Morning Market Update - 19 June 2020

Pre-Open Data

International Markets vs Australian Market

Key Data for the Week

Key economic data released this week:

  • Thursday – AUS – Unemployment Rate rose to 7.1% in May from 6.4% in April, its highest level since 2001, while the participation rate fell to 62.9% from 63.6%.
  • Thursday – UK – BoE Interest Rate Decision remained unchanged at 0.1%. The BoE also increased its bond-buying program by £100bn per month, in line with consensus.
  • Friday – UK – Retail Sales

    S&P ASX 200 Last 12 Months

Australian Market

The Australian sharemarket fell 0.9% yesterday, after new data showed a rise in the unemployment rate to its worse level in 19 years. All sectors were lower except Utilities, as AGL lifted 1.2%.

Consumer Discretionary, REITs and Telecommunications were amongst the worst preforming sectors. Telstra slipped 1.2% and Vocus Group lost 6.3%.

Mining heavyweights BHP and Rio Tinto fell 0.9% and 1.3% respectively, while Fortescue Metals lost 4.2% after Brazilian iron ore miner Vale received permission to restart production.

The big four banks all weakened; NAB fell 1.0%, Commonwealth Bank lost 0.8%, ANZ slipped 0.4% and Westpac lowered 0.3%.

Qantas fell 3.8% after the company announced it has cancelled international flights except for New Zealand until at least October. Auckland International Airport slipped 2.4% and Sydney Airport lost 1.1%, while travel companies Flight Centre and Webjet fell 3.9% and 4.8% respectively.

The Australian futures market points to a 0.08% fall today.

Overseas Markets

European sharemarkets ended lower for a second straight day. German payment processor Wirecard plunged 61.8% after it was announced auditors could not confirm the existence of €1.9bn of cash balances. Wind turbine maker Siemens Gamesa Renewable Energy slipped 7.6% after the company replaced Chief Executive Markus Tacke with Andreas Nauen and warned of an operating loss in the third quarter. By the close of trade, the broad based STOXX Europe 600 fell 0.7%.

US sharemarkets were mixed overnight. Energy was the best performing sector, while REITs were the weakest. Financial services companies were stronger; PayPal gained 2.6% to be at a new record high, MasterCard rose 0.4% and Visa added 0.2%.

By the close of trade, the Dow Jones slipped 0.2%, the S&P 500 rose 0.1% and the NASDAQ gained 0.3%.

CNIS Perspective

As the world tackles the conflicting scenario of reopened economies and ending lockdowns versus potential second waves of infections from the coronavirus, financial markets find themselves similarly conflicted.

On one hand, sharemarkets remain priced for booming global growth but on the other hand bond markets point to a significant and sustained downturn. Meanwhile, foreign exchange markets are lacking any clear direction and we are seeing rising volatility across most currencies.

Nowhere has currency volatility been more evident than the jittery Australian Dollar (AUD). Whilst the US Dollar is known as the safe haven or ‘risk-off’ currency, the AUD is renowned as a proxy for global growth or ‘risk-on’ currency. The AUD’s recent instability highlights the lack of confidence the market has in the future direction of world economies.

This year alone the AUD has plunged to an 18-year low in March, then rebounded 28% in the space of three months and now over the last week has begun to soften again as investors recalibrate their growth expectations ahead of earnings season.

Australian Dollar Spot

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


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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