Morning Bell 15 October

Jessica Amir
October 15, 2020

The futures are suggesting a pull-back of 0.2%, which will trim off some of this week’s gain of 1.3%.

U.S. equities pulled back for the second session overnight, as investors came to grips that an American COVID-19 stimulus deal wouldn’t be reached before the November 3 presidential election.

As for Commodities: The oil price lifted over 2% for the second day, nudging over US$41.11. Gold firmed 1% higher to US$1,905.

What to watch today:

  1. The future for coal exports to China: BHP (ASX:BHP) confirmed that Chinese customers have deferred orders of Australian coal.
  2. Reporting today: Alumina (ASX:AWC) and Whitehaven Coal (ASX:WHC).
  3. AGMs today: Audinate Group (ASX:AD8), ARB Corporation (ASX:ARB) and Perpetual (ASX:PPT).
  4. The unemployment rate is expected to rise from 6.8% to 7.1% with 35,000 jobs expected to be lost in September amid Victoria being the second most populated state in lockdown.
  5. Data from the Australian Banking Association tells us that repayments have resumed for about half of the deferred loans.

Trading ideas:

  • Afterpay (ASX:APT) had its price target increased to $121.00 by Bell Potter. We have not heard from other brokers yet but are expecting more upgrades given APT passed the external monetary laundering AUSTRAC audit, with the body saying it would not investigate Afterpay further.
  • UBS restamped Zip (ASX:Z1P) as a sell with a $5.50 target. We know Zip’s results yesterday at face value were strong, but Zip’s results were weaker than what the market was expecting given it’s taken over QuadPay.
  • Following CSL’s (ASX:CSL) AGM yesterday, Citi maintained the blood therapy business as a Buy with a $325 target, with the market focused on FY21 and the strong demand for plasma and blood therapies.
  • Adairs (ASX:ADH), Whisper (ASX:WSP) and MNF Group (ASX:MNF) are all showing bullish charting signals – according to Trading Central
Read Transcript

A very good morning to you this Thursday the 15th of October, I’m Jessica Amir, a market analyst with Bell Direct.

Well there’s lots to go through so bare with me, U.S. equities pull back for the second straight session overnight as investors came to grips that an American COVID-19 stimulus deal won’t be reached before the November 3 presidential election and the reason for that was because U.S. treasury secretary Steve Mnuchin said in black and white it’s becoming increasingly difficult to get a deal done.

The benchmark S&P500 fell 0.7%, the Nasdaq down the most 0.8% and the Dow 30 down the least 0.6%.

As for company earnings results that came through overnight well a bit of a mixed bag of results which also weighed on equities as well, we saw Goldman Sachs report stronger than expected numbers driven by strong bond buying and trading revenue and Bank of America’s earnings speed expectations as well but their revenue missed the mark and as a result their stock fell about 5%.

As for Wells Fargo their bank their shares fell about 6% as third quarter earnings missed expectations with a bank blaming lower interest rates blaming that’s why their results missed expectations.

As for commodities we saw the oil price lift over 2% for the second straight day it’s now nudged over US$41.11 a barrel, the gold price has firmed 1% higher to US$1,905 an ounce.

And as for local trade well the futures are suggesting a pullback of 0.2% today and if that comes to fruition it’ll trim off some of this week-to-date gain of 1.3% that’s so far how much we’ve gained from Monday to Wednesday but there’s a lot to factor in today and a lot to watch.

One of the big items to watch is the future for coal exports to China, now BHP confirmed yesterday that Chinese customers have deferred orders for their coal just a day after reports came through that China has stopped taking shipments of Australian coal.

Now BHP did make the announcement at the AGM today and the federal government is investigating.

As for AGM’s today well there’s a couple to watch out for including (ASX:AD8), (ASX:ARB) and (ASX:PPT).

As for results coming through today, Alumina (ASX:AWC) is reporting production results AWC as well as Whitehaven coal (ASX:WHC) which will be interesting on the back of these allegations from China.

On the economic news side of things unemployment data out today, unemployment expected to weaken and rise from 6.8% to 7.1% and the reason for that is 35,000 jobs are expected to have been lost in the month of September amid Victoria the second most populated state in Australia being in lockdown.

Also keep your eyes peeled for that better or weaker number at 11:30, so we’re looking for the headline unemployment rate.

On the other side of the spectrum today data from the Australian Banking Association tells us that repayments have resumed for about half of the deferred loans in Australia as Australians recover from the pandemic, so a good sign that Australians are getting back on their feet.

As for trading ideas that could be worth a look Afterpay (ASX:APT) had its price target increased to $121 by Bell Potter, now that’s the most bullish target in the market but do keep in mind earlier this year Morgan Stanley gave a bull 20% case for APT shares reaching $242.80 if Afterpay can replicate its Australian success in Canada and the U.S. and also cement itself in China.

Now RBC also increased Afterpay price target yesterday to $107 but we’ve not yet heard from the other brokers but expect more upgrades given Afterpay has indeed passed the external money laundering AUSTRAC audit with about it saying with the body saying that it won’t investigate Afterpay further so a huge milestone.

On the flip side we saw UBS re-stamp Zip (ASX:Z1P) as a sell with a $5.50 target, we know Zips results yesterday at face value was strong all key metrics were up and improved but Zip’s results were weaker than the market was expecting given that they’ve taken over the U.S. company Quadpay. UBS says although Zips balance sheet and risk metrics continue to improve, what’s alarming is its transaction frequency is lower than expected so hence the sell on Zip.

And following CSL’s (ASX:CSL) AGM yesterday, Citi maintained the blood therapy business as a buy with a $325 target with the market purely focused on FY21 stronger demand for plasma and blood therapies while Seqirus expected to benefit from strong demand from vaccines given in part by the government wanting to protect their populations from the flu amid the COVID-19 pandemic and lastly keep your eye on Adairs (ASX:ADH) Whisper (ASX:WSP) and MNF Group (ASX:MNF) all showing bullish shining signals according to Trading Central.

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

Close Transcript

Morning Bell 20 October

Jessica Amir
October 20, 2020

Morning Bell 19 October

Jessica Amir
October 19, 2020

Weekly Wrap 16 October

Jessica Amir
October 16, 2020

Morning Bell 16 October

Jessica Amir
October 16, 2020

Morning Bell 14 October

Jessica Amir
October 14, 2020

Morning Bell 13 October

Jessica Amir
October 13, 2020

Morning Bell 12 October

Jessica Amir
October 12, 2020

Weekly Wrap 9 October

Jessica Amir
October 9, 2020

Morning Bell 9 October

Jessica Amir
October 9, 2020

Morning Bell 8 October

Jessica Amir
October 8, 2020

Morning Bell 7 October

Jessica Amir
October 7, 2020