Morning Bell 13 August

Bell Direct
August 13, 2020

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.
Read Transcript

Good morning, thanks for your company this Thursday the 13th of August.

I’m Jessica Amir, a market analyst with Bell Direct.

Well the Aussie share market looks like it’ll push higher with a rise of 0.7% today according to the futures which should erase yesterday’s fall of 0.1%.

It comes as tech stocks on Wall Street rebounded rising 2.1%, almost the opposite of what we saw yesterday, while the S&P500 is now in striking distance of a record high, while the UK market rose 2% and the other major indices followed.

A big reason for this was that global COVID-19 cases are continuing to fall.

As for standout stocks, we saw growth stocks shine.

Tesla’s shares rose 13%, while tourism and travel stocks reversed yesterday’s gains with the likes of Wynn Resorts down almost 3%.

What was notable on the commodity front though, was the oil price jumped 2% to US$42.56a barrel, its highest level since early March, after U.S. oil supply dropped.

Now despite this, the peak oil body is warning that oil demand will fall by 9.1 million barrels a day this year.

But keep in mind today oil companies like Santos (ASX:STO) and Woodside Petroleum (ASX:WPL) are showing bullish signs that they’ll open high elsewhere.

On the commodity front, the gold price fell for the second day, with gold losing 0.9% to US$1,928, so look for more profit taking today among gold stocks.

What else to watch, well Australia’s unemployment data is out for July, which is likely to show the rate worsened from 7.4% to 7.8% last month.

We know this will likely worsen again with lockdowns and curfews continuing, which is why the RBA expects the unemployment rate will rise to 10% later this year.

Nevertheless, we are expecting 40,000 people to have gained jobs last month, as restrictions eased in the most populated state of New South Wales.

So if the data is better or weaker than expected, watch retail and banking stocks.

As for earnings season results today, earnings results are out for AGL (ASX:AGL), AMP(ASX:AMP), Breville (ASX:BRG) & Evolution Mining (ASX:EVN) the gold pearl mining stock.

When I say pearl mining, I mean it’s an absolute outperforming stock. Also Goodman group (ASX:GMG), Telstra (ASX:TLS), QBE (ASX:QBE), Treasury Wine Estates (ASX:TWE) and Woodside Petroleum (ASX:WPL) all report results today and we’ll cover some of those a little later today.

As for trading ideas, well Mesoblast (ASX:MSB) was reiterated as a Bell Potter speculative buy, with a $6 target.

MSB’s flagship product is being trialled in late stage phase 3 COVID-19 vaccine trials. Now, 70% of their 90 patients with severe to moderate COVID-19 infections have been taken off ventilators and discharged from hospital.

Aside from this, MSB has got another late phase 3 clinical trial for the treatment of bone marrow transplants for children under the age of 12 with bone cancer.

The FDA is reviewing its efficacy and a decision is due at the end of next month.

Bell Potter expects FDA approval so that’s a Bell Potter speculative buy.

Secondly, Bell Potter downgraded CBA (ASX:CBA) from a buy to a hold with a $78 target.

Now despite the final dividend for CBA, coming in at $0.98 that’s a 50% statutory payout ratio which is great news for investors.

CBA’s shares have already gained 37% from their COVID-19 low and this is the reason CBA was downgraded from a buy to a hold.

Nevertheless, it should emerge stronger than ever from the COVID-19 pandemic.

Lastly, WiseTech (ASX:WTC) was downgraded by Citi to a sell.

Bell Potter also downgraded the logistics tech stock.

It’s due to report results next week.

The reason for WiseTech’s downgrade is that earnings have pretty much been tracking sidewaysfor the last couple of reporting years, and growth looks hard to gain thisfinancial year that’s FY21.

So that’s WiseTech, now a Citi and Bell Potter sell.

I’m Jess Amir with Bell Direct, happy trading stay safe.

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