Morning Bell 1 October

Jessica Amir
October 1, 2020

The Aussie futures are suggesting a modest 0.2% or 11 point gain. It’s worth looking out for how stimulus talks develop, as well as the U.S. futures – as that that could affect our afternoon session.

After U.S. equities pulled back for a day, they’ve sprung back into action overnight on better than expected jobs and home sales data. On the political side, the U.S. Treasury Secretary and House Speaker Nancy Pelosi are attempting to craft a fifth stimulus package. All of this saw economic recovery stocks like banks and cruise operators lead the rally, with the Dow rising 1.2%, the broader S&P500 gaining 0.8%, while the tech heavy Nasdaq rose 0.7%.

What to watch today?

  • It should be a better day for oil stocks after they declined over 4% yesterday. A rebound looks in order, as the oil price jumped almost 2% overnight to just shy of US$40.
  • Gold stocks could see another pull back as the precious metal traced lower again.
  • The Aussie Prime Minister’s budget next week plans to invest $1.5 billion into manufacturing, i.e. resources, critical minerals, food and beverages, medical products, recycling and clean energy, defence and space manufacturing. So it could be worth looking at companies in those areas.

Trading ideas:

  • Elders (ASX:ELD) was upgraded by Bell Potter as a buy with a new $12.25 target, implying 12% upside from yesterday’s close.
  • Santos (ASX:STO) was reiterated as a Buy by UBS with a $6.50 target. Yesterday STO closed at $4.88. Santos was granted NSW environmental approval for the Narrabri Gas Project.
  • Alliance Aviation (ASX:AQZ), Medusa Mining (ASX:MMI) and Shine Justice (ASX:SHJ) – all showing bullish charting signals – according to Trading Central.

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