Morning Market Update - 12 July 2018

Pre-Open Data

International Market vs Australian Market

Key Data for the Week

Key economic data released this week:

  • Wednesday – AUS – Consumer Confidence rose 3.9% in the latest survey to 106.1, the largest increase since May 2016. This is the eighth consecutive month in which the index has been above 100, indicating optimists outnumber pessimists.
  • Wednesday – AUS – Housing Finance – The total value of dwelling finance commitments, excluding alterations and additions, rose 0.5% in May. Owner occupied housing rose 0.7%, offsetting a 0.1% fall in investor lending.
  • Thursday – EUR – Industrial Production
  • Thursday – US – Consumer Price Index
  • Thursday – US – Initial Jobless Claims

Australian Market

S&P ASX 200 Last 12 months

The major banks led the market lower yesterday, with ANZ and NAB each falling 0.8%, while Westpac lost 0.7% and Commonwealth Bank ended 0.5% lower.

Corporate Travel Management (CTM) announced the acquisition of Lotus Travel Group Limited for $50m. Lotus is one of the largest travel companies in Greater China and is headquartered in Hong Kong. CTM will be acquiring 75.1% of Lotus, with CTM’s Asian partners, Ever Prestige Investments Limited, acquiring the remaining 24.9%. The acquisition will be funded via a share placement of 1.5m fully paid ordinary shares at $25.75 per share, raising AUD$40m, representing CTM’s 75.1% share. CTM’s shares finished the day down 0.07% to $27.58.   

Scentre Group (SCG) announced it had acquired a 50% interest in Westfield Eastgardens for $720m, representing a capitalisation rate of 4.25%. SCG’s shares finished the day 0.7% lower at $4.42.

The Australian futures market points to a 0.13% fall today.

Overseas Market 

The renewed tensions in the trade arena led to a fall in US share markets overnight. The Dow Jones gave up 0.88%, the S&P 500 fell 0.71% and the NASDAQ lost 0.55%.

Markets also fell across Europe. The broad based STOXX Europe 600 declined 1.26%. Germany’s DAX ended the session 1.53% lower, France’s CAC 40 dropped 1.48% and the UK’s FTSE 100 fell 1.30%.

CNIS Perspective 

The earnings season is about to begin in the US and, if the last quarter is anything to go by, it could well turn out to be another outstanding quarter. 

The market expected the March quarter earnings to deliver growth of 17.1% year on year, but the final result was growth of 24.8%.

This quarter the market is expecting 20% earnings growth, but as the graph below illustrates, of recent years, there have been numerous occasions of outperformance.

Every single quarter shown in the chart shows actual earnings exceeding the forecast. There is a reasonable chance that even the 20% growth currently forecast will be exceeded for the June quarter, with every chance the annual earnings growth rate will come in closer to 23.2% based on the historical data

This is a good indicator that corporate America is in excellent shape.

S & P 500 Earnings Growth: End of Qtr. Estimate vs Actual 

Contact Us

Should you wish to discuss this or any other Investment related matter, please contact our 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, ASX, Dow Jones, Australian Market, international markets

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