Morning Market Update - 16 September 2020

Pre-Open Data

International Markets vs Australian Market

Key Data for the Week

Key economic data released this week:

  • Tuesday – AUS – RBA Meeting Minutes reiterated the goal of supporting jobs, incomes, and businesses during the recovery process.
  • Tuesday – UK – ILO Unemployment Rate rose to 4.1% from 3.9% in July, consistent with expectations.
  • Wednesday – UK – Consumer Price Index
  • Wednesday – US – Fed Interest Rate Decision
  • Wednesday – US – Retail Sales
S&P ASX 200 Last 12 Months

Australian Market

The Australian sharemarket fell 0.08% yesterday, with the REITs sector the strongest performer. Scentre Group and Stockland gained 5.2% and 3.6% respectively, while Ingenia Communities Group rose 1.6%.

The Materials sector was mixed on Tuesday as mining heavyweights Rio Tinto and Fortescue Metals lost 1.5% and 0.1% respectively, while BHP rose 0.7%. Goldminers enjoyed a second consecutive day of strong gains; Northern Star finished 7.4% higher, Saracen Mineral added 4.0% and Newcrest gained 1.9%.

Financials weighed on the market with all the big banks closing lower. ANZ slumped 1.9% and Commonwealth Bank fell 1.7%, while Westpac slipped 1.5% and NAB lost 1.4%. Macquarie Bank closed down 1.3%, while QBE Insurance fell 1.0%.

The Energy sector was the weakest performer, dragged lower by Oil Search and Santos, down 3.4% and 2.9% respectively. Ampol slumped 2.1% and Origin Energy lost 1.9%, while Woodside Petroleum fell 1.1%.

The Australian futures market points to a 0.74% rise today, driven by stronger overseas markets.

Overseas Markets

European sharemarkets were stronger overnight, as the broad based STOXX Europe 600 lifted 0.7%. The world’s second-largest fashion retailer, Hennes & Mauritz (H&M), gained 10.8% after the company beat quarterly profit forecasts. Financials underperformed; Barclays slipped 1.0% and Lloyds Bank fell 0.8%, while Deutsche Bank slumped 2.4%. Industrials were mixed; Eiffage and Vinci lost 1.2% and 0.6% respectively, while CRH gained 3.2%.

US sharemarkets also closed higher on Tuesday, with Communication Services and REITs the top performers. Amazon lifted the Consumer Discretionary sector, up 1.7%, while Alibaba added 1.4% and Starbucks rose 1.3%. Information Technology also closed higher; Netflix added 4.1% and Facebook rose 2.4%, while Apple gained 0.2% following the rollout of a new virtual fitness service (Fitness+).

The Financials sector underperformed; Citigroup fell 6.9% after reports of risk management concerns and JPMorgan Chase slid 3.1% after the investment bank lowered its full-year net interest income forecast. The Dow Jones rose 0.01% and the S&P 500 added 0.5%, while the NASDAQ gained 1.2%.

CNIS Perspective

After a week of controversy, Boris Johnson's government has passed the ‘Internal Market Bill’ through the House of Commons. The Bill is designed to enable goods and services to flow freely across mainland Britain and Northern Ireland when the UK leaves the European Union's single market and customs union on 1 January.

There is major concern this Bill threatens to undermine the UK’s withdrawal agreement in process with the EU, with the legislation deemed as breaking international law.

Since Britain left the European Union on 31 January, a trade deal between the UK and the EU has proven difficult, with negotiations making little headway, and the risk of a ‘hard Brexit’ has now increased considerably.

Financial markets don’t like risk, and with a trade deal between the two parties looking fragile, currency markets have seen a sharp exit from the GBP as a result.

How this ongoing game of brinkmanship plays out remains to be seen. While the UK should do well outside of the EU in years to come, short term risks and bumps in the road are currently at play.

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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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