Morning Market Update - 22 June 2018

Pre-Open Data

International Market versus Australian Market

Key Data for the Week

Key economic data released this week:

  • Thursday – UK – BoE Interest Rate Decision – The Monetary Policy Committee voted 6-3 to leave rates on hold.
  • Thursday – US – Initial Jobless Claims unexpectedly fell last week to 218,000 for the week ended June 16. Claims have now fallen for four consecutive weeks.
  • Friday – EUR – Markit Manufacturing PMI
  • Friday – US – Markit Manufacturing PMI

Australian Market

S&P ASX 200 Last 12 months

The ASX 200 rose 0.96% yesterday, led by gains in the IT and Consumer Staples sectors.

Ramsay Health Care (RHC) announced it will record a $125m non cash impairment charge for FY18 NPAT, due to an onerous lease provision and asset write downs relating to its UK hospitals business. The company also downgraded its FY18 core NPAT guidance, from 8-10% down to 7% growth, and cited challenging operating conditions to continue in both Australia and the UK into FY19. RHC fell 7.5% to $57.59.

APN Outdoor (APO) announced it has received an unsolicited and conditional acquisition proposal from French outdoor advertising company JCDecaux. APN Outdoor's board of directors is widely expected to reject the $1.1bn offer of $6.52 per share, or an 11% premium to Wednesday’s closing price. APO shares closed 12.1% higher to $6.56.

The Australian futures market points to a 0.49% fall today, being driven by weak leads from international markets overnight.

Overseas Market 

Share market sentiment in the US continued to be weighed down by trade concerns overnight. The Dow fell 0.80%, the S&P 500 dropped 0.63% and the NASDAQ gave up 0.88%.

PayPal announced it has agreed to acquire Simility, a leading fraud prevention and risk management platform, for a purchase price of $120 million in cash, subject to certain adjustments. Paypal stated “the acquisition of Simility will enhance PayPal’s ability to deliver fraud prevention and risk management solutions to merchants globally”. PayPal ended the session up 0.02%

In Europe, markets also ended the session lower; the German DAX lost 1.44%, France’s CAC 40 fell 1.05% and the UK’s FTSE 100 dropped 0.93%.

CNIS Perspective 

Some White House officials are trying to restart last minute talks with China to avoid a trade war before US tariffs on Chinese products take effect on July 6.

Staff of the National Economic Council (NEC) have contacted US and Chinese government officials in recent days to gauge chances for high-level talks in the next two weeks. One idea NEC staff floated was to invite Chinese Vice President Wang Qishan to the US before the tariff deadline.

The outreach signals a willingness by some US officials to seek a truce before US$34 billion in Chinese products are hit with tariffs, rather than triggering a trade war between the world’s two largest economies. Still, the chances of such negotiations happening in the near term are slim as long as opponents inside the administration favour penalising Beijing. President Trump has shown no signs of backing down.

The US administration has said that after July 6, tariffs on an additional US$16 billion worth of Chinese goods will be imposed after a public review period.

After China swiftly responded with counter threats on the same amount of tariffs and timeline, Trump on Monday directed the US Trade Representative’s office to identify an additional US$200 billion worth of Chinese products that would be subject to a 10% tariff.

It is likely this tit-for-tat like trade war will continue, and expect market volatility to increase in the short term.

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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: CNIS, Dow Jones, Australian Market, ASX, Foreign Exchange, Internation Markets

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