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Morning Market Update - 2 December 2019


Pre-Open Data

International Markets vs Australian Market

Key Data for the Week

Key economic data released this week:

    • Monday – AUS – TD Securities Inflation
    • Monday – EUR – Markit Manufacturing PMI
    • Monday – US – Markit Manufacturing PMI
    • Tuesday – AUS – RBA Interest Rate Decision
    • Wednesday – AUS – Gross Domestic Product
    • Wednesday – US – Markit Services PMI
    • Thursday – AUS – Retail Sales
    • Thursday – EUR – Gross Domestic Product
    • Friday – US – Unemployment Rate

S&P ASX 200 Last 12 Months

Australian Market

The Australian sharemarket was unable to maintain its early momentum on Friday, as the ASX 200 slipped in afternoon trade to end the session 0.3% lower, after earlier hitting a new all-time intra-day high. Utilities was the weakest performing sector, weighed down by APA Group (-1.8%) and AGL Energy (-0.4%).

The big four banks dragged Financials stocks lower, with NAB the worst performer, closing down 1.1%, while Westpac slid a further 0.7%, to record its eighth day of losses in its last ten trading sessions.  

Materials stocks also weighed on the broader market as BHP and Rio Tinto closed down 0.7% and 0.5% respectively, while gold miners were not immune to the sell-off; Newcrest Mining lost 1.0% and Evolution Mining dropped 1.3%.

The Australian futures market points to a 0.07% rise today.

Overseas Markets

European sharemarkets fell on Friday, as upbeat economic data was offset by a setback in US-China trade talks. China warned the US to expect a retaliation in response to President Trump signing two bills into law in support of pro-democracy protestors in Hong Kong. The announcement weighed on trade sensitive miners (-1.4%) and automakers (-1.1%). The UK FTSE 100 weakened 0.9%, the STOXX Europe 600 fell 0.4% and the German DAX slipped 0.1%.

US sharemarkets also closed lower on Friday, down from their recent record highs in a very quiet session of trade. The Energy sector was the biggest weight on the market, as the price of crude oil fell amid signals OPEC and allied crude producers are averse to deepening output cuts when they meet this week. By the close of trade, the Dow Jones and S&P 500 both gave up 0.4%, while the NASDAQ lost 0.5%.

CNIS Perspective

Friday’s release of Australia’s weak credit growth was not unexpected and is consistent with weak growth in the overall domestic economy.

In particular, the housing sector remains subdued and even though October’s lending to this crucial sector was up 0.1% from September, the annual rate has slipped to 3.0%, which is the slowest annual rate since this data series began in 1976.

It suggests householders are using savings from lower interest rates to reduce their mortgage balances and are not being enticed into borrowing for additional housing exposure.

The RBA will be hoping their recent rate cuts, and the prospect for more, will flow through to borrowing in the housing sector.

Housing construction is critical to the economy and in particular employment, and it’s difficult to see interest rates rising, until some strength returns to both.

Private Sector Credit

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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