Morning Market Update - 18 October 2017


Pre-Open Data


Key Data for the Week

Key economic data released this week:

  • Tuesday – AUS – New Motor Vehicle Sales decreased by 0.5% when compared with August 2017. Over the last 12 months sales have fallen 0.8%.
  • Tuesday – UK – Consumer Price Index – Inflation rose to 3.0% in September, its highest level in more than five years.
  • Tuesday – EUR – Consumer Price Index – Euro area annual inflation was 1.5% in September, stable compared with August, whilst in the European Union annual inflation was 1.8%, up from 1.7% in August.
  • Tuesday – US – Housing Starts unexpectedly fell in July, as the construction of multi-family houses dropped to a 10-month low.
  • Wednesday – UK – ILO Unemployment Rate
  • Wednesday – UK – Inflation Report Hearings

Australian Market


The ASX 200 extended its rally to six days yesterday, gaining 0.7%. The Materials sector led the gains, with all sectors closing higher, except Utilities.

Challenger Ltd (CGF) provided a 1Q18 update, announcing a 49.0% increase in Life sales to $1.6bn. Total AUM increased 5% to $73.5bn. The company maintained its FY18 guidance of 8-12% normalised profit before tax growth. CGF increased $0.67, to close 5.4% higher at $13.19.

IOOF Holdings Ltd (IFL) announced it has entered into an agreement to acquire ANZ Banking Group’s (ANZ) OnePath Pensions and Investments business and aligned dealer groups for a cash consideration of $975m. The transaction represents an FY17 NPAT multiple of 25 and will be funded by debt and a ~$550m equity raising. IFL will become the second largest advisory business in Australia, both by numbers and funds under advice. IFL expects the acquisition to be ~15% EPS accretive in FY19 and over ~20% p.a. thereafter. IFL entered into a trading halt yesterday, while ANZ closed 0.6% higher at $30.34.

The Australian futures market points to a 0.19% rise today.

Overseas Market

The Dow Jones briefly topped the 23,000 point level for the first time overnight before closing 0.2% higher at 22,997, setting a new record closing high. The S&P 500 ended the session up 0.1%, to also hit a record closing high.

Johnson and Johnson (JNJ) announced sales of $19.7 billion for the third quarter of 2017, an increase of 10.3% as compared to the third quarter of 2016. Domestic sales increased 9.7%. International sales increased 10.9%. The company increased its sales guidance for the full year 2017, to a range of $76.1 billion to $76.5 billion. Additionally, the company increased its adjusted earnings guidance for full-year 2017, to $7.25 - $7.30 per share. JNJ’s adjusted third quarter EPS increased 13.1% to $1.90 and JNJ’s share price rallied 3.43%.

CNIS Perspective

The October minutes of the RBA board meeting should have taken the sting out of the AUD for some time.

While the RBA acknowledged that “economic conditions internationally and domestically had been more positive since 2016”, however, the more important take away was in regard to their intentions on interest rates.

The RBA made it clear they were not thinking of increasing rates any time soon and sought to distance itself from other central banks around the world, which are pulling back on monetary stimulus.

The AUD has shown little strength for a few weeks now.


Contact Us

Should you wish to discuss this or any other Investment related matter, please contact our Investment Services Team on (02) 4928 8500.


The material contained in this publication is in the nature of general comment only, and neither purports, nor is intended to be advice on any particular matter.  Persons should not act or 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: Investment, CNIS, RBA, Market Update, AUD

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