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Morning Market Update - 11 August 2017

 

Pre-Open Data

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Key Data for the Week

Key economic data released this week:

  • Thursday – AUS – Consumer Inflation Expectation fell to 4.2% in August, following a reading of 4.4% in July.
  • Thursday – UK – Industrial Production fell by 0.4%, mainly due to a 0.6% drop in manufacturing output.
  • Friday – US – Consumer Price Index

Australian Market

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The Australian market started strong, but ended the session 0.1% lower yesterday, as weakness from the Financials offset strength in Telecommunications and Consumer names.

Aristocrat Leisure led the gains in the Consumer sector, closing up 2.2% after announcing the acquisition of social-gaming company Plarium for US$500m. Telstra led the Telecommunications sector higher, putting on 1%, whilst TPG Telecom gained 0.4%.

Packaging maker Orora Ltd (ORA) released its FY17 results, reporting a 4.9% increase in revenue and a 14.6% increase in EPS, its third consecutive year of double-digit earnings growth. Through its acquisitions in Orora Visual and organic sales growth in Orora Packaging Solutions, its North American segment now accounts for over 50% of revenue. The company also announced it expects FY18 earnings to be higher than FY17. ORA increased $0.25 to close 9.2% higher at $2.98.

Amongst the big four banks; Westpac gave up 0.31%, ANZ lost 0.27% and Commonwealth Bank fell 0.07%, however NAB bucked the trend, rising 0.10%.

The Australian futures market points to a 1.21% fall today, being driven by weakness from international markets.

Overseas Market

International markets fell overnight, largely driven by an increase in geopolitical tension between the US and North Korea. The Dow Jones fell 0.93%, after having reached an all-time high at the start of this week. The S&P 500 index fell 1.5% and the NASDAQ gave up 2.13%.

European markets were also sold off; the Euro Stoxx 600 fell 1.0%, the UK FTSE 100 declined 1.44% and the German DAX lost 1.15%.

Nvidia posted second quarter earnings which beat estimates. The maker of graphics processing units said it earned US$1.10 per share, topping the consensus forecast for US$0.82. Its revenue totalled US$2.23 billion, beating the forecast for US$1.96 billion.

CNIS Perspective

The ‘Goldilocks’ run financial markets have been experiencing since November last year was set to continue unabated, given there was no foreseeable change to global macro factors and the low inflation, low interest rate environment.

It needed to be a wild card factor that would rattle markets and it appears rising tensions between North Korea and the US is exactly that.

Overnight, financial markets adopted a ‘risk-off’ attitude that saw equities sold off in favour of safe haven assets, like gold and bonds.

All of this is depicted graphically in the VIX chart below.

After months of record low volatility under 10, the index has jumped to 16 over the past two days.

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Contact Us

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


Disclaimer

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, Euro, NASDAQ, Market Update, VIX, North Korea

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