Morning Market Update - 18 March 2020


Pre-Open Data

International Markets vs Australian Market

Key Data for the Week

Key economic data released this week:

  • Tuesday – UK – Unemployment Rate rose slightly from 3.8% in December, to 3.9% in the three months to January.
  • Tuesday – US – Retail Sales fell 0.5% in February, well below consensus expectations for a 0.2% rise.
  • Wednesday – EUR – Consumer Price Index

    S&P ASX 200 Last 12 Months

Australian Market

The Australian sharemarket surged 5.8% yesterday, led by Financials stocks, as the big four banks all posted strong gains. Commonwealth Bank strengthened 13.3%, ANZ climbed 11.9%, Westpac added 8.0% and NAB lifted 8.0%.

Mining heavyweights BHP and Rio Tinto boosted the Materials sector, closing up 11.9% and 6.9% respectively, while South32 gained 11.0% and Fortescue Metals rose 10.8%. Goldminers shone, as Saracen Mineral (17.5%), St Barbara (17.5%) and Newcrest Mining (10.6%) all recorded strong improvements.

Supermarket giants Coles and Woolworths continued to benefit from consumers stockpiling groceries, posting gains of 8.4% and 9.7% respectively, while Wesfarmers added 5.9%.

Qantas gave up a further 5.3% after the airline announced it was cutting 90% of all international and 60% of domestic services until at least the end of May 2020 due to the ongoing impact of the coronavirus outbreak.

The Australian futures market points to a 0.13% fall today.

Overseas Markets

European sharemarkets rose on Tuesday, rebounding off near seven-year lows, led by Telecommunications and Utilities stocks. Spain’s benchmark IBEX 35 gained 6.4% to mark its best day since 2010, as investors were encouraged by a new €200 billion stimulus package unveiled by Prime Minister Pedro Sanchez. However, travel and leisure stocks remained under selling pressure, with the sector closing down a further 5%.

US sharemarkets also closed higher overnight. Amazon gained 7.0% after the company announced it will temporarily prioritise household staples, medical supplies and other important products arriving into fulfillment centres, so these products can be shipped to customers quicker. Fellow technology stocks Microsoft (8.2%), Apple (4.4%), Alphabet (3.2%) and Facebook (2.3%) all posted solid gains. By the close of trade, the NASDAQ lifted 6.2%, the S&P 500 climbed 6.0% and the Dow Jones added 5.2%.

CNIS Perspective

The ugly reality of the financial impact of this pandemic was to be seen in the Chinese economic data published Monday. Economic data for retail sales and industrial production in January and February contracted at their fastest pace on record, coinciding with the most intense phase of the Covid-19 outbreak, with experts expressing surprise government officials were willing to report such devastating figures.

The last time China reported a contraction was more than four decades ago, at the end of the cultural revolution.

With the country in lockdown to control the epidemic, and with factories, offices and restaurants closed, new infections have been slowed to almost zero. Its next concern is finding the balance to revive the economy, whilst avoiding a second outbreak. This risk is complicated, with the possibility of the virus re-entering from abroad. China needs to trade and their re-entry into the global economy will be watched closely.   

The graph shows new cases in China (in orange) have flat lined, while the rest of the world (in yellow) appears to be accelerating, having overtaken China earlier this week.

New Coronavirus Cases

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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