Morning Bell 29 July

Jessica Amir
July 29, 2020

The Aussie share market is eyeing a fall of 0.4% at the open. U.S. equities fell back into the red overnight with lawmakers debating the COVID-19 relief plan that was partly unveiled yesterday.

Companies reporting today:

  • Rio Tinto (ASX:RIO) – expect results after market close
  • Unibail-Rodamco-Westfield (ASX:URW)
  • Independence Group (ASX:IGO) – quarterly production
  • Janus Henderson (ASX:JHG) – quarterly earnings

What to watch today:

  • For an economic pulse check, we’ll learn what Aussie inflation is at. Inflation is expected to fall from 2.2% to -0.4% in Q2 on a year-on-year basis, reflecting zero wage growth in the private sector and pay cuts in the public sector.

Local trading ideas:

  • Bell Potter upgraded betting company PointsBet’s (ASX:PBH) speculative buy rating and price target to $7.60, implying 31% share price growth from yesterday’s close price of $5.80. Yesterday it fell almost 8% but is tracking 18% higher this year. With TAB outlets being closed and limited access to pokies, PBH has a bullish outlook. PBH recently received a permit to operate in Illinois, which will add to its newly created programs in Michigan, Indiana and New Jersey. PBH is a buy, but is classed as speculative given it is making a loss.
  • Bell Potter upgraded Temple & Webster’s (ASX:TPW) buy rating and price target to $9.70, implying 18% share price growth from yesterday’s close price of $33.61. Yesterday TPW charged almost 6% higher after it announced full-year revenue jumped 74%.
  • Bell Potter upgraded Virgin Money UK (ASX:VUK) from a hold to a buy, increasing its target to $2, implying 13% share price growth from yesterday’s close at $1.77.
Read Transcript

Good morning to you, thanks for your company this Wednesday the 29th of July.

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

Well U.S. equities fell back into the red overnight with lawmakers debating the COVID-19 relief plan that was partly unveiled the day before.

We saw big U.S. tech names and momentum stocks, which have been carrying people’s portfolios benefiting from the work to home shift and the wage subsidy fell overnight, with Amazon losing 1.8%, Google-parent alphabet fell 1.6%, and Netflix and Facebook lost at least 1.4% each.

Now that saw the Nasdaq fall the most out of the major indices losing 1.3%, the S&P500 and the Dow followed erasing the prior day gains.

As for the commodities, the gold price took a step down from the stairway to heaven and its brand new record high that it hit of US$1,981 an ounce with traders locking in profits ahead of the U.S. Fed meeting, which is expected to provide further stimulus.

So that means the gold price is now lower, it’s about 2% off that record high, in fact it’s now US$1938 an ounce.

Meanwhile, with COVID-19 cases continuing to rise, this is causing demand fears for oil consumption and the oil price has fallen 1.3% as a result to US$41.08.

Taking everything into the mix today, the Aussie share market futures is suggesting that the market will head south by about 0.4% and if we have a look at how we’re faring Monday and Tuesday, adding both of those days mixed gains and losses into the mix including the fall of 0.4%.

Yesterday the market is now tracking 0.05% lower this week.

So what to watch today, well company results are coming out today including for one of the biggest mining giants in Australia, Rio Tinto (ASX:RIO) their results are out after the market close.

Expect Unibail-Rodamco-Westfield’s (ASX:URW) results as well.

And Independence Group (ASX:IGO), the gold miner their quarterly production numbers are out, as well as Janus Henderson’s (ASX:JHG) quarterly earnings.

And on the economic side of things we’ll learn what Aussie inflation is at, with expectations inflation will fall from 2.2%, that’s what it’s at so far year on year, to -0.4% in Q2 on a yearly basis.

Now this reflects zero wage growth in the private sector and pay cuts in the public sector, as well as the price of a basket of goods and services.

Now to trading ideas, well firstly Bell Potter upgraded the betting company PointsBet’s (ASX:PBH) speculative buy rating and price target to $7.60, implying 31% share price growth from yesterday’s close of $5.80 yesterday.

PointsBet did fall about 8% but it is tracking 18% higher this year.

With TAB outlets being closed and limited access to pokies.

PBH is looking like it’s got a fairly bullish outlook.

Add in to the mix that the NBA, MBL and NHL seasons kick off in July/ early August.

So you’d think sport betting will get an extra kick.

PBH also recently received a permit to operate in Illinois which adds to its newly created programs in Michigan, Indiana and New Jersey.

So that’s PBH a Bell Potter speculative buy, speculative as it’s making a loss.

Secondly, Bell Potter also upgraded Temple & Webster (ASX:TPW), their buy rating and price target to $9.70 implying 18% price growth from yesterday’s close price.

Yesterday TPW charged almost 6% higher after the online furniture company announced full-year revenue jumped 74%.

It’s active customers are growing and this is definitely supported by its online model as well.

So that’s TPW, a Bell Potter buy.

And thirdly for the grand finale, Bell Potter upgraded Virgin Money UK (ASX:VUK)  from a hold up to a buy, increasing its target to $2 and that implies 13% share price growth.

Yesterday it closed at $1.77 and it also announced it’s UK’s sixth largest bank by the way they announced deposit and lending growth actually improved.

And this has actually bolstered its net interest margin a key line that analysts look at.

So that’s VUK, now a Bell Potter buy.

I’m Jessica Amir with Bell Direct, thanks so much for your company, have a great day.

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