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Morning Market Update - 10 September 2019


Pre-Open Data

International Markets vs Australian Market

Key Data for the Week

Key economic data released this week:

  • Monday – AUS – Housing Finance – New home loans approved for owner occupiers increased 4.2% in July, while the total value of new loans to investors rose 4.7%.
  • Monday – US – Consumer Credit rose $23.3bn in July, above expectations for a $16.0bn rise.
  • Tuesday – AUS – Business Confidence and Conditions
  • Tuesday – UK – Unemployment Rate

S&P ASX 200 Last 12 Months

Australian Market

The Australian sharemarket eked out less than a 0.1% gain yesterday, in a mixed session of trade. The big four banks helped boost the Financials sector; NAB led the gains, up 1.0%, Westpac added 0.8%, while ANZ and Commonwealth Bank rose 0.5% and 0.3% respectively.

The Health Care sector weighed on the market. Industry leaders CSL and Cochlear slipped 1.0% and 0.9% respectively. The Materials sector also dragged on the market; BHP fell 0.5% and Rio Tinto lost 0.1%, while Fortescue Metals bucked the trend to rise 0.6%.

The Telecommunications sector was mixed; Telstra fell 0.3%, while TPG Telecom rose 5.5% ahead of the Federal Court case challenging the ACCC’s ban on the Vodafone – TPG merger which begins today.

The Australian futures market points to a 0.14% fall today.

Overseas Markets

European sharemarkets were mixed on Monday. The broad based STOXX Europe 600 fell 0.3%, with the Financials and Energy sectors the strongest performers, while defensive sectors Health Care and REITs led the declines.

US sharemarkets were also mixed overnight. The Energy sector rose in response to higher oil prices, while the banks helped boost the Financials sector. Technology stocks were mixed; Microsoft slipped 1.1%, while Apple rose 0.4%, ahead of the launch of the new iPhone.

CNIS Perspective

Compared with a year ago, lending activity remains subdued and down 8.7%, but the pace of the decline has slowed markedly.

In retrospect, May’s result looks to have been the trough in the lending cycle, which coincided with the Federal election and enormous uncertainty in the sector given Labour’s proposed policy changes to property investments.

The number of new home loans approved for owner occupiers increased 4.2% in July, which is the fastest growth since June 2015, with multiple interest rate cuts and tax breaks appearing to be supporting the sector.

First home buyers continued to return to the market, with the percentage of first home buyers as a proportion of all dwellings increasing for the fifth consecutive month. At 19.6% in July, the proportion now stands at the highest in 7 ½ years.

However, building activity will remain constrained by a decline in building approvals, led by the fall in house prices over much of the past two years. Cladding and building integrity issues are also weighing on sentiment.

The RBA should be happy with the data, as it appears their two rate cuts are turning into improved lending data and house prices. Wages growth and inflation remain missing though.

Value of Housing Finance

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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