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Morning Market Update - 13 February 2018

Pre-Open Data

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Key Data for the Week

Key economic data released this week:

  • Tuesday – AUS – NAB’s Business Confidence & Conditions
  • Tuesday – UK – Consumer Price Index

Australian Market

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The Australian market finished Monday’s session in negative territory, closing 0.3% lower at 5,821. The market was dragged lower by the Financials sector, as the banking royal commission kicked into gear. Of the major banks, National Australia Bank closed down the most, falling 0.8%, Westpac and ANZ both fell 0.7%, while Commonwealth Bank gave up 0.5%.

Aurizon (AZJ) released its 1H18 results, reporting revenue of $1,565m, lower than the previous corresponding period. Underlying NPAT was also lower at $282m, down 5%. Total volumes were up 2%, with coal (+4%) offsetting a reduction in bulk (-6%). AZJ announced a 3% increase in its interim dividend to $0.14/share. Looking ahead, AZJ has guided for underlying EBIT of $900-$960m. AZJ’s shares finished the day 2.0% higher at $4.69. 

Among other companies to release earnings reports yesterday, JB Hi-Fi closed off 8.0%, Bendigo and Adelaide Bank fell 2.1%, while Amcor rose 0.6% after a 15% lift in NPAT.

The Australian futures market points to a 0.57% rise today, being driven by a broad recovery on overseas markets overnight.

Overseas Market 

In the US, markets surged for the second straight session overnight, with Technology and Financials stocks gaining the most. Investors, however, remain cautious, awaiting important US consumer prices data to be released on Wednesday night, providing an indication as to whether higher inflation is returning to the US economy. The S&P 500 closed 1.4% higher, while the NASDAQ finished up 1.6%. Apple rose 4.0%, while Intel and Microsoft added 2.0% and 1.0% respectively.

In Europe, markets were broadly higher after a volatile week last week, with the German DAX leading the region higher, closing up 1.5%, while the UK FTSE 100 and France’s CAC 40 both rose 1.2%.

CNIS Perspective

Last week’s market fluctuations serves to remind us that financial markets, like any market, experiences price swings for a wide variety of reasons.

That’s why a portfolio needs to be aligned to global trends or themes that are more medium to longer term in nature. Sure, their price will fluctuate as the market fluctuates, but these fluctuations are generally short term as the global trend remains in place.

One trend that is still in its early days and therefore has years to develop, is the growth in outbound travel by the Chinese population.

Already China accounts for more than a fifth of money spent by outbound tourists, which is twice as much as the next biggest spender, the US.

As populations become more affluent, they travel, and it’s estimated the emerging middle classes of Asia will add over 50 million new outbound travellers over the next three years.

The flow on effects to the broader economy are significant in the form of infrastructure alone, with bigger airports, more planes, railways, hotels, buses and theme parks.

It’s a trend that will be with us for many years to come and one that portfolios should be aligned to.

Contact Us

Should you wish to discuss this or any other Investment related matter, please contact our Investment Services Team on (02) 4928 8500.


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, China, Financial Markets

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