more realistic.

The Aussie share market rose for the 4th month, up 33% from its COVID-19 low. We saw Australia slip into deflation, while on the commodity front, all that glittered was gold. 

In this week’s wrap, Jessica covers:

• (0:16) Star stocks: ALS (ASX:ALQ) +34% & Orocobre (ASX:ORE) +33%
• (0:45) Stocks to consider as the gold price glistens
• (1:55) Inflation hits rock bottom - biggest fall in history
• (2:25) Rent takes a plunge: also a historical record
• (2:56) Inflation rebound themes to consider: childcare & fuel/oil
• (3:57) Rio Tinto (ASX:RIO) & Fortescue Metals (ASX:FMG) results
• (5:30) Next week: Resmed (ASX:RMD) reports, RBA meets
• (6:17) Retail stocks to watch: Temple & Webster (ASX:TPW), Michael Hill (ASX:MHJ) & Harvey Norman (ASX:HVN)