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Morning Market Update - 12 August 2019


Pre-Open Data

International Markets vs Australian Market

Key Data for the Week

Key economic data released this week:

  • Monday – CHINA – Loan Growth
  • Tuesday – AUS – NAB Business Confidence and Conditions
  • Tuesday – US – Consumer Price Index
  • Wednesday – AUS – Wage Price Index
  • Wednesday – EUR – Gross Domestic Product
  • Thursday – AUS – Unemployment Rate
  • Thursday – US – Retail Sales
  • Friday – US – Housing Starts
  • Friday – EUR – Trade Balance
S&P ASX 200 Last 12 Months

Australian Market

The benchmark ASX 200 index closed up 0.25% on Friday to limit losses in the worst week since mid-November last year. Over the course of the week the ASX 200 dropped 2.72%.

James Hardie rose 13.7% to an 11 month high of $21.62 after the building materials company said it expected to make more profit this year than analysts had forecast.

AMP jumped 11.6% after the fallen banking and wealth giant completed a $650 million capital raising to fund its three year turnaround plan. AMP remains down 43% over the past 12 months.

The Australian futures market points to a 0.34% fall today.

Overseas Markets

US markets closed down on Friday night, with the Dow Jones falling 0.34%, the S&P 500 dropping 0.66% and the NASDAQ losing 1.00%.

Companies reporting this week include; Alibaba, Applied Materials, Cisco, Macy’s, NVIDIA and Walmart.  

CNIS Perspective

Last week, Australia posted its biggest monthly trade surplus on record, and is on track to post its first current account surplus since Gough Whitlam was prime minister.

In June, Australia sold $8 billion more goods and services to the rest of the world than it imported. That is a staggering $1.8 billion higher than the previous month, which was itself a record trade surplus.

A current account surplus basically means the nation is earning more from overseas than it is paying out.

There are no prizes for guessing how Australia is posting record trade surpluses, with surging iron ore prices and shipments of LNG contributing much of the improvement so far this year.

However, while a 1.4% rise in exports boosted the surplus, a 3.6% slump in imports contributed more than twice as much to the improvement in the trade balance. On the one hand, the decline in imports may be a sign the lower dollar is causing people to buy Australian. The more likely, and more concerning, explanation is the import slump simply reflects the fact Australians are cutting back on spending in general.

The record run of Australian trade surpluses has occurred despite Australia's largest export partner (China) and most important strategic partner (US) engaging in a trade war.

The volatile nature of some of these factors also means it is possible that June 2019 was as good as Australia's trade surplus gets, but is a welcome boost for an economy that is generally otherwise spluttering.

Australia's imports, exports & trade balance

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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