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Morning Market Update - 12 September 2019


Pre-Open Data

International Markets vs Australian Market

Key Data for the Week

Key economic data released this week:

  • Wednesday – AUS – Consumer Confidence fell 1.7% to 98.2 in September, indicating more pessimists than optimists.
  • Wednesday – US – Producer Price Index rose from 1.7% in July, to 1.8% in August.
  • Thursday – EUR – ECB Monetary Policy Decision

S&P ASX 200 Last 12 Months

Australian Market

The Australian sharemarket rose modestly yesterday, ending the session 0.4% higher, led by the Financials and Materials sectors. The big four banks all posted solid gains; Westpac rose 1.7%, NAB climbed 1.1%, Commonwealth Bank lifted 0.9% and ANZ added 0.8%. Materials stocks were boosted by mining heavyweights BHP and Rio Tinto, which closed up 1.7% and 2.3% respectively, as the price of iron ore rose to a one-month high.

Consumer Staples and Information Technology stocks were the biggest drags on the market, as Woolworths gave up 2.8%, outweighing a 0.9% gain from Coles, which hit an all-time high of $14.90.

Several companies commenced trading ex-dividend yesterday. These included BlueScope Steel, Brambles, CIMIC Group, Costa Group, Regis Healthcare and SEEK.

The Australian futures market points to a 0.39% rise today, driven by broadly stronger markets overnight.

Overseas Markets

European sharemarkets hit six-week highs on Wednesday, amid hopes of fresh stimulus from the European Central Bank and an easing of US-China trade tensions. China’s Ministry of Finance announced plans to exempt 16 types of US goods from tariffs, including cancer drugs, lubricants, pesticides and food for livestock. The UK FTSE 100 climbed 1.0%, the broad based STOXX Europe rose 0.9% and the German DAX lifted 0.7%.

Optimism surrounding the latest US-China trade development also boosted US sharemarkets overnight, with all three major indices posting solid gains. Apple continued to rise after unveiling new products on Tuesday, ending the session 3.2% higher, while fellow heavyweights Facebook, Alphabet and Amazon added 1.3%, 1.2% and 0.1% respectively. By the close of trade, the Dow Jones rose 0.9%, the S&P 500 gained 0.7% and the NASDAQ lifted 1.1%.

CNIS Perspective

Turmoil or disruption in any market often provides opportunity to acquire an asset at an attractive price, and the current turmoil in the UK is being seized upon by the Chinese for just that.

The Hong Kong Stock Exchange (HKEX) has announced it has made a US$37 billion unsolicited bid for the London Stock Exchange (LSE).

The HKEX obviously views the current UK turmoil as an opportunity to acquire a quality asset cheaply.

More importantly though, it indicates the HKEX is confident of London remaining a significant financial hub post Brexit. It’s hard to imagine what life will look like post Brexit, but crucial to the UK’s future is renewed confidence in its financial sector.

The commercial terms of the deal may be attractive to all parties, but what might scuttle the deal is the politics behind it.

A takeover from Hong Kong, a special administrative region of China, could be seen as a takeover by China.

To call this deal politically sensitive would be an understatement, and no doubt the security implications for the UK will be paramount in determining whether the deal goes ahead.

Nevertheless, it will be interesting to see how many other UK assets come under scrutiny by suitors seeking a good opportunity during a difficult time.

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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