Morning Market Update - 17 May 2019

Pre-Open Data

International Markets vs Australian Market

Key Data for the Week

Key economic data released this week:

  • Thursday – AUS – Unemployment Rate edged higher from a revised 5.1% in March to 5.2% in April, the highest level in eight months.
  • Thursday – US – Housing Starts rebounded in April, rising by 5.7% in the month, after a 1.7% gain in March. Housing starts remain consistent within the firm range of the past three years.
  • Friday – EUR – Consumer Price Index

S&P ASX 200 Last 12 Months

Australian Market

Despite weakness earlier in the trading session, the Australian sharemarket closed up 0.7% yesterday, boosted by strong gains from Energy, Information Technology, Real Estate and Telecommunication stocks. 

The Energy sector was again the strongest performer, as ongoing tensions in the Middle East continued to fuel higher oil prices. Oil Search gained 2.3%, Santos lifted 2.1% and Woodside Petroleum gained 1.5%. 

Materials heavyweights BHP and Rio Tinto climbed 0.9% and 1.0% respectively, while the Telecommunications sector was buoyed by Telstra, which closed up 1.4%. The big four banks closed mixed, with Westpac the worst performer, after the company traded ex-dividend.

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

Overseas Markets

European sharemarkets rose again on Thursday. Telecommunications stocks rose after the US applied sanctions on China’s Huawei. The broad based STOXX Europe 600 rose 1.3%, the German DAX strengthened 1.7% and the UK FTSE 100 added 0.8%. 

US sharemarkets continued their rebound on Thursday. Strong housing starts data led gains among home builders. Walmart rose 1.4% after first quarter results beat expectations. The Dow Jones gained 0.8%, while the S&P 500 and NASDAQ both added 0.9%.

CNIS Perspective

With just days to go before the federal election, yesterday’s unemployment figures couldn’t have been more controversially timed. 

Yesterday’s data contained mixed trends that will be reported differently, depending on the political angle or bias of the publication you read. 

On one hand, the higher unemployment rate will be reported as a negative, but this was largely due to a higher participation rate which is generally viewed as a positive.

On the other hand, while jobs growth should be reported positively, the breakdown reveals less full time jobs created than part time, which is generally viewed as a negative.

So the political spin will work whatever angle is needed by whoever is making the comment.

Financial markets have ‘voted’ through the foreign exchange rate, with the AUD falling under 69 US cents for the first time in over 10 years.

Markets are obviously seeing yesterday's unemployment data as less than encouraging and are factoring in a cut to the Official Cash Rate by the RBA, sooner rather than later.

Unemployment & Participation Rates


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Topics: CNIS, Dow Jones, Australian Market, ASX, international markets

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