Morning Bell 19 June

Jessica Amir
June 19, 2020

The Aussie share market is set for a hesitant start with the futures eyeing a dip of 0.1% at the open.

Investors will be watching:

  • Splitit (ASX:SPT) rose over 100% after inking a deal with Mastercard. Pre-market trade suggests it could rally 8% at the open.
  • Afterpay (ASX:APT) became the 22nd biggest company on the ASX, following the RBA announcement that cash payments continued to fall on the back of structural trends and COVID-19.
  • Evolution Mining (ASX:EVN) cut its gold output guidance and flagged an impairment of up to $100 million.
  • UK Retail sales data is out later with stores reopening this week, but online retail is expected to have pushed sales up 5% in May.

Local trading ideas:

  • Seek (ASX:SEK) was upgraded to a buy by UBS with a target of $23, following yesterday’s weaker than expected rise in unemployment.
  • Temple & Webster (ASX:TPW) was reiterated as a Bell Potter buy given its valuable offering online retail. Bell Potter targets 17% share price growth to $6.10.
  • Following Westpac selling its Pendal (ASX:PDL) stake, the fund managers Pendal was reiterated as a Bell Potter buy given Pendals performance fees have grown more than expected.
Read Transcript

U.S. traders were left scratching their heads overnight when the weekly unemployment claims came out, staying above 1 million for the 13th straight week despite states reopening.

Now what took Wall Street also by surprise was that first-time benefit claims hit 1.5 million last week, higher than the 1.3 million expected.

Tech giant’s remained resilient and rallied with Microsoft, Facebook, Amazon and Netflix helping the Nasdaq to lift 0.3% but falls in Carnival and American Airlines, just to name a few kept a lid on the S&P500 which only puffed 0.1% higher, while the Dow stumbled 0.2% down.

Elsewhere, energy and gas ETFs rose between 1 – 3.5% after the oil price charged up 2%to $38.84 on OPEC countries continuing to cut production as expected.

Elsewhere the gold price slipped ever so slightly to $1,731 an ounce and the iron ore price pushed back above $103 a tonne.

Now taking all of this into equation, the Aussie share market is set for a hesitant Friday morning, the futures are currently suggesting 0.1% dip.

Now what to watch today, well firstly Splitit (ASX:SPT) rose over 100% yesterday after inking a deal with MasterCard, so I’d be interested to see if Splitit can maintain this momentum.

Pre-market trade also suggested it could rally 8% at the open.

Secondly, Afterpay (ASX:APT) became the 22nd biggest company on the ASX yesterday following the RBA announcement that cash payments have continued to fall on the back of structural trends and of course the COVID-19 impact, so I’d expect after paid to overtake Fisher & Paykel (ASX:FPH) if not today, pretty soon.

Thirdly Evolution Mining (ASX:EVN) has cut its gold output guidance and flagged an impairment of up to $100 million based on the reduction of the life of mine at Queensland.

Now fourthly, UK Retail sales are  out later with retail stores physically reopening this week, but online retail is expected to have pushed UK sales up 5% in May.

Now to some trading ideas, well Seek (ASX:SEK) was upgraded to a buy by UBS following yesterday’s weaker than expected unemployment data.

Now despite the worst of unemployment now being behind us Seek could hit $5 billion in revenue which could push it shares above $30, but for now UBS is targeting $23.

Secondly, Temple & Webster (ASX:TPW) was reiterated as a Bell Potter buy given its valuable online offering.

Now it’s customer satisfaction has hit an all-time high and its revenue is up 90% year-on-year, Bell Potter targets Temple & Webster’s shares will grow 17% to $6.10.

Lastly following Westpac (ASX:WBC) selling down its Pendal (ASX:PDL) stake, the fund manager Pendal was reiterated as a Bell Potter buy given Pendal’s performance fees are growing more than expected and Pendel also offers a yield of 6%.

But keep in mind, Westpac has flagged a further $1.1 billion sale to exit Pendal by the end of next calendar year and that represents about a 1% EPS impact.

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

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