Between the Bells

Aussie shares are set for a flat start this week, following a mixed session on Wall Street last Friday, where the Nasdaq and S&P500 rose 0.3% each, while the Dow fell 0.2%.

With NSW eyeing another lockdown and Victoria in the thick of theirs, attention this week will be turned to Federal economic stimulus. We know the government plans to increase its support to small and medium businesses, giving access to cheap and part-guaranteed loans of $1 million from 1 October, an increase from $250,000.

What to watch this week:
- The RBA Governor on Tuesday will give a speech, and you’d expect bond buying or quantitative easing to be brought up.
- Thursday's economic statement - revealing record debt and huge deficit forecasts, driven by massive increases in spending, and falls in revenue. We’ll also get details of the further economic stimulus.

Trading ideas:
- A.P. Eagers (ASX:APE) - UBS initiated coverage of the automotive retailer, giving it a buy rating and price target of $7.90. On Friday it closed 0.5% up at $6.19. APE is the largest dealership group in Australia (with over 11% of new car market share) offering new and used vehicles, servicing, spare parts and financing service.
- Integrated Research (ASX:IRI) - Bell Potter has downgraded the software provider from a buy to a hold with a $4.25 target. On Friday it rose 4.4% to $4.00, and it’s collectively gained about 20% this year. Bell Potter forecasts high single digit percentage growth in revenue and low double digit percentage growth in NPAT in both FY21 and FY22.
- Service Stream (ASX:SSM) - Bell Potter also downgraded the engineering infrastructure company from a buy to a hold with a $2.05 target. On Friday it closed 1.3% lower at $1.86. Bell Potter expects there to be about 9% upside in the stock but then expects things could dampen due to operational pressures from COVID-19 restrictions.

With COVID-19 changing our daily behaviour, several rebalancing and trading opportunities have surfaced. Add in the six key economic indicator and commodity price movements this week - and there's plenty for investors to consider. In this week’s wrap, Jessica covers:

• (1:59) Three stocks benefiting from the economic recovery
• (2:15) Recessionary outperformers slump: Avita Therapeutics down 15%
• (2:35) Where to consider increasing exposure to in light of the recent $2 billion jobs package
• (3:08) As OPEC eyes a production lift in August, the oil price braces for heightened volatility
• (3:26) Reading the new market: rebalancing ideas for your portfolio
• (4:24) Strategic trading ideas: Collins Foods (ASX:CKF), Coles (ASX:COL) and Super Retail Group (ASX:SUL)

The Aussie share market is eyeing a 0.3% lift at the open. 

Yesterday we had mostly encouraging economic news with the Aussie employment rate rising more than expected. 

U.S. industrial and manufacturing activity beat expectations, but overnight U.S. weekly unemployment claims unexpectedly rose, spooking investors and giving them an excuse to take recent profits off the table. 

Trading ideas:

• UBS increased Audinate’s (ASX:AD8) buy rating and price target to $7.80, yesterday it closed 1.5% lower at $5.30.  This doesn’t take away from its 118% gain from the COVID-19 low.
• Ahead of CBA’s (ASX:CBA) full financial year results being released on Wednesday 12 August, Bell Potter rose CBA’s price target to $78.00, yesterday it closed 0.1% lower to $72.64. CBA shares are up 34% from their COVID-19 bottom.
• Life 360 (ASX:360) had its buy rating and price target upgraded by Bell Potter to $4.80. Yesterday it closed 5.2% higher at $3.03, giving it a total gain of 89% from its COVID-19 low.

The Aussie share market is eyeing a 0.3% lift at the open, which will be a nice addition to this week’s 2.3% gain. 

Following better than expected economic news, industrial production rose 5.4% in June quarter, much more than expected, spelling its biggest rise since 1959. Meanwhile New York manufacturing numbers came out, also much stronger than expected, showing the biggest gain since 2018. All of this supports the V-shape economic recovery.

What to watch today:

• It’s Aussie employment data day. 113,000 jobs are expected to be added in June, which could mark an encouraging recovery from the 228,000 jobs lost in May. On the flip side, the unemployment rate is also expected to rise to 7.4%.
• Later this evening U.S. retail sales data is out, which is expected to rise again.

Trading ideas:

• UBS increased Woodside Petroleum's (ASX:WPL) buy rating and price target to $27.00, seeing upside in its multi-billion dollar growth projects. Yesterday Woodside announced second quarter revenue fell 30% due to LNG prices, that was weaker than expected, which is why it’s shares fell 2.2% to $20.96.
• Bell Potter rose Afterpay’s (ASX:APT) price target to $83.00. APT confirmed its services will now be available in Apple Pay and Google Pay wallets.
• Bell Potter reiterated Senex Energy (ASX:SXY) as a buy, increasing its target to $0.35.

The Aussie share market is expected to rise 0.5% at the open, after U.S. equities throttled ahead on COVID-19 vaccine hopes.

After market close Biotech giant Moderna announced its potential COVID-19 vaccine produced a strong immune response, neutralizing antibodies in all of the 45 patients in its early stage human trial. The U.S. futures are now suggesting a 0.9% rally when trade resumes this evening. That’s red hot news for Aussie investors, who closely follow what U.S. futures are doing as a sentiment indicator. So you could expect Aussie eco recovery stocks to follow Wall Street’s lead.

 What to watch today:
 Today consumer confidence data is out following better than expected NAB business confidence numbers out yesterday. Will confidence return to positivity and rise more than expected given the government cash handouts and superannuation withdrawals?

 Trading ideas:

• Bell Potter upgraded Whitehaven Coal's (ASX:WHC) price target to $2.30, implying 51% growth, after the company delivered record results and that it will meet its production & sales guidance this year. UBS also reiterated it as a buy and increased its price target to $2.70.
• According to Trading Central's charts, AMA Group (ASX:AMA) is on a bullish uptrend, and it is also supported by fundamental research. Bell Potter backs the vehicle repair and accessory business AMA as a buy, recently increasing its price target to $0.85 after the company negotiated its service agreements with IAG and Suncorp.
• Looking at Trading Central's charts, Michael Hill's (ASX:MHJ) shares are suggested to be in a bullish uptrend. MHJ is also supported by fundamental research by Citi, which backs the jeweller as a buy with a $0.45 target.

The ASX200 is set to fall 0.8% at the open, trimming off some of yesterday’s 1% gain after U.S. equities turned positive for the year. The S&P500 hit its highest level since COVID-19 began before falling and losing those gains.

What to watch today:

• Whitehaven Coal (ASX:WHC) releases Q2 2020 production.
• NAB business confidence for June is out today with forecast to improve from May’s reading of negative 20 given payrolls in May and retail spending is recovering. Keep a close eye on stocks linked to the economic recovery like the big four banks, Suncorp (ASX:SUN), Auswide Bank (ASX:ABA), Goodman Group (ASX:GMG) & Centuria (CIP).
• NSW will cap the number of people allowed in pubs following an outbreak at the Crossroads hotel. This won’t affect the Clubs or Star City Casinos (ASX:SGR). Keep an eye on the biggest owner of pub properties ALE Properties (ASX:LEP).
• Westpac (ASX:WBC) names Michael Rowland as its new CFO, joining from KPMG.

Local trading ideas:

• UBS reiterated Oil Search (ASX:OSH) as a buy with a $4.30 price target. 
• Bell Potter increased its buy rating and price target of Praemium (ASX:PPS) to $0.59 expecting a stellar FY22 on the back of an EPS lift.
• UBS reiterated Qantas (ASX:QAN) as a buy with a $4.60 price target, expecting an improvement in numbers from September. But keep in mind flights in and out of Melbourne represent 21% of Australian capacity and international flights are on hold. Given this, expect earnings to return in 2022.

The Aussie share market is eyeing a 1.6% gain at the open, which will help us recoup some of the 2.3% lost last week. 

Millions of Australians will receive a second $750 payment from today, with the one-off cash payment going to eligible pensioners, carers and students, which will cost the government over $4 billion. Free childcare ends today after three months, while some parents will receive 100 hours per fortnight subsidised until October 4. 

Despite COVID-19 cases in the U.S. rising to a record high, U.S. stocks charged ahead on Friday after Gilead reported its COVID-19 treatment candidate showed an improvement in clinical recovery and 62% reduction in the mortality rate compared to the level of care. 

What to watch today: 

• Expect stocks linked to the economic recovery to attempt a slight claw back following Wall Street’s lead. 
• Tomorrow NAB (ASX:NAB) will report its business confidence for June, Consumer confidence data is out on Wednesday and unemployment data is out on Thursday with consensus expecting unemployment will lift from 7.1% to 7.4%, less than the RBA’s forecast of 10%. If data is better than expected, expect the market to rally along with banks and consumer discretionary stocks. 

Local Trading ideas:

• UBS reiterated Nine Entertainment (ASX:NEC) as a buy with a $1.70 target, after the CFO announced his resignation after a family member passed away. At the same time, Nine announced its full year earnings (EBITDA) for FY20 should be $390-$410 million beating UBS’ expectations. 
• Bell Potter increased its buy rating and price target of NAB (ASX:NAB) to $19.90.
• Bell Potter initiated coverage of Calix (ASX:CXL) as a speculative buy with a $1.10 target as it’s growing organic revenue amid its U.S. expansion into differentiated water treatments. All in all, Calix has five targets, from CO2 emissions in cement manufacture to commercialising its aquaculture and crop protection with a total combined market of $70 billion. 

Though the Aussie share market appears to be recovering, it's not exactly been a smooth road in light of Victoria re-entering lockdown. That being said, investors should remember this is only the 4th pullback in 16 weeks. 

In this week’s wrap, Jessica covers:

• (0:26) The rocky road to recovery: The ASX200's sluggish return
• (0:37) Tech sector leading the way: Up 2.7% (Mon-Thur)
• (0:53) Five gold stocks make the stock leader board
• (1:02) Gold glistens, Melbourne suffers & the RBA holds cash rate
• (2:19) Afterpay skyrockets (ASX:APT): sales up 120% year-on-year
• (4:40) Thematic Healthcare trading ideas: CSL (ASX:CSL), Sonic Healthcare (ASX:SHL), and Oncosil Medical (ASH:OSL) poised for a booster shot

The Aussie share market is eyeing a 0.4% fall at the open, going by the futures.

The resilient Nasdaq rose 0.5% to hit another new record high helped by Amazon rising over 3% to another record, with Microsoft, Apple and Google-parent Alphabet putting on at least 0.4% each. This has helped the Nasdaq gain 2.7% this week, while the S&P500 is higher by 0.3%

The World Health Organisation (WHO) has published new guidance saying COVID-19 may be transmitted through air particles in crowded and inadequately ventilated spaces, citing “choir practice...restaurants” and fitness classes as examples. Although the WHO says its findings are preliminary, you can’t rule out air transmission.

Local trading ideas:

• UBS rated Vocus (ASX:VOC) as a buy with a $3.60 target, based on valuation, but noted earnings catalysts are potentially negative. Yesterday Vocus closed 0.7% lower at $3.05.
• Bell Potter increased its buy target for Praemium (ASX:PPS) to $0.56 given the software platform looks set to buy listed platform provider PWL for $55.6 million, which will build scale and reinvigorated interest in the stock.
• UBS reiterated its buy rating for CSL (ASX:CSL), but dropped its price target to $331 given the disruptions to its plasma centres in America, due to COVID-19, with UBS expecting donations to fall 20% from April to September, but then pick up.

The Aussie share market looks set to bounce 0.9% higher at the open.

U.S. equities dusted off their knees and attempted to recoup their losses from the prior session. Stay at home stocks soared. Apple shares lifted 2.3% to a new all-time high after Deutsche Bank rose its price target, Microsoft followed up 2.2%, also hitting a new record high. These tech darlings helped the Nasdaq forget about the prior day’s slip, ending 1.4% higher at a brand new record high of 10,493 points.

What to watch today:

• After BHP rose 2% in London overnight, keep an eye on the Aussie listed BHP (ASX:BHP) and other majors like Fortescue Metals (ASX:FMG) and Rio Tinto (ASX:RIO).

Local trading ideas:

• UBS reiterated its buy rating on Independence Group (ASX:IGO) with a price target of $6.20. The Aussie miner reported stronger than expected preliminary copper and cobalt March quarter production results, while nickel production was closer to consensus it was lower than UBS forecasts.
• UBS reiterated its buy rating on Select Harvests (ASX:SHV) with a $7.75 target, while Bell Potter dropped its buy rating to a hold with a $6.10 target. The almond grower has been hit by wet weather which increased its costs allowing drying time, despite that, conditions are at their “best” in the last three years.
• Bell Potter upped its buy rating for dentist group Pacific Smiles Group (ASX:PSQ), increasing its target to $1.75. Pacific Smiles Group signed a 10 year deal with HBF that will accelerate its margin growth, effectively meaning its profits.