Morning Bell 3 November

Jessica Amir
November 3, 2020

The Australian share market is set to have a sluggish lift of 0.1%. Just 1 day out from the U.S. election, investors bought the dip, pushing up key U.S. indices such as the S&P500, Dow Jones, and Nasdaq rising 1.2%, 1.6%, and 0.4% respectively.

In commodities, Oil gained 3.7% rising to US$37.12, while gold commenced US$1,896.

What to watch today:
–         The RBA meets, with rates expected to be cut to 0.1%
–         Additionally, the RBA is set to announce more bond buying, with at least $5 billion a month in order to get more money in the economy.

Local trading ideas:
–         UBS increased CSR’s (ASX:CSR) buy rating and price target to $5.19
–         ResMed (ASX:RMD) was yesterday upgraded by Credit Suisse, Macquarie, UBS, and Wilsons. Credit Suisse is the most bullish with a target of $31
–         UBS reiterated Westpac (ASX:WBC) as a buy with a $20.50 price target, after the bank announced what some would call a multi-year turnaround report card.
–         Lastly, Trading Central’s technical analysis suggests that Amaysim (AYS), Ansell (ANN) and Bellevue Gold (BGL) are all showing bullish signals

 

Read Transcript

Good morning to you thanks for accompanying this Tuesday the 3rd of November, I’m Jessica Amir, market analyst with Bell Direct.

Well of course all eyes are on the U.S. election this evening results not expected for some days though while America is prepped and ready for mass protests with the likes of Trump hotel and the White House being fenced off and Washington D.C. shop fronts have been boarded up too but U.S. investors look past that overnight and bought the dip favoring cyclical stocks tied to economic growth.

The reason for that better than expected economic news came through overnight, U.S. factory data saw its strongest growth in about two years with new orders production inventory and factory employment all rising.

In the large end of town, in the Dow Jones 30, Honeywell and Walgreens rose over 5% while among the S&P500 stocks, flooring manufacturer Mohawk Industries was up the most up 11%, the Dow Jones finished up 1.6%, S&P500 up 1.2% while the Nasdaq rose 0.4%.

And the commodity screens saw black and green as well moving forth north, the oil price gained 3.7% to US$37.12 a barrel, gold gained 0.8% in what seems its first move north in quite some time it’s now US$1,896 an ounce.

As for local trade the futures are suggesting a hesitant start just a rise of 0.1%, the reason for the hesitation today it’s a public holiday in Victoria for Melbourne cup of course and the interest rate decision that stops a finance nation is ahead, rates are expected to be cut to 0.1%.

The RBA’s rate indicator is expecting rates to be cut to 0% but the headline figure that the market is priced in is that rates will be cut to 0.1%.

Now if this happens you could expect markets to rally because they don’t like surprises but if there’s no cut on the back of a disappointment you could expect a full particularly encyclicals, mining stocks, industrials, growth tech names and smaller and mid companies as well so keep an eye on that.

The market is also expecting the RBA to announce more bond buying at least $5 billion a month to get more money into the economy and to of course drop the rate at which the state government borrows that so keep an eye on that.

As for a couple of trading ideas that could be worth a look well CSR (ASX:CSR) was upgraded overnight by UBS increasing their buy rating and price target to $5.19 on stronger than expected first half profits for CSR and a special surprise dividend that was announced given that didn’t clear a dividend back in March.

And ResMed (ASX:RMD) yesterday was upgraded by four brokers including Credit Suisse, Macquarie, UBS and Wilsons.

Now Credit Suisse the most bullish a target of $31 as it thinks ResMed is growing its market share in the device and masks departments and it’s also raised its FY2021 EPS by 12%.

And UBS reiterated Westpac (ASX:WBC) as a buy with a $20.50 target after the big four announced what some are calling a multi-year turnaround report card, UBS says Westpac’s balance sheet is stronger than expected regulatory capital is above forecast which is good news while its deferred mortgages have dropped 70% to 4% of its book and deferred SME loans dropped 90% to 2% of its book.

And lastly keep an eye on Amaysim( (ASX:AYS), Ansel (ASX:ANN) and Bellevue Gold (ASX:BGL) all showing bullish charting signals according to Trading Central.

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

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