Morning Market Update - 22 June 2020

Pre-Open Data

International Markets vs Australian Market

Key Data for the Week

Key economic data released this week:

  • Monday – CHINA – PBoC Interest Rate Decision
  • Monday – US – Existing Home Sales
  • Tuesday – US – Markit Manufacturing PMI
  • Tuesday – US – New Home Sales
  • Wednesday – US – Housing Price Index
  • Thursday – US – Bank Stress Test Information
  • Thursday – US – Gross Domestic Product
  • Thursday – US – Initial Jobless Claims

    S&P ASX 200 Last 12 Months

Australian Market

The Australian sharemarket faded Friday afternoon to end the session flat, despite being up as much as 1.2% earlier in the day, after the latest government data released showed a rebound in retail sales across the nation. Retail sales rose 16.3% in May, following a 17.7% fall in the prior month. Consumer Discretionary and Information Technology stocks were the best performing sectors, with Materials the major laggard.

Buy-now-pay-later stocks rose, buoyed by the latest retail sales data; Afterpay gained 1.5% to close at a new all-time high, while Zip added 0.4%. Splitit continued to surge, ending the day up 6.9%, a day after the payments company announced a partnership with MasterCard, a multi-year agreement intended to widen the global reach of its payment method solution.

Nick Scali and Adairs strengthened 19.7% and 10.5% respectively, after both retailers provided positive sales updates. Nick Scali announced it would bring forward a dividend previously deferred due to the COVID-19 pandemic following strong sales in May and early June, while Adairs reported online sales had soared 92% on a year ago.

The Australian futures market points to a 1.33% fall today.

Overseas Markets

European sharemarkets rose on Friday, led by defensive stocks, as investors remained hopeful the EU's proposed €750bn stimulus package to help economies rebound from lockdowns will be passed. German airliner Lufthansa gained 3.0%, after the company’s biggest shareholder reached out to the nation’s politicians in the latest step of the airliner’s €9 billion euro bailout talks. The German DAX climbed 0.4% and the broad based STOXX Europe 600 lifted 0.6%, while the UK FTSE 100 added 1.1% after retail sales in the area rebounded 12% in May.

US sharemarkets were mixed on Friday. Reports of China’s plans to increase purchases of American farm goods was offset by renewed concerns of a second wave in COVID-19 cases in the nation. Arizona, California, Florida, South Carolina and Texas all hit record singly-day increases on Thursday, while there was a noticeable acceleration of cases in Arizona and Florida on Friday. The concern led the Cruise Lines International Association to extend suspension of operations from US ports until 15 September, while Apple slid 0.6% after the company announced it was re-closing 11 US stores. By the close of trade, the Dow Jones slipped 0.8% and the S&P 500 dipped 0.6%, while the NASDAQ was flat.

CNIS Perspective

June may have been the most ‘open’ month we have had for some time but hopes the global economy is on its way back to normality may be premature, according to the International Monetary Fund (IMF).

Two months after their predictions of the steepest recession in almost a century, the IMF have warned that a revised outlook due to be released on Wednesday may be even more pessimistic than previously thought.

The IMF note the COVID-19 downturn is remarkably synchronised in that both advanced and emerging economies have been significantly affected and both will endure recessions this year, the first time both have suffered in tandem since the Great Depression of the 1930s.

With renewed outbreaks of the virus over the past few days in the relatively clean countries of New Zealand and Australia, it does appear we have a long way to go before businesses will return to normal.

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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