Morning Bell 14 August

Jessica Amir
August 14, 2020

The Aussie share marked is eyeing a flat start to today’s session, after rising 1.4% Monday to Thursday. The lack of gas behind us today, comes as global markets closed mixed overnight, while U.S. futures are now suggesting a slight gain tonight.

In terms of economic news, we saw green shoots emerge in the U.S. showing its economy is clawing back. U.S. weekly job claims rose less than expected. What’s key is the number of those filing for benefits is now under 1 million for the first time since the pandemic started.

What to watch today:

  • On the economic front, the RBA Governor will give a speech later today and New Home sales numbers are out for July.
  • On the company news side, we mentioned Mesoblast (ASX:MSB) yesterday, well it’s back in focus today with the FDA advisory committee underway voting on MSB product’s efficacy in treating graft versus host disease in children with blood cancer, so keep an eye on the FDA’s vote due Friday 14th. MSB is a speculative buy for Bell Potter with a $6 target.
  • Companies reporting today: Baby Bunting Group (ASX:BBN) and Adacel Technologies (ASX:ADA), both Bell Potter buys will report results. Other companies reporting including Newcrest Mining (ASX:NCM), Abacus Property Group (ASX:ABP) and Charter Hall Retail REIT (ASX:CQR).

Local trading ideas:

  • Breville Group (ASX:BRG) was downgraded from a buy to a hold by Bell Potter with a $26.00 price target. UBS also downgraded BRG but expects its share price to continue to grow to $29.50. Breville has a strong balance sheet and is continuing to expand into Europe as planned. It also delivered a better than expected financial year result despite COVID-19.
  • Macquarie downgraded AMP’s (ASX:AMP) price target to $1.30 following its financial results being handed down. While Bell Potter again went out on a limb, maintaining its buy rating and actually increased AMP’s price target to $2.60, expecting 70% share price growth.
Read Transcript

Good morning, happy Friday the 14th of August.

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

Well the Aussie share market is eyeing a bit of a flat start to the session today, after so far putting on 1.4% Monday to Thursday.

The lack of gas behind us today is likely to come as a global markets close mixed overnight, while the U.S. futures are now suggesting a slight push ahead when they reopen this evening, so keep an eye on U.S. futures.

That’s usually an impetus for how our session tends to rally in the afternoon.

In terms of economic news, we saw green shoots emerge in the U.S. showing that the U.S. economy is clawing back.

U.S. weekly job claims rose less than expected.

What’s key is the number of those filing for benefits is now under 1 million for the first time since the pandemic started.

On the U.S. earnings season side, Cisco reported disappointing forward guidance and its shares fell 11% as a result.

It’s a top 30 company so that contributed to the Dow Jones falling 0.3%.

On the flip side, Apple shares went the other way gaining 1.8% hitting a new record high and this helped the Nasdaq rise 0.3%, while the broader S&P500 continued to flirt with arecord high but fell slightly.

Looking at commodities, the oil price retraced 1% to US$42.34 a barrel, with traders mulling over another report highlighting how much oil demand will likely grow, or will likely fall this year rather, on the back of reduced air travel.

This time the report was by the IEA, suggesting oil demand will fall by 8.1 million barrels of oil per day this year, not as bleak as OPEC’s outlook though.

Elsewhere, the gold price for the first time in three days rose lifting 0.7% to US$1,963, so keep an eye on gold stocks today, like locally listed Evolution Mining (ASX:EVN), Gold Resources (ASX:GOR), St Barbara (ASX:ABM) and Newcrest Mining (ASX:NCM), which reports results as well.

Now what to watch on the economic front, well the RBA Governor will give a speech later today and New Home sales are out for July, those numbers are out so keep an eye on those.

On the company news side, as we mentioned Mesoblast (ASX:MSB) yesterday or today, it’s back in focus with the FDA advisory committee underway voting on MSB’s product efficacy in treating graft versus host disease in children with blood cancer.

So far the majority of votes by the FDA are in favor of MSB, so keep an eye on the FDA’s final vote due Friday the 14th.

If it’s positive, expect its shares to rally if they do come out of a trading halt.

MSB is a speculative Bell Potter buy with a $6 target.

As for earnings season results, they’re in full focus again today. Baby Bunting (ASX:BBN) and Adacel Technologies (ASX:ADA), both Bell Potter buys will report results.

Other companies reporting results include Newcrest Mining (ASX:NCM), Abacus Property Group (ASX:ABP) and Charter Hall Retail REIT (ASX:CQR).

Now for two trading ideas, well Breville Group (ASX:BGR) was downgraded from a buy to a hold by Bell Potter with a $26 target.

UBS also downgraded Breville but expects its shares to grow further to $29.50. Breville has got a strong balance sheet, it’s continuing to expand in Europe as planned and it’s also delivered a stronger than expected financial year report card.

What’s key to think about though is shares have hit a new all-time high and continued to grow, but if you think about why Bell Potter and Macquarie think BRG’s shares will only grow by $1, it’s because the rush to buy toasters and kettles in lockdowns could slow with the sale bonanzas dying down.

Secondly, Macquarie downgraded AMP’s (ASX:AMP) price target to $1.30 following its financial results being handed down while Bell Potter again went out on a limb maintaining AMP as a buy stock and actually increasing AMP’s price target to $2.60 expecting 70% share price growth.

The reason for this bullish view on AMP is because it’s got $300 million in cost out programs remaining on track to fulfill, that it’s on track to simplify the business and its profit and dividend beat market expectations and its investment management business is indeed bolstering growth.

I’m Jessica Amir with Bell Direct, happy trading, stay safe, i’ll see you for the market weekly wrap.

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