Between the Bells

The Aussie share market is eyeing a fall of 0.5% at the open, following a mixed session on overnight markets with the Dow falling 0.9%, the S&P500 down 0.4%, while the Nasdaq pumped up 0.4%. But what’s noteworthy is the Nasdaq futures are suggesting a 1% gain on Friday. So in afterhours trade, the ETF tracking the Nasdaq 100 (QQQ) rose 1% and the ETF tracking the S&P500 (SPY) rose 0.9%. So keep an eye on their Aussie counterparts today, the ETF on the ASX that tracks the Nasdaq 100 is (ASX:NDQ). 

Overnight, the U.S. officially entered a recession with second quarter GDP falling 32.9%, following the 5% drop in Q1. The fall was not as bad as the expected 34.1% drop however, it was the worst fall in history. This saw people reshuffle their portfolios, chasing companies upgrading their earnings. 

What else to watch today:

• On the economic side, private sector borrowing known as private sector credit is out today. 

Local trading ideas:

• Bell Potter reiterated CBA (ASX:CBA) as a buy with a price target of $78.00, implying 7% share price growth from yesterday’s close price of $73.01. 
• Janus Henderson (ASX:JHG) delivered a solid June quarter update, Bell Potter reiterated JHG’s buy rating and increased its target to $42.50. That implies 36% growth from yesterday’s close of $31.21. Bell Potter also upgraded its earnings per share estimates by 2-3% with June quarter profit hitting US$104.1 million, smashing through expectations. 
• Following IOOF Holdings’ (ASX:IFL) disappointing quarterly report that raised a number of issues that were not properly addressed in the update, Bell Potter reiterated IOOF as a sell, dropping its target price to $4.20.

The Aussie share market is eyeing a gain of 0.9% at the open, following a positive night for U.S. equities and commodities. 

Overnight in the U.S., the Federal Reserve kept interest rates on hold at 0.25% as most expected. 

Companies reporting today:

• CIMIC (ASX:CIM) – half year results
• Fortescue Metals (ASX:FMG) – quarterly production

What to watch today:

• Rio Tinto (ASX:RIO) reported half year results after market close yesterday with its earnings dropping less than UBS expected. 
• Macquarie (ASX:MQG) holds its AGM today. 
• Building permits are out for June, expected to recover from -16% and show a rise of 1.5%. So watch building supplies companies like CSR (ASX:CSR) and Brickworks (ASX:BKW).
• In the U.S. tonight, we’ll learn how much the economy fell in the second quarter, with growth estimated to fall from -5% in Q1 to -34.1% in Q2. 

Local trading ideas:

• Bell Potter upgraded family tracking and safety app, Life 360’s (ASX:360) buy rating and price target to $5.20, implying 60% share price growth from yesterday’s close price of $7.99. This month its shares recovered from its COVID-19 losses after gaining 59%. Life360 delivered maiden positive quarterly cash flows, a US$6.9 million turnaround due to tight cost controls and resilient subscription numbers during the lockdowns. 
• Bell Potter also upgraded Aussie car dealership giant, A.P Eagers’ (ASX:APE) buy rating and price target to $9.00, implying 13% share price growth from yesterday’s close price of $33.61. APE held its AGM yesterday, announcing first half profit before tax of $40.3 million, which was stronger than expectations. Its corporate debt was $7.6 million, far less than expected, emphasising APE’s strong management. 
• Following APRA’s capital management guidance released yesterday, easing restrictions around paying dividends, Bell Potter reiterated ANZ (ASX:ANZ), CBA (ASX:CBA) and NAB (ASX:NAB) as buys, reiterating holds for Westpac (ASX:WBC), Bendigo & Adelaide Bank (ASX:BEN) and Bank of Queensland (ASX:BOQ). 

The Aussie share market is eyeing a fall of 0.4% at the open. U.S. equities fell back into the red overnight with lawmakers debating the COVID-19 relief plan that was partly unveiled yesterday. 

Companies reporting today:

• Rio Tinto (ASX:RIO) – expect results after market close
• Unibail-Rodamco-Westfield (ASX:URW)
• Independence Group (ASX:IGO) – quarterly production
• Janus Henderson (ASX:JHG) – quarterly earnings

What to watch today:

• For an economic pulse check, we’ll learn what Aussie inflation is at. Inflation is expected to fall from 2.2% to -0.4% in Q2 on a year-on-year basis, reflecting zero wage growth in the private sector and pay cuts in the public sector. 

Local trading ideas: 

• Bell Potter upgraded betting company PointsBet’s (ASX:PBH) speculative buy rating and price target to $7.60, implying 31% share price growth from yesterday’s close price of $5.80. Yesterday it fell almost 8% but is tracking 18% higher this year. With TAB outlets being closed and limited access to pokies, PBH has a bullish outlook. PBH recently received a permit to operate in Illinois, which will add to its newly created programs in Michigan, Indiana and New Jersey. PBH is a buy, but is classed as speculative given it is making a loss. 
• Bell Potter upgraded Temple & Webster’s (ASX:TPW) buy rating and price target to $9.70, implying 18% share price growth from yesterday’s close price of $33.61. Yesterday TPW charged almost 6% higher after it announced full-year revenue jumped 74%.
• Bell Potter upgraded Virgin Money UK (ASX:VUK) from a hold to a buy, increasing its target to $2, implying 13% share price growth from yesterday’s close at $1.77. 

The Aussie share market is set to gain 0.4% at the open, a nice addition to yesterday’s 0.3% gain. 

It was another action-packed night with the gold price continuing to climb, U.S. equities clawing back and the Republican party unveiling parts to their COVID-19 relief plan, including a 70% wage replacement of sorts. 

Companies reporting today:

• Credit Corp (ASX:CCP) - Full year 
• G.U.D Holdings (ASX:GUD) - Full year 
• Iluka Resources (ASX:ILU) - 2Q20 Prod 

Local trading ideas:

• Bell Potter upgraded Emeco Holdings’ (ASX:EHL) buy rating and price target to $1.60, implying 62% share price growth from yesterday’s close price of $0.99. The bullish outlook comes as EHL reported solid FY20 results in line with expectations, with profit up 23%. EHL also unveiled a stronger than expected FY21 outlook for earnings. 
• Bell Potter upgraded fund manager Perpetual’s (ASX:PPT) buy rating and price target to $45.00, implying 32% share price growth from its last close at $33.61. It comes as PPT announced the 75% purchase of U.S. based fund manager who manages US$44 billion.  
• Ahead of Rio Tinto (ASX:RIO) releasing their results tomorrow, UBS reiterated its hold rating and price target of $102 for RIO, implying its shares will fall from yesterday’s close of $102.89. UBS says with commodity prices being slower, earnings are tipped to fall 6% to US$4.6 billion. 
• Following HUB24’s (ASX:HUB) fourth quarter trading update, Citi maintained its buy rating and $14.40 target for the stock. 

The Aussie share market is eyeing a fall 0.5% at the open, following a red finish in the U.S. on Friday.

Gold prices hit brand new record highs of US$1,898, on the back of US-China tensions and lingering COVID-19 fears. 

What to watch this week:

• The RBA Assistant Governor is speaking via webinar at 10am. Catch that on the RBA’s website.
• Australian inflation data will be released on Wednesday. 
• U.S. GDP data will be released on Thursday.
• This week will be a really telling week for markets with Apple, Amazon and Facebook reporting results which will need to justify their record high valuations. 

Reporting season: 

• Credit Corp (ASX:CCP) on Tuesday.
• Rio (ASX:RIO) on Wednesday. 

Trading ideas: 

• After Mineral Resources (ASX:MIN) shares rose about 47% this year, seeing minimal COVID-19 impacts and increasing its iron ore shipment by 53% in the year, Bell Potter downgraded the company from a buy to a hold, following its outperformance. However, Bell Potter also said there is uncertainty in the iron ore price, as well the increased tension with US/China that could weigh on Mineral Resources.
• UBS increased Insurance Australia’s (ASX:IAG) buy rating and price target to $6.50 with UBS being bullish on insurance premium rates. However, UBS downgraded IAG’s earnings for FY21E by -15%.
• Citi reiterated Aristocrat Leisure (ASX:ALL) as a buy with a $30 target. 
• Citi picked Austal (ASX:ASB) as its key buy in the small caps with a $4.23 target. 

The rocky road continues with the Aussie share market on the up, but hitting bumps along the way. With COVID-19 still a concern both domestically and in key international markets, strategic investing continues to be critical.

In this week’s wrap, Jessica covers:

• (0:11) Two steps forward, one step back - the Aussie share market hits a 4-week high before falling back
• (1:16) Stocks on watch: Resolute Mining (ASX:RSG) up 20%, while TPG Telecom (ASX:TPG) falls 10% amid roaming data losses
• (1:44) Macro outlook: COVID-19's impact on the Australian economy
• (2:30) What the stimulus package means for the economy
• (3:20) Taking advantage of the gold rush
• (4:48) Working At Home trading ideas: Tesserent (ASX:TNT), Vocus (ASX:VOC) and Wesfarmers (ASX:WES)

The Aussie share market is eyeing a 0.9% fall at the open, following a volatile session overnight in the U.S. after the release of disappointing unemployment data. 

U.S. weekly jobless claims came in at 1.4 million for last week, which marks the 18th straight week that initial claims totalled more than 1 million.

The Oil price fell 2.1% to US$41.03 a barrel. Given this, we can expect Energy producers like Oil Search (ASX:OSH) and Woodside Petroleum (ASX:WPL) to come under pressure today. Traders were selling oil amid concerns that further spikes in COVID-19 cases could hurt demand.

What to watch today: 

• With the tech-heavy Nasdaq index tumbling overnight, keep an eye on Australian tech shares, such as Altium (ASX:ALU) and Appen (ASX:APX), as Australia’s leading tech shares have a tendency to follow the lead of their U.S. counterparts.
• Gold miners including Evolution Mining (ASX:EVN) and Newcrest Mining (ASX:NCM) could be on the rise again today after the gold price surged higher on the back of stimulus hopes. 
• Mining services company, Mineral Resources (ASX:MIN) is due to report production numbers for the fourth quarter. Mineral Resources closed yesterday 1.1% lower to $24.52, so keep an eye on that stock today.
• Gold mining company, OceanaGold (ASX:OGC) is due to report production numbers for the second quarter. 

Local trading ideas: 

• Consumer goods retailer, JB Hi-Fi (ASX:JBH) is showing a bullish signal according to Trading Central’s charting. Yesterday JB Hi-Fi closed 2.5% higher at $44.27, but Trading Central says it could hit between $49.25 to $50.50 in 30 days according to standard technical analysis. 
• Goldman Sachs believes the recent weakness in CSL’s (ASX:CSL) share price could be a buying opportunity for the stock. Goldman Sachs retains its buy rating for the stock and has a price target of $326. After doing a deep-dive on plasma collections, it doesn’t believe there is anything to worry about for the biotherapeutics company. 

The Aussie share market is eyeing a 0.1% lift at the open, bracing for the Government’s mid-year Economic and Fiscal update with estimates suggesting debt swelled to 9% of GDP. Investors are also weighing up a positive finish on Wall Street, while Europe closed lower with oil stocks leading the decline. 

In the U.S., the Government agreed to pay Pfizer and BioNTech $1.95 billion to produce 100 million COVID-19 vaccines if their candidate is safe and effective. Washington is considering extending the COVID-19 unemployment benefit from September to December, and dropping it to $400 a week.

On the commodities front, Oil fell slightly to US$41.90, maintaining its March high. The Gold price gained 1.3% to US$1,865, its highest level since September 2011 and Silver hit a near 7-year high.

What to watch today:

• The Aussie dollar holds its 15-month high with the USD.
• Quarterly results are due out today for Evolution Mining (ASX:EVN), Galaxy Resources (ASX:GXY), Newcrest Mining (ASX:NCM), Northern Star Resources (ASX:NST), Santos (ASX:STO), Syrah Resources (ASX:SYR) and Megaport (ASX:MP1).
• Face masks are compulsory in Victoria as of midnight last night.

Local trading ideas:

• After Lynas (ASX:LYC) handed down its quarterly report, UBS reiterated Lynas as a buy, increasing its target to $2.70. Yesterday LYC closed 2.4% lower at $2.08, but they are still tracking 92% up from their COVID-19 bottom. UBS cut EPS estimates for FY21 due to weaker demand in the automotive industry.
• OZ Minerals (ASX:OZL) handed down its quarterly results yesterday and UBS reiterated OZ Minerals as a buy, increasing its price target to $15.00. Yesterday OZL shares gained 4.2% to $4.24 and have gained 28% so far this year. UBS thinks there is more upside following yesterday’s better than expected results.

The Aussie share market is eyeing a 1% fall at the open, following the 2.6% gain yesterday on the ASX which took the market to its highest level since the 6th of March. The Aussie futures are pointing to a dreary open despite European equities hitting four-month highs and U.S. equities mostly pushing higher.

Across the ocean, the European Union agreed to the 750 billion Euro recovery package.

What to watch today:

• OZ Minerals (ASX:OZL) is due to report production numbers for the second quarter.
• Washington lawmakers are coming under pressure to extend the $600 per week federal unemployment benefit ending at the end of September.

Local trading ideas:

• Bell Potter reiterated Suncorp Group (ASX:SUN) as a buy with a $10.50 price target. Yesterday Suncorp Group closed 2.1% higher at $9.24. In terms of COVID-19 impacts, Suncorp expects these to be broadly neutral on FY20.
• After BHP (ASX:BHP) handed down its quarterly report, UBS reiterated BHP as a buy with a $40 target. Yesterday BHP closed 1.1% up at $38.80. Overall with lower guidance for FY21 results, UBS forecast a 6% reduction in underlying earnings.
• Footwear business Accent Group (ASX:AX1) is showing a bullish signal according to Trading Central’s charting. Accent Group is backed by Bell Potter as a buy with a $1.80 target given its online sales grew 150% from April to June.

The Aussie share market is eyeing a 0.7% lift at the open, following a positive night in the U.S. on hopes of further economic stimulus there. 

Across the ocean, UK’s Oxford University with AstraZeneca reported a strong immune response in a large early-stage human trial, according to medical journal The Lancet. 

What to watch today: 

• The RBA Governor will give a speech later today and the RBA minutes will be released. 
• The Government is expected to announce that JobKeeper and JobSeeker payments have been extended for another six months, but both payments will be reduced as the Government has found they could act as disincentives to work as the economy recovery. This is on top of the new $2 billion job package that was announced to help the unemployed and school-leavers. So stay tuned to the Prime Minister and Treasurer’s announcements. 
• Quarterly results today are due out for BHP (ASX:BHP) and Oil Search (ASX:OSH).

Local trading ideas:

• Following South32’s (ASX:S32) quarterly results being handed down, UBS reiterated the stock as a buy with a with a $2.60 target following yesterday’s close of 2.3% lower at $2.17. South32 ended FY20 better than expected, with yearly production records set by Brazil Alumina, Hillside Aluminium and Australian Manganese. 
• Fleet leasing business Eclipx Group (ASX:ECX) had a cracking day on the ASX yesterday up 7.3% to $1.40 after announcing the sale of Right to Drive for up $26.5 million, to be completed on 17 August 2020. UBS reaffirms Eclipx Group as a key buy with a $1.45 target, with upside to earnings. 
• Bell Potter upgraded Catapult Group (ASX:CAT), a wearable software athlete tracker company, with a $1.50 target. Yesterday it closed 11.4% higher at $1.42 after delivering FY20 earnings stronger than expected, also generating free cashflow of $9 million which was well ahead of the estimated $100,000.