Morning Market Update - 13 November 2019

Pre-Open Data

International Markets vs Australian Market

Key Data for the Week

Key economic data released this week:

    • Tuesday – AUS – NAB Business Confidence & Conditions – Confidence rose to 2 in October, from 0 in September, while Conditions rose to 3 over the same period. Despite the increases, both Confidence and Conditions remain below their 10-year averages, of 5 and 6 respectively.
    • Tuesday – UK – ILO Unemployment Rate fell to 3.8% for the 3 months to September, from 3.9%.
    • Wednesday – UK – Consumer Price Index
    • Wednesday – US – Consumer Price Index
S&P ASX 200 Last 12 Months

Australian Market

The Australian sharemarket fell 0.3% yesterday, with Health Care the worst performing sector. CSL dropped 1.5% following Monday’s 4.5% gain.

The Financials sector weakened, as the big four banks were mixed. Westpac had the largest fall, down 3.5% after the bank went ex-dividend, ANZ lost 0.9%, while NAB and Commonwealth Bank rose 0.7% and 1.0% respectively.

The Consumer Staples and Information Technology sectors were the strongest performers. Treasury Wine Estates added 2.4%, A2 Milk rose 2.2%, while Coles and Woolworths increased 0.6% and 0.2% respectively. Technology companies Afterpay and WiseTech Global gained 3.5% and 3.2% respectively.

The Australian futures market points to a 0.28% rise today, being driven by stronger overseas markets.

Overseas Markets

European sharemarkets closed higher on Tuesday, with the broad based STOXX Europe 600 up 0.4%. The Telecommunications and Financials sectors led the gains, while Consumer Discretionary was the weakest performer.

US sharemarkets were mixed overnight, with the Health Care sector the strongest performer. Walt Disney rose 1.4%, as the company launched its widely awaited streaming service, Disney+. Telecommunications company AT&T fell 0.5%, however remains near 1-year highs. Information Technology stocks were mixed; Facebook rose 2.6% and Microsoft added 0.7%, while Apple and Alphabet both lost 0.1%. By the close of trade, the S&P 500 rose 0.2%, the NASDAQ added 0.3%, while the Dow Jones finished flat.

CNIS Perspective

We’ve previously raised concern over the high level of US corporate debt, but it looks like even more US corporate debt will be hitting the market.

The US Federal Reserve has lowered benchmark interest rates for three consecutive months, providing an opportune time for corporates to issue bonds and lock in very cheap cost of funds.

Pharmaceutical company AbbVie is expected to issue US$30 billion of bonds to fund its takeover of Allergan, which would push this week’s sales of high-grade debt to US$45 billion, double last week’s total.

The upcoming holiday season is also looming and encouraging a last run of issuance before Christmas.

US corporate debt of BBB rated bonds has experienced significant growth over the past few years and is a potential catalyst for a pullback, should credit rating downgrades be experienced.

U.S. Corporate bond Debt Rated 'BBB' Exceeds $3 Trillion, Dwarfing Speculative Grade

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


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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