Morning Market Update - 13 June 2018

Pre-Open Data

International markets versus Australian market

Key Data for the Week

Key economic data released this week:

  • Tuesday – AUS – Home Loan Figures – The number of owner-occupier loans fell 1.4% in April, falling for the fifth consecutive month. On an annual basis, owner-occupier loans fell 2.9%, while investor loans weakened 0.9%.
  • Tuesday – AUS – NAB Business Confidence & Conditions Business conditions fell to 15 in May, indicating business conditions still remain elevated, although below the record high of 21 in April. Business confidence eased to 6 in May, from 11 in April, leaving it close to its long-run average.
  • Tuesday – US – Consumer Price Index was in line with consensus expectations, rising 0.2% in May. CPI inflation lifted at an annual pace of 2.8% in May, up from 2.5% in April.

Australian Market

S&P ASX 200 Last 12 Months

The Australian sharemarket closed 0.15% higher yesterday, led by gains in the Information Technology sector, as the market resumed trading following the Queen’s Birthday long weekend.

The big four banks all ended the session lower. ANZ and Westpac both slid 0.4%, Commonwealth Bank lost 0.7% and NAB slipped 0.2%, while in the Materials space, BHP and Rio Tinto closed down 1.1% and 1.7% respectively.

Caltex (CTX) upgraded their profit guidance for 1H18 to be between $295m to $315m, despite lower refining earnings and higher convenience store costs. CTX finished the day 2.8% higher, at $30.17. 

Ausdrill (ASL) announced the value of the contract with Process Minerals International, a subsidiary of Mineral Resources (MIN) would be half of the $180m originally announced. Additionally, ASL revealed the scope of work at the Kalgoorlie Gold Mines Super Pit had been cut by 35%. ASL ended the session 20.2% lower, at $1.90. 

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

Overseas Market 

European sharemarkets fell on Tuesday, weighed down by mining and energy stocks. BP, Royal Dutch Shell and Total all declined around 1%, as the Brent crude oil price eased, following a monthly report from OPEC that revealed higher production from its members in May. The broad based STOXX Europe 600 fell 0.1%, the German DAX was broadly flat and the UK FTSE 100 closed down 0.4%.

US sharemarkets were mixed on Tuesday, with the lack of detail about denuclearisation from the US-North Korea summit, as well as the Federal Reserve’s meeting this week on interest rates, keeping market moves restrained. Twitter gained 5.0%, after JPMorgan raised its price target on higher expected revenue growth. By the close of trade, the S&P 500 and NASDAQ rose 0.2% and 0.6% respectively, while the Dow Jones eased 0.01%.

CNIS Perspective 

It goes to show that interest rates alone don’t necessarily dampen borrowers appetite to take on debt.

Regulatory measures and tighter lending standards, along with weaker confidence in the housing market, have had a large negative impact on borrowers, particularly investors.

The weakness in home lending was most pronounced amongst investors, with the proportion of investors over total borrowers falling to 33%, which is the lowest since January 2012.

In annual terms, all loans shrunk 3.2% to the April year end which, along with falling auction clearance rates, points to further weakening in housing conditions.

Value of housing finance

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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, Dow Jones, Australian Market, ASX, Housing Sector, Home construction, Housing Finance

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