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Morning Market Update - 1 November 2019


Pre-Open Data

International Markets vs Australian Market

Key Data for the Week

Key economic data released this week:

    • Thursday – EUR – Consumer Price Index rose to 1.1% in October, up from 1.0% in September.
    • Thursday – EUR – Gross Domestic Product rose 0.2% in Q3, beating consensus estimates for a rise of 0.1%.
    • Friday – US – Unemployment Rate
S&P ASX 200 Last 12 Months

Australian Market

The Australian sharemarket fell 0.4% yesterday, with the Financials sector the weakest performer. The big four banks all closed lower led by ANZ, down 3.3%, after the company released weak full year profit results and announced it would pay only a partially franked dividend, for the first time in 20 years. Commonwealth Bank slipped 1.3%, Westpac lost 1.2% and NAB dipped 1.1%.

The Materials sector was mixed. BHP and Rio Tinto fell 0.7% and 0.4% respectively, while Fortescue Metals added 1.4%.

Qantas lost 2.6%, after the discovery of structural cracks in two of their Boeing 737 aircrafts. The company said it would inspect 33 of their planes, amid calls to ground the entire fleet.

The Energy sector also had heavy losses. Origin fell 0.8%, Santos lost 0.6% and Woodside Petroleum slipped 0.6%.

Information Technology, Consumer Staples and Utilities were the only sectors to make gains.

The Australian futures market points to a 0.33% fall today, driven by weaker overseas markets.

Overseas Markets

European sharemarkets fell on Thursday. Fiat Chrysler rose 8.2%, while Peugeot dropped 12.9%, after the confirmed US$48 billion merger, that would be a 50-50 share swap, to create one of the world’s largest carmakers. By the close of trade, the broad based STOXX Europe 600 fell 0.5%, the German DAX slipped 0.3% and the UK FTSE 100 lost 1.1%.

US sharemarkets were also weaker overnight, as doubts about a US-China trade deal resurfaced. Apple rose 2.3%, after reporting positive quarterly revenue and EPS. Facebook added 1.8%, after reporting Q3 revenue of $17.65 billion. Kraft Heinz jumped 13.4%, after reporting better-than-expected quarterly profit.

CNIS Perspective

It’s hard to believe that Greece has now joined the negative yield club. Not long-ago Greece was at the centre of the Eurozone debt crisis, now investors are paying for the privilege of lending money to the country.

Last week Athens raised €487.5m of 3-month debt, at a yield of -0.02%. At this stage, Greece has only issued very short term negative yielding debt, but this may be increased with the ECB quantitative easing program starting this month.

This is a country that only survived due to multiple bailouts by its European neighbours and, only in recent years enforced austerity measures. With a €350 billion national debt, or 181% government debt to GDP ratio, it doesn’t seem to be a rational investment.

Greek 3 Month T-Bill Auction Average Yield   

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


Disclaimer

The material contained in this publication is the nature of the general comment only, and neither purports, nor is intended to be advice on any particular matter. Persons should not act nor 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, Australian Market, ASX, international markets

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