Morning Market Update - 19 June 2017

 

Pre-Open Data

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Key Data for the Week

Key economic data released this week:

  • Monday – AUS – New Motor Vehicle Sales
  • Tuesday – AUS – House Price Index
  • Tuesday – AUS – RBA Meeting Minutes
  • Thursday – US – Initial Jobless Claims
  • Thursday – EUR – Consumer Confidence
  • Thursday – US – House Price Index
  • Friday – US – Market PMI Composite
  • Friday – US – New Home Sales

Australian Market

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Australian equities finished the week in positive territory, closing up 0.19% to 5,774, after shaking off a weak lead from Wall Street and European indices on Thursday night.

The market was boosted by gains from the Financials, Telecommunications and Consumer Discretionary sectors, while the miners were the biggest drag.

NAB finished the strongest of the big four banks, adding 0.5%, ANZ gained 0.4% and Commonwealth Bank firmed 0.2%. Across other stocks, QBE added 1.7%, Boral jumped 2.0% and Telstra closed 0.2% higher, while BHP and Wesfarmers lost 0.1% and 0.8% respectively.

Over the holiday shortened week, the ASX 200 rose 1.7%, its best weekly improvement since the end of March.

The Australian futures market points to a 0.16% rise today, as overseas markets were stronger on Friday night.

Overseas Market

Soft US housing data weighed on the US dollar and caused a decline in bond yields on Friday night, while the US stockmarkets closed mixed. The Dow lifted 0.1%, the Nasdaq slipped 0.2%, while the S&P 500 was unchanged for the session.

In Europe, sharemarkets rose as investors were buoyed by a new US$8.5 billion tranche of bailout funds for Greece and news Swiss giant Nestlé is considering the sale of its US confectionery business, which saw shares in the company rise 3%.

In company news, Amazon.com announced it will acquire Whole Foods Market Inc. for US$13.7 billion, in a deal that will see it acquire hundreds of physical stores and fulfill a goal of selling more groceries. Amazon climbed 2.4% to US$987.71, while Whole Foods Market spiked 29% to US$42.68.

CNIS Perspective

On one hand, comments by US Federal Reserve chair Janet Yellen are reassuring, but on the other hand, they could well be the comments that lead the market into another debt fuelled bubble.

Last week, in her announcement to raise the benchmark interest rate in the US, she also elaborated on how she sees further rate rises being implemented. She expects the normalisation process to go on for a “number of years” and emphasised the desire to cause as little disruption to the markets and the banking system as possible.

With regard to unwinding other policies that have been in place post GFC, she wants the process to be like “watching paint dry”.

There is no doubt her deliberations and reassurances are keeping financial markets informed and well aware that rates won’t rise dramatically any time soon.

However, what she runs the risk of doing is providing too much reassurance that interest rates will remain lower for longer, which could lead to a debt binge. Borrowers need to be on guard that higher rates are possible and factor this into their borrowing capacity.

Yellen’s comments may well be comforting, but hopefully they don’t lead to complacency.

Contact Us

Should you wish to discuss this or any other investment related matter, please contact our Investment Services Team on (02) 4927 8844.


Disclaimer

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, Australian Market, Market Update

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