Morning Market Update - 1 February 2019

Pre-Open Data

 International market vs Australian Market

Key Data for the Week

Key economic data released this week:

  • Thursday – EUR – Gross Domestic Product grew 0.2% for the quarter, in line with consensus, while annualised growth slowed from 1.6% to 1.2%.
  • Thursday – EUR – Unemployment Rate remained unchanged at 7.9% for December, in line with expectations.
  • Friday – EUR – Markit Manufacturing PMI
  • Friday – US – Unemployment Rate

S&P ASX 200 Last 12 Months

Australian Market

The Australian sharemarket fell 0.4% yesterday, led by losses in the Telecommunications and Financials sectors. Telstra slipped 2.5% to $3.11. The big four banks all lost between 1.6% and 2.5%, ahead of the upcoming release of the Royal Commission findings on Monday. 

Rising commodity prices led to the Materials and Energy sectors both having strong sessions. BHP and Fortescue Metals Group (FMG) rose 0.7% and 4.2% respectively, after providing quarterly updates. FMG shipments increased 6% over the December quarter, while average costs decreased over the period.

The Technology sector was also positive, with software companies Xero and WiseTech Global gaining 8.8% and 4.4% respectively, as a result of improving investor sentiment in the IT sector. 

The Australian futures market points to a 0.24% rise today, being driven by stronger overseas markets. 

Overseas Market 

European sharemarkets were mixed on Thursday. Data showing a technical recession in Italy weighed on sentiment. The broad based STOXX Europe 600 eked out a 0.04% gain and the UK FTSE 100 lifted 0.4%, while the German DAX lost 0.1%. 

US sharemarkets closed mostly higher overnight, after one of the busiest days of the reporting season. The S&P 500 closed out its best month since October 2015, up 0.8% and 7.9% for the month. The NASDAQ rose 1.4%, while the Dow Jones fell 0.1%. 

Facebook rose 10.8% after reporting revenue of US$16.9bn, which exceeded expectations by 3.2%. MasterCard gained 3.5% after management provided a positive report and in-line Q1 and full year outlook, while Visa slipped 1.9% after slower US payment volumes and cross border growth.

CNIS Perspective 

The soon to be released outcomes of the banking Royal Commission, will no doubt make some significant changes to the way banking is carried out in Australia. 

However, in the background there are already changes occurring that will affect the way banking will be performed in the future. 

The development of neo-banks is gathering momentum and will, over time, start to eat into the traditional banks customer base. 

Neo-banks or digital banks, are just like traditional banks, but without the bricks and mortar, with their entire offering supplied online through digital means. They are fully functioning deposit taking institutions, and therefore, fall under the supervision of the Australian Prudential Regulation Authority (APRA).

Last week, Volt Bank received an unrestricted banking license from APRA, the first of its kind to do so. They expect to be taking customer deposits in March, provide home loans by the end of this year and commence small business banking in early 2020. 

Traditional bricks and mortar banking has changed significantly over the past five years or so, where personal interaction has been replaced with online transacting. 

The likes of Volt will now offer even greater choice in the provision of banking services, which is probably what the Royal Commission will recommend.

Should you wish to discuss this or any other investment related matter, please contact your Investment Services Team on (02) 4928 8500.


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: CNIS, Dow Jones, Australian Market, ASX, international markets

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