Morning Bell 30 September

Jessica Amir
September 30, 2020

The Aussie share market is eyeing a fall of 0.9% or 56 points ahead of the first of three Trump vs. Biden debates.

U.S. stocks fell to their lows for the day after the New York City Mayor said NY’s daily COVID-19 cases are back above 3%, for the first time in months. That spooked airline investors, and airliners led the decline, with American Airlines, United and JetBlue falling about 4%.

U.S. consumer confidence surged to its highest level since the start of the pandemic, with confidence levels seeing their biggest rebound in 17 years. This reflects that Americans are optimistic about the U.S. recovery being on track.

What to watch today?

  • Options expiry- fund managers and investors are unwinding their positions, which will add to the volatility today.
  • It should be a positive day for gold stocks, after the gold price lifted over 1% for the second day, to US$1,903, with COVID-19 cases rising in Europe
  • Oil stocks may come under pressure as the oil price fell 3.7%, back to under US$40.
  • What else to watch: ASX (ASX:ASX) holds its AGM today, Freedom Foods (ASX:FNP) is due to hand down results and this evening in the U.S., GDP growth is released with the market expecting second quarter growth to fall 31.7%, following the 5% fall in Q1.

Trading ideas:

  • Corporate Travel Management (ASX:CTD) was upgraded as a Buy by UBS with a new $18.70 price target. UBS thinks CTD has been one of the best performing travel stocks.
  • Australian Finance Group (ASX:AFG) was initiated as a Buy by Citi with a $3 price target. AFG control about 40% of the mortgage broking industry, and a cyclical recovery looks to be on the cards, given the reregulation of the industry.
  • Accent (ASX:AX1), Macmahon Holdings (ASX:MAH) and American Pacific Borates (ASX:ABR) –  all showing bullish charting signals – according to Trading Central. Of those AX1’s fundamental calls almost mirror Trading Central’s technical analysis, meaning its shares could rally to $1.95 – 2.01 over the next 25 days. Bell Potter targets $1.85. Morgans targets $1.84.

 

Read Transcript

Good morning to you, thanks for your company this Wednesday the 30th of September, I’m Jessica Amir, a market analyst with Bell Direct.

Well after three days of U.S. equities charging ahead investors took a breather last night, before the first presidential U.S. debate takes place at 11am Sydney time today.

Now, what was noteworthy was that U.S. stocks fell to their lows for the day after the New York city mayor said that New York daily COVID-19 cases are back above 3% for the first time in months.

Now this spooked airline investors and saw airline stocks lead the decline, American Airlines United and Jet Blue shares all fell about 4% each.

As for how the broad indices wrapped up.

Well the Dow and the broader S&P500 ended 0.5% lower while the Nasdaq slipped 0.3%.

Now despite all this a beaming light came through in way of better than expected economic news that the market really seemed to ignore.

Now it was U.S. consumer confidence data that surged to its highest level since the start of the pandemic with confidence levels seeing their biggest rebound in 17 years, quite reflective that Americans are optimistic about the U.S. recovery being on track despite being a bumpy road.

Now what to watch today, well the Aussie share market is eyeing a full of 0.9% or a dip of 56 points ahead of the first of three Trump vs Biden debates.

Another thing to consider is its options expiry so fund managers and investors will be unwinding their positions and now this will add to the volatility today.

Add that to a bevy of companies going ex-dividend yesterday and it’s easy to see why markets have been so volatile this week with the market hitting a new three-week high yesterday before ending flat.

But it should be a positive day for Gold stocks given the Gold prices lifted 1% for the second day it’s now US$1,903 an ounce with COVID-19 cases rising in Europe, lifting the precious safe haven metal commodity and maybe expect Oil stocks to come under a bit of pressure today given the Oil price has lost almost 4%, it’s back under US$40 a barrel.

What else to watch, well ASX holds its AGM today.

Freedom Foods (ASX:FNP) is due to hand down results and this evening in the U.S., GDP growth data is released, the market is expecting second quarter growth to fall a massive 31.7% and that’s of course following the 5% fall in the first quarter.

As for trading ideas that may be worth a look, Corporate Travel Management (ASX:CTD) was upgraded to a buy by UBS with a new $18.70 target.

Now UBS thinks that CTD has been one of the strongest travel stocks, it’s minimized its cash burn and didn’t need to raise money in the COVID-19 trough but did instead raise capital for business changing North American acquisition that’ll beef up its scale and earnings so that’s why CTD was upgraded by UBS as a buy.

Now, secondly the second lightest mortgage broking firm in Australia, Australian Finance Group (ASX:AFG) was initiated as a buy by Citi with a $3 target.

Now AFG controls about 40% of the mortgage broking industry and a cyclical recovery looks to be on the cards given the deregulation of the industry which will be detailed in next week’s budget.

Now lastly keep an eye on three stocks, shoe business that owns Hype and the like Accent (ASX:AX1) engineering business Mcmahon Holdings (ASX:MAH), boric acid company American Pacific Borates (ASX:ABR) all showing bullish charting signals according to Trading Central.

Now of those, Accent AX1, their fundamental calls almost mirror what Trading Central’s technical analysis is saying saying that its shares could rally to $1.95 to $2.01 over the next 25 days as that’s how long it took AX1 to form a symmetrical continuation triangle chart pattern.

Bell Potter targets $1.85 for AX1.

Morgans is slightly less than that $1.84.

I’m Jessica Amir with Bell Direct, thanks for your company, stay safe happy trading.

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