Morning Bell 4 August

Jessica Amir
August 4, 2020

The Australian share market looks set to rise 1.4% at the open, marking the second trading day for August.

Overnight Microsoft shares lifted 5.6% to a brand-new record high, supported by U.S. President Trump calling on Microsoft to buy TikTok.

What to watch today:

  • The RBA will meet today with rates expected to remain on hold at 0.25%. While the focus will be on further bond buying and if that will kick off again, particularly as Victorian COVID-19 restrictions tightened to level 4 with a curfew in place.
  •  The Federal Government will introduce a $1,500 payment to workers in Victoria who are required to self-isolate.

Companies reporting today:

  • BWP Trust (ASX:BWP)

Local trading ideas:

  • Bell Potter reiterated Tabcorp Holdings (ASX:TAH) as a buy following its solid FY20 result. Its shares are up 61% from the COVID-19 low.
  • Magellan Financial Group (ASX:MFG) was reiterated as a UBS hold, with a target price of $56.70. Yesterday MFG closed 0.3% higher at $61.16. Despite growing its inflows, UBS says maintaining inflows is becoming increasingly capital intensive as its business enters a more mature growth phase.
  • Cleanaway Waste Management (ASX:CWY) is showing a bullish uptrend according to Trading Central’s data. Its chart is showing a bullish signal, ‘by an inside bar’ chart, suggesting CWY’s stock price may rise from the close of $2.12. UBS has the stock as a hold with a $2.15 target.
Read Transcript

Good morning to you, thanks for your company this Tuesday the 4th of August.

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

The Australian share market looks set to rise 1.4% or 84 points, marking the second trading day for August.

Overnight, we saw Microsoft shares surged 5.6% to a brand new record high after U.S. President Donald Trump called on Microsoft to buy TikTok.

The Dow Jones ended 0.9% higher, while the Nasdaq rose the most 1.5% also closing at a brand new record high.

Also in the U.S., manufacturing data came out stronger than expected with manufacturing rising to its highest levels in 16 months.

Even though the manufacturing sector only contributes about 13% to GDP, it definitely boosted sentiment there.

Across the Atlantic, European equities surged over 2% after manufacturing data there in the Eurozone expanded for the first time since early 2019 and as a result, the cyclical autos led their sectors higher in Europe.

On the commodities front, the gold price has eased from its brand new record high it’s now at about US$1,986 an ounce.

The oil price jumped 2% to US$41.33 a barrel.

Meanwhile and what to watch today, on the economic side of things, the RBA meets today and is expected to hand down their decision at 2:30pm with rates to remain on hold at 0.25%, while the focus will be squarely on when and if bond buying will kick off, particularly as Victoria COVID-19 restrictions have tightened to level four with the curfew in place.

In other news, the Federal Government will introduce a $1,500 payment to workers in Victoria who are required to self-isolate.

On the earnings season side of things, BWP Trust (ASX:BWP) reports results today.

Now for three quick trading ideas, well firstly Bell Potter reiterated Tab Corp (ASX:TAH) as a buy following its solid FY20 result, while the business will write down $1 billion in impairments after it was hit by COVID-19 shutdowns and lost ground to online bookmakers.

TAH shares are up 61% from their COVID-19 19 lows.

Secondly, Magellan Financial Group (ASX:MFG) was reiterated as a UBS hold with a target price of $56.70, that implies that Magellan’s shares are likely to fall over the year.

Magellan recently proposed the restructure of their global equities products from three products into one listed product.

But that’s not UBS’ concern, UBS says that even though inflows are growing, which is definitely what we’ve seen strongly over the last several years.

UBS says it’s going to become increasingly difficult for this business to continue to grow funds at the level that they are while keeping costs low, particularly as the company has entered a mature growth phase.

And thirdly, Cleanaway Waste Management (ASX:CWY) is showing a bullish uptrend according to trading central’s data.

Its chart is showing a bullish signal ‘by an inside bar’ chart, suggesting CWY’s stock price may rise from today’s or from yesterday’s close of $2.12.

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

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