Morning Bell 30 June

Jessica Amir
June 30, 2020

The Aussie futures are eyeing a 1.2% lift at the open. Today is the end of financial year, so it could be a volatile day. Wall Street clawed back half of its prior day’s losses on stronger than expected economic data.

After close of trade, Bank of America, Citi, and Goldman announced they’ll keep their dividends the same, following the Fed’s new stress test, while Wells Fargo will have to cut its quarterly dividends.

What to watch today:

  • Private sector credit data is out.
  • Colins Food (ASX:CKF) reports its full year results.
  • There is lot of ex-dividends today, including tech ETFs (ASX:TECH), (ASX:FANG), (ASX:ROBO) and the biotech (ASX:CURE).

Local Trading ideas:

  • UBS rated Brickworks (ASX:BKW) as a buy, initiating coverage of the Brickmaker, expecting its shares to grow to $17.10.
  • Citi reiterated Coca-Cola Amatil (ASX:CCL) as a buy expecting 15% share price growth as drink consumption begins to fizz up.
  • After Fisher & Paykel Healthcare (ASX:FPH) reported a 30% rise in net profit after tax, its highest growth rate in at least a decade. It also provided stronger than expected FY21 profit guidance levels 2% above consensus, given continued level of COVID-19 related demand. Citi reiterated the stock as a sell, however Fisher & Paykel Healthcare trades at 25 times earnings.
Read Transcript

Good morning, well the lion market tamer is back.

Wall Street has clawed back half of its prior days losses on stronger than expected economic news.

There was a sharp and stronger than expected recovery in home sales and a huge surge in manufacturing in Texas, swinging from a negative reader for 49.2 to just – 6, meaning although manufacturing is still recovering industrial activity is indeed rebounding.

The S&P500 finished up 1.5%, the Dow up 2.3%,

the Nasdaq 1.2%. The big stand out was Boeing, rising 14% after certification flights began for the Boeing 737 max.

Now Facebook shares close 2% higher despite Starbucks and Coca-cola announcing that they’re going to halt social media advertising.

After the close of trade we also had big news from the banks, the Bank of America, Citi and Goldman announced they’ll keep their quarterly dividends the same following the Fed’s new stress test, while Wells Fargo will have to cut its dividend.

On the commodity side, oil guzzled up 3% to US$39.69 on improving economic conditions, oil has held its eighth year high which it scaled to the last week it’s now US$1,784, copper rose 1% and the iron ore price last traded higher.

Now what to watch today, well the Aussie futures are suggesting a 1.2% lift which means the market will be up around 30% from its bear market bottom.

Keep in mind it is the end of financial year today so there could be a lot of volatility.

On the economic side of things, private sector credit data is out today.

On the company news side, the KFC and Taco Bell franchisee Colins Foods (ASX:CKF), they report full year numbers today.

There’s a lot of ex-dividends today including tech ETFs (ASX:TECH), (ASX:FANG), (ASX:ROBO) and the biotech ETF (ASX:CURE).

Three local trading ideas, well UBS has rated Brickworks (ASX:BKW) as a buy initiating coverage of the brickmaker expecting its shares to grow to $17.10 since now given Brickwork’s earnings are recovering as brick production intensifies over the course in the U.S. to meet rising demand industrial and residential real estate.

Secondly Citi has reiterated Coca-cola (ASX:CCL) as a buy expecting 15% share price growth as drink consumption begins to really fizz up.

After Fisher & Paykel (ASX:FPH) reported a 30% rise in net profit after tax, its highest growth rate in at least a decade and provided stronger than expected profit guidance for this financial year, 2% above what the market expected particularly given COVID-19 related demand is continuing to come through.

Citi however surprisingly reiterated the stock as a sell despite saying Fisher & Paykel management is excellent and earnings are expected to rise.

However what is worthwhile to note is Fisher & Paykel trades at 25 times earnings ratio, probably why Citi thinks it’s too expensive and is a sell.

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

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