Morning Market Update - 15 May 2019

Pre-Open Data

International Markets vs Australian Market

Key Data for the Week

Key economic data released this week:

  • Tuesday – AUS – NAB Business Conditions & Confidence – Business Conditions weakened from 7 in March to 3 in April, while Business Confidence improved from a revised reading of -1 in March to 0 in April, both below the long-run average.
  • Tuesday – EUR – Industrial Production contracted 0.3% in March as expected.
  • Tuesday – UK – Unemployment Rate edged down from 3.9% in February to 3.8% in March, the lowest since 1974.
  • Wednesday – EUR – Gross Domestic Product
  • Wednesday – US – Retail Sales

S&P ASX 200 Last 12 Months

Australian Market

The Australian sharemarket fell 0.9% yesterday, with all sectors closing lower, except Materials and Consumer Staples. The Financials sector was again a major drag on the market. NAB was the weakest performer after it went ex-dividend and slipped 4.7%, while the rest of the big four banks closed between 0.8% and 1.3% lower. 

The Energy, Health Care, Industrials and Information Technology sectors also had losses greater than 1%.

Fortescue Metals (FMG) outperformed, after the miner declared it would pay shareholders a special dividend of $0.60 per share. FMG rose 7.4% in response to the announcement.

The Australian futures market points to a 0.4% rise today, being driven by stronger international markets.

Overseas Markets

European sharemarkets rose on Tuesday on an apparent easing of US-China trade tensions. The broad based STOXX Europe 600 and Germany’s DAX both rose 1.0% and the UK FTSE 100 added 1.1%. 

US sharemarkets rebounded overnight, with all sectors higher, except Utilities. The Dow Jones and the S&P 500 both ended the session 0.8% higher and the NASDAQ rose 1.1%. 

E-commerce companies Alibaba and eBay rose 2.9% and 2.6% respectively, while financial services corporations MasterCard and Visa gained 1.9% and 1.7% respectively. Apple added 1.6% and Amazon lifted 1.0% to help lift the indices higher. 

CNIS Perspective

Over the past month the US S&P 500 Volatility index has jumped from a low of 12 to as high as 20, and finished last night still relatively high at 18. 

The US-China trade negotiations are back on the front page and responsible for these gyrations. 

The outcome form the negotiations is obviously important, but the bigger macro issue that will drive the US equity markets throughout most of this year, remains benign inflation and therefore no interest rate rises by the US Federal Reserve.

Unfortunately, every now and then Trump’s twitter account will disrupt things, as we are seeing now. 

While his approach is certainly not conventional, the runs are on the board as far as the US economy is concerned.

Next year’s Presidential election campaigning will start sooner rather than later and these negotiations have dragged on long enough. 

Trump needs an unequivocal win regarding trade with China and his latest comments appear aimed at speeding up the process.

However, the US Federal Reserve keeping rates on hold remains the main game, at least until the end of the year. 

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, Dow Jones, Australian Market, ASX, international markets

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