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Morning Market Update - 2 September 2019


Pre-Open Data

International Markets vs Australian Market

Key Data for the Week

Key economic data released this week:

  • Monday – CHINA – Caixin Manufacturing PMI
  • Monday – UK – Markit Manufacturing PMI
  • Tuesday – AUS – RBA Interest Rate Decision
  • Tuesday – US – Markit Manufacturing PMI
  • Wednesday – AUS – Gross Domestic Product
  • Wednesday – EUR – Retail Sales
  • Thursday – AUS – Trade Balance
  • Thursday – US – Initial Jobless Claims
  • Friday – EUR – Gross Domestic Product
  • Friday – US – Unemployment Rate

S&P ASX 200 Last 12 Months

Australian Market

The Australian sharemarket enjoyed its best session since mid-June, closing up 1.5%, and extending its recent rally for a fourth consecutive day. Gains were widespread, with all sectors closing higher, led by Consumer Staples, Health Care and Information Technology.

The big four banks all posted strong gains to lead Financials higher; Commonwealth Bank and Westpac both gained 2.1%, ANZ lifted 1.6% and NAB climbed 1.0%. The Materials sector was buoyed by mining giants BHP and Rio Tinto, as both companies strengthened 2.2%. Fellow ASX heavyweights, Telstra and CSL, further boosted the market, closing up 1.6% and 2.3% respectively.

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

Overseas Markets

European sharemarkets lifted on Friday to end the session at fresh one-month highs, after news emerged China and the US were willing to proceed on trade talks. The STOXX Europe 600 rose 0.7%, the German DAX lifted 0.9% and the UK FTSE 100 added 0.3%. However, the Italian FTSE MIB gave up 0.4%, after the Five-Star Movement gave potential coalition partner, the Democratic Party, a number of tough policy demands to agree to before they will form government together.

US sharemarkets were mixed in low volume trade on Friday, led by gains from the Financials, Industrials and Materials sectors. By the close of trade, the Dow Jones had gained 0.2% and the S&P 500 rose 0.1%, however, the NASDAQ slipped 0.1%.

Over the week, the Dow Jones strengthened 3.0%, the S&P 500 lifted 2.8% and the NASDAQ added 2.7%, as US markets closed higher following four straight weeks of decline.

CNIS Perspective

In what can only be an ominous sign for the Australian economy in coming months, building approvals continued their contraction in the month of July, falling 9.7% from June.

While monthly fluctuations are common in this data, the annual data confirms the pace of contraction actually quickened, with approvals down 28.5% for the year. Since peaking in 2017, building approvals have fallen in trend terms for 20 consecutive months.

Apartment approvals registered an 18.4% fall in the month and were down 44.2% in the year to July, to the lowest level since July 2012.

This continued weakness in the construction sector remains a significant risk to the economic outlook.

Easier monetary and fiscal conditions will flow through to the construction sector eventually, but this could be a fair way off yet.

Construction is a key sector and these results confirm pressure will remain on unemployment, consumer spending and wages growth for some time to come.

Number of Building Approvals (In thousands)

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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