Morning Market Update - 22 March 2018

Pre-Open Data


Key Data for the Week

Key economic data released this week:

  • Wednesday – US – Federal Reserve Interest Rate Decision – The FOMC raised the benchmark interest rate by 0.25%, as widely expected.
  • Wednesday – UK – Unemployment Rate fell to 4.3%, from 4.4% in December, the lowest level since 1975.
  • Thursday – AUS – Unemployment Rate
  • Thursday – UK – BoE Interest Rate Decision
  • Thursday – US – Initial Jobless Claims

Australian Market


The ASX 200 gained 0.23% yesterday, led by gains in the Energy sector following rising oil prices. The Materials sector also rose, boosted by a 5.45% rise in crop protection producer Nufarm and heavyweight BHP rising 0.87%. The major banks also gained; NAB rose 0.96%, ANZ lifted 0.89%, Commonwealth Bank put on 0.78% and Westpac rallied 0.57%.

Rio Tinto (RIO) announced after market Tuesday it has entered into a binding agreement with Glencore for the sale of its entire 82% interest in the Hail Creek coal mine and 71% interest in the Valeria project for $1.7bn. RIO will use some of its surplus liquidity to reduce debt, launching a bond repurchase plan of up to $2.3bn. RIO closed flat at $75.23 yesterday.

Nufarm Ltd (NUF) released its 1H18 earnings report yesterday, reporting a 7.4% pcp increase in revenue to $1.5bn, but a 66% decline in underlying EPS to 1.8c, impacted by a scheduled plant upgrade in Australia and tougher operating conditions in the Brazil market. The company declared an unchanged interim DPS of 5c. Earnings remain heavily weighted to the second half of the year and the company guided for 5-10% underlying EBIT growth for FY18. NUF closed 5.45% higher at $8.71.

The Australian futures market points to a 0.13% fall today.

Overseas Market 

All eyes were on the US Federal Reserve, which raised interest rates by 25 basis points as widely expected. There was a more upbeat tone in the Fed’s forecasts and commentary. US shares initially rose, but then retreated later in the session. The upbeat assessment on the economy was likely outweighed by concern over rising interest rates and the ongoing concerns about trade. The Dow and S&P 500 indices were both down 0.18%, whilst the NASDAQ gave up 0.26%.

In Europe markets softened; the UK’s FTSE 100 lost 0.32%, France’s CAC 40 fell 0.24%, however, Germany’s DAX bucked the trend, eking out a 0.01% gain.

CNIS Perspective 

‘Buy the rumour and sell the fact’ is often the case in financial markets, and last night the USD’s move was exactly that.

Over the past few days the USD had strengthened against a broader basket of currencies, and also the AUD, in anticipation of the US Federal Reserve raising their benchmark interest rate last night.

The USD strengthened a significant 2% against the AUD over the past few days, but this morning, after the rise was announced, gave back over 1% of the gains to be trading at 77.64 cents against the AUD.

What was reassuring about the rate rise was the market reaction. Both the equity and bond markets remained steady and only recorded minor negative movements, indicating an acceptance that rates are on a rising trajectory and also that the fundamentals are stronger to absorb such rises.


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


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: Investment, CNIS, AUD, USD

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