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Market wraps 18th August 2020

Morning Bell - Jessica Amir

The Aussie share market looks like it will attempt to erase some of yesterday’s 0.8% fall, with the futures suggesting a lift of 0.5% at the open.

Overnight the U.S. stocks ended mostly higher, with the NASDAQ hitting another new all-time high after rising 1%. Broad sentiment was high as U.S. homebuilder levels climbed to their highest points in 21 years, supported by record-low interest rates which boosted building demand.

What to watch today:

  • On the economic front, the RBA meeting minutes will be released.
  • Companies reporting: BHP (ASX:BHP), Coles (ASX:COL),  Cochlear (ASX:COH) and Westpac (ASX:WBC).
  • BHP (ASX:BHP) reported that its underlying attributable profit fell 1% to US$9.06 billion. At a first glance, it looks like that’s in line with Citi’s expectation, but weaker than what the market was expecting. Total dividends for the year fell from US$1.23 to US$1.20, including a US55¢ final dividend.
  • Coles (ASX:COL) reported full year results with profit better than expected from continuing activities up 7% to $951 million.
  • Westpac (ASX:WBC) cancelled its interim dividend and reported a quarter cash profit of $1.3 billion.

Local trading ideas:

  • JB Hi-Fi (ASX:JBH) announced strong results yesterday but was downgraded by Bell Potter from a hold to a sell with a $44.00 target. Despite JB Hi-Fi and The Good Guys delivering double-digit sales growth on the back of COVID-19, the stock is now looking expensive at 20 times earnings, that’s why it was downgraded to a sell. Yesterday JBH rocketed up 4.9% to $49.60.
  • Altium (ASX:ALU) also reported better than expected result yesterday. However, ALU did allude to slowing growth for the next five years, which is why Bell Potter reiterated ALU as a sell with a $31.25 target. Yesterday it rose 1.3% to $33.92.
  • Imdex (ASX:IMD) earnings were in line with expectations, but net profit was below expectations due to higher depreciation costs. Bell Potter reiterated the stock as a hold and increased its price target to $1.38. Yesterday it gained 2.9% to $1.42.