Morning Bell 23 June

Jessica Amir
June 23, 2020

The Aussie share market is eyeing a 0.6% gain at the open after new records were made overnight with the oil price jumping over US$40 for the first time since March.

Investors will be watching:

  • Energy companies like Santos (ASX:STO) which has lower debt than most of its peers, as well as Woodside (ASX:WPL) which has a lot of head room for an acquisition down the track.
  • With copper moving higher, keep an eye on BHP (ASX:BHP) and Oz Minerals (ASX:OZL).
  • On the economic front, manufacturing and services data is out for June, with the market expecting manufacturing activity will grow to a reading of 49.3.

Local Trading ideas:

  • UBS upgraded James Hardie Industries (ASX:JHX) price target to $34, saying the building company is a key standout following earnings upgrades and better than expected U.S. sales in the first six weeks of Q1. For UBS, James Hardie Industries is a buy, meanwhile Citi also maintained its buy on the stock.
  • Ramelius Resources Limited (ASX:RMS) was rated as a buy by Shaw and Partners. Whereas UBS’ preferred gold buy is Independence Group (ASX:IGO) expecting its shares will grow to $6.00 with the price of gold tipped to reach US$2,000 in the not too distant future.
  • Citi put out a note on Stockland (ASX:SGP) following the CEO’s retirement and after it estimated a 2H20 dividend of 10.6 which was 25% of its guidance levels. Citi expects further downside for Stockland and prefers Mirvac (ASX:MGR) for residential exposure for Goodman Group (ASX:GMG) on the commercial industrial side.
Read Transcript

Good morning, it’s expected to be a cracking Tuesday.

The futures were earlier suggesting a lift of 0.6% after records were broken overnight on the commodity and equity front.

Now on the equity front, Apple shares jumped over 2% higher to a record high after unveiling the latest version of iOS its mobile operating system and Apple also announced its future Mac’s will use their chips in stead of Intel.

Now shares linked to the economic reopening also rallied like GAP and Walmart, making gains after brokers upgraded their stock saying that they were undervalued.

The Dow rose 0.6% held by Apple and Microsoft gains and the S&P500 rose 0.7% and the Nasdaq, the showstopper, up 1.1%.

Now on the commodity front, an exceptional day was seen on the oil front as it rose over $40 a barrel for the first time since March.

Gold also hit a one-month high $1,764 and the iron ore price last traded steady at $103, while the copper price lifted 1.7%.

So what to watch today, well following the oil price uptrend I’ve be watching energy companies like Santos (ASX:STO) which has the least debt compared to its peers, as well as Woodside Petroleum (ASX:WPL) which has a lot of headroom for acquisitions down the track.

Now for the copper price moving higher, I’d watch BHP (ASX:BHP) and OZ Minerals (ASX:OZL). And on the economic front, today flash manufacturing and services numbers are out for June, the market is expecting manufacturing activity will have improved this month to a reading still in contractionary phase, but nevertheless pushing ahead to a reading of 49.3.

Now to three local trading ideas, will UBS upgraded James Hardie Industries (ASX:JHX), they’re priced up to $34 saying the building company is a key standout following earnings upgrades and better than expected U.S. sales in the first six weeks of Q1.

For UBS, JHX is a buy, meanwhile Citi also maintained its buy position on James Hardie.

Ramelius Resources Limited (ASX:RMS),  a smaller company was rated as a buy by Shaw and Partners, whereas UBS’ preferred gold pick his Independence Group (ASX:IGO) expecting it’s shares to rock it up to $6, given the gold prices also tipped to reach $2,000 an ounce in the not-too-distant future.

Lastly on the property front, Citi has put out a note on Stockland group (ASX:SGP) following the CEO’s retirement and after the company announced their estimated second half dividend came in at $0.106, now that was 25% below the guidance levels provided by the company.

Citi expects Stockland will have further downside, now for this reason Citi still prefers Mirvac (ASX:MGR) for the residential exposure and Goodman Group (ASX:GMG) for commercial and industrial property.

I’m Jessica Amir with Bell Direct, have a great day and happy trading.

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