Market wraps 16th July 2021

Morning Bell - Sophia Mavridis

Yesterday growing COVID-19 concerns across the nation weighed down on the market, as well as news that China’s economic growth for the second quarter was slightly below expectations of 8% growth, it rose 7.9%.

Today, the futures are suggesting the Aussie share market will open 6 points lower.

What to watch:

  • Melbourne entered a sudden 5-day lockdown, while NSW Premier Gladys Berejiklian says she expects todays reported cases to be higher than yesterdays.
  • The unemployment rate fell to 4.9%. This is the lowest unemployment rate in a decade. However, labour force figures in the coming months will be interesting and we can expect some volatility given the data will include the current NSW lockdown.
  • Travel stocks continue to come under pressure. While most of the travel stocks closed in the red yesterday, today we will all be watching Sydney Airport (ASX:SYD)’s share price, after the company formally rejected the takeover offer of $22 billion from a consortium of infrastructure investors.
  • Telstra (ASX:TLS) is on watch off the back of competition with Optus in an auction for low- band spectrum coming up in November. Low- band spectrum allows company’s such as Telstra to carry mobile data across greater distances in regional Australia, which is important for Telstra to reach regional communities.
  • The oil price is down 2.4%, the gold price is edging 0.1% higher, while iron ore is currently trading 0.3% higher at US$218.
  • One of the most traded stocks yesterday by both Bell Direct and our advised clients was Westpac (ASX:WBC). WBC was recently downgraded to a HOLD by Bell Potter, with an increased price target of $26.50. After a large jump in impairment benefits, Westpac closed 1.1% lower yesterday, falling the most out of the 4 major banks.
  • Bell Direct clients were also trading Fortescue Metals (ASX:FMG). The past week has seen confidence in iron ore miners, as well as the broader resources sector. Yesterday FMG closed over 2% higher at $25.72, nearing its January all-time record high of $26.40.

Trading ideas:

  • Bell Potter maintain their BUY recommendation on technology company Life360 with an increased price target of $9.25 (previously $7.75). Life360 closed yesterday at $7.83, implying just over 18% share price growth in a year.
  • Bell Potter also maintain their BUY recommendation on Whitehaven Coal (ASX:WHC), with an increased price target of $2.50, with optimism in the current strength in thermal coal markets. WHC closed yesterday at $2.07, implying 21% share price growth in the year.
  • Bullish charting signals have been identified in Magnis Technology (ASX:MNS), Brainchip (ASX:BRN) and Rhythm Biosciences (ASX:RHY), according to Trading Central.