Key Data for the Week
Key economic data released this week:
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.
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%.
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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