Morning Bell 29 September

Jessica Amir
September 29, 2020

The Aussie market is eyeing a 0.6% or 38-point lift following U.S. rally. Equities rallied for the second session, and started a brand new week in the green, with banking stocks leading the rally. Elsewhere on the street, other deals were being made, which boosted sentiment. Devon Energy and WPX Energy announced their merger is progressing, which sent their shares over 11% higher. The S&P500 rose 1.6%, while the Nasdaq ended rose 1.9%.

What to watch today?

  • The oil price lifted 0.8% to US$40.58, and gold gained 1.1% to US$1,886.
  • Following the Federal government’s plan to invest $800 million in improving the government’s digital technologies, and digital face recognition, it’s worth looking at artificial intelligence and face recognition companies. A company to watch in this space is Appen (ASX:APX) and BrainChip (ASX:BRN) that was just added to the tech index.
  • Companies going ex-dividend today include Centuria Industrial REIT (ASX:CIP), Charter Hall Long WALE REIT (ASX:CLW), Cromwell Property Group (ASX:CMW), Centuria Office REIT (ASX:COF), Meridian Energy (ASX:MEZ) and Kirkland Lake Gold (ASX:KLA).

Trading ideas:

  • Downer EDI (ASX:DOW) was upgraded to a Buy by UBS with a new $5.00 target. The reason for upgrade is its restructure will deliver $300 million in enhanced cash flows, boosting its yield.
  • The a2 Milk Company (ASX:A2M) was downgraded by Bell Potter to a Sell with a $13.75 target. Revenue is expected to fall with no recovery in the Daigou channel expected yet.
  • Afterpay (ASX:APT), FlexiGroup (ASX:FXL) and Pental (ASX:PTL) are all giving off bullish charting signals – according to Trading Central. Of those Afterpay’s (APT) fundamental calls mirroring Trading Central’s technical analysis, saying it’s shares could rally to $102 to $107, over the next 22 days. Morgan Stanley targets $101 and Bell Potter targets $99.10.

 

Read Transcript

Good morning, thanks for your company this Tuesday the 29th of September, I’m Jessica Amir, a market analyst with Bell Direct.

Well equities rallied for the second session and started a brand new week in the green with banking stocks leading the charge.

HSBC shares ruled 9% higher after China’s Ping An Insurance said it would increase its stake in the bank.

We also saw Deutsche Bank and Barclays saw great gains of between 7 and 5 percent.

Over in the U.S., banking juggernauts like JP Morgan, Bank of America, Goldman’s and Morgan Stanley all rose over 2%, really after the White House speaker Pelosi said that stimulus talks were in the mix as she met with Treasury Secretary Mnuchin.

Elsewhere on the street other deals of sorts were being made which boosted sentiment.

We saw Devon Energy and WPX announce that their merger is progressing, which sent their shares over 11% higher.

As for how the broad indices finished, well they were all in the black the S&P up 1.6% mimicking Friday’s gain while the Nasdaq was up the most 1.9%.

Now what to watch today, well the Aussie market is eyeing a lift of 0.6% or 38 points following the Wall Street rally and it should be a bit more of an exciting day for commodity stocks given the oil price is up about 0.8%.

It’s now US$40.58 and the gold prices lifted about 1.1%. It’s now at US$1,886 an ounce.

So what else to watch today, well following the Federal Government’s plan to invest $800 million dollars into improving the government’s digital technologies and digital face recognition, it might be worthwhile looking at artificial intelligence and face recognition companies in that space.

A company to watch in the top 200 is Appen (ASX:APX).

On the smaller side of town, BrainChip (ASX:BRN), they were just added to the tech index so they may be worth a look.

A lot of companies are going ex-dividend today transferring the right of the dividend to shareholders.

Property companies like CIP, CLW, CMW and COF, as well as Meridian Energy  (ASX:MEZ) and Kirkland Lake Gold (ASX:KLA), one of the large gold producers in Canada.

As for trading ideas that may be worth a look, Downer EDI (ASX:DOW) is their ticket code, they were upgraded to a Buy by UBS with a new $5 target.

Now the reason for the upgrade, its restructure will deliver $300 million dollars in enhanced cash flows which will boost its yield.

Now Downer is set to divest its capital intensive mining and laundries operations while also winding down its more problematic construction operations, leaving it purely focused on its core urban services businesses that are largely backed by large government clients here in Australia and in NZ as well, so that’s DOW a UBS buy and this shouldn’t come as a surprise that a2Milk (ASX:A2M) was downgraded by Bell Potter to a sell with a $13.75 target given revenue is expected to fall with no recovery in the Daigou channel expected yet.

So that’s now a2Milk, a Bell Potter sell and lastly keep an eye on three stocks, Afterpay (ASX:APT), fintech FlexiGroup (ASX:FXL) and Huggies and Lux owner Pentel (ASX:PTL) all giving off bullish charting signals according to Trading Central.

Now of those Afterpay (ASX:APT) their fundamental calls are mirroring what Trading Central’s technical analysis is saying, saying that its shares could rally to $102 to $107 over the next 22 days, as that’s how long it’s taken to form this symmetrical continuation triangle chart pattern.

As for Morgan Stanley they have it as a buy $101 dollar price target, Bell Potter targets $99.10.

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

 

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