Morning Market Update - 1 August 2017


Pre-Open Data


Key Data for the Week

Key economic data released this week:

  • Monday – AUS – HIA New Home Sales fell 6.9% in June, the largest fall in eight months.
  • Monday – AUS – TD Securities Inflation gauge rose 0.1% in July, following a 0.1% increase in June. The annual pace picked up from 2.3% in June, to 2.7% in July.
  • Monday – EUR – Unemployment Rate edged down from a revised 9.2% in May, to 9.1% in June, the lowest level since early 2009, highlighting the recent improvement in the euro zone economy.
  • Tuesday – AUS – RBA Interest Rate Decision
  • Tuesday – EUR – Gross Domestic Product

Australian Market


Australian equities shrugged off a mixed offshore lead to finish in positive territory yesterday, with strength from Materials and Energy stocks offsetting a tough day for Health Care names.

Materials stocks continued to benefit from higher iron ore prices, as Fortescue Metals gained 5.9%, while Rio Tinto and BHP climbed 2.4% and 2.0% respectively.

Oil prices rose to their highest level since May, on a combination of weaker than expected output from the US, and the overhang of potential sanctions against Venezuela. Among Energy names, Woodside Petroleum closed 1.14% higher, while Origin Energy and Santos Limited rose 0.87% and 0.59% respectively.

The Australian futures market points to a 0.02% fall today.

Overseas Market

US sharemarkets were mixed on Monday. The ongoing strength in Boeing shares continued to lift the Dow Jones, however selling in Facebook and Alphabet stocks weighed on the Technology sector. Snap shares closed 1.01% lower, as some investors were allowed to sell shares for the first time since the Snapchat owner’s March IPO. The Dow Jones rose 0.3% to hit a record closing high, while the S&P 500 and Nasdaq lost 0.1% and 0.4% respectively.

European sharemarkets were mostly weaker on Monday. Broker downgrades hurt consumer stocks, while tobacco stocks continued to fall, a day after the US Food and Drug Administration said it planned to cut nicotine in cigarettes.

Europe's largest bank, HSBC Holdings, reported earnings that beat estimates in the first half of 2017 and announced a US$2 billion share buyback. The bank said its pre-tax profit for the first half of 2017 came in at US$10.24 billion, 5% higher than a year ago, and beating the US$9.5 billion average estimate by analysts. The bank’s stock jumped 1.80% in London trade.

The Euro STOXX 600 and German DAX fell 0.1% and 0.4% respectively, while the UK FTSE 100 was the exception among European indices, climbing 0.1%.

CNIS Perspective

There are a number of factors behind the weaker USD, but one factor that is growing in importance is the declining confidence in the new US government.

When Trump was elected in November last year, the USD rallied on the back of belief that Trump's expansionary policies would drive the US economy further.

However, some nine months later, with little or no meaningful policy legislated and continual controversy surrounding the government, confidence is waning.

Foreign exchange rates are relative to each other and reflect the varying levels of demand between currencies.

What drives the demand is investor belief in the economic growth of a country.

At the moment, the Trump government is hardly inspiring demand and the USD reflects this.

Contact Us

Should you wish to discuss this or any other investment related matter, please contact our Investment Services Team on (02) 4927 8844.


The material contained in this publication is in the nature of general comment only, and neither purports, nor is intended to be advice on any particular matter.  Persons should not act or rely upon any information contained in or implied by this publication without seeking appropriate professional advice which relates specifically to his/her particular circumstances.  Cutcher & Neale Investment Services Pty Limited expressly disclaim all and any liability to any person, whether a client of Cutcher & Neale Investment Services Pty Limited or not, who acts or fails to act as a consequence of reliance upon the whole or any part of this publication. Cutcher & Neale Investment Services Pty Limited ABN 38 107 536 783 is a Corporate Authorised Representative of Cutcher & Neale Financial Services Pty Ltd ABN 22 160 682 879 AFSL 433814

Topics: Investment, CNIS, Trump, Market Update, USD, Sharemarkets

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