Morning Market Update - 23 March 2020


Pre-Open Data

International Markets vs Australian Market

Key Data for the Week

Key economic data released this week:

  • Monday – US – Chicago Fed National Activity Index
  • Tuesday – EUR – Markit Manufacturing PMI
  • Tuesday – US – Markit Manufacturing PMI
  • Wednesday – UK – Consumer Price Index
  • Wednesday – UK – Producer Price Index
  • Wednesday – US – Durable Goods Orders
  • Thursday – UK – Retail Sales
  • Thursday – US – Initial Jobless Claims

    S&P ASX 200 Last 12 Months

Australian Market

The Australian sharemarket ended its worst week since October 2008 with a modest gain on Friday, closing up 0.7%. The session was more subdued than usual, with Friday the first trading day in two weeks the ASX 200 didn’t at least gain or drop 3%.

Energy stocks rebounded from recent losses, as the price of oil lifted 2.4% after US President Trump announced his administration was seeking US$3 billion from Congress to top up the country’s strategic petroleum reserves. Santos strengthened 10.9% and Oil Search added 15.3%, while Woodside Petroleum eked out a 0.6% gain.

The big four banks were mostly stronger; Westpac surged 8.5%, ANZ climbed 7.5% and NAB lifted 6.8%, however, Commonwealth Bank eased 1.7%. Recent outperformers, supermarket giants Woolworths and Coles both fell, closing down 6.0% and 2.7% respectively, while CSL dragged Health Care stocks lower, ending the session down 4.6%.

The Australian futures market points to a 1.85% fall today, driven by weaker US markets on Friday.

Overseas Markets

European sharemarkets rose for a second consecutive session on Friday, boosted by additional measures taken by the European Central Bank and the Bank of England to combat the economic impact of the coronavirus outbreak. Travel and leisure stocks were among the strongest performers, with the sector surging nearly 10%, after previously trading at a near 19-year low earlier in the week. 

US sharemarkets closed lower on Friday, as more states announced lockdowns. California issued a statewide “stay at home” order, while New York ordered 100% of their workforce to stay at home. However, President Trump said he is not considering a national lockdown at this time. AT&T slipped 8.7% after the Telecommunications giant announced it is cancelling its US$4 billion accelerated share buyback with Morgan Stanley, which was due to occur in Q2. Boeing slipped a further 2.8% after the company signalled it is considering cutting its dividend and laying off staff.

CNIS Perspective

With the turmoil in financial markets continuing, investors are already looking at re-entry prices and considering when to make the move back into markets, to benefit from the recovery.

On the one hand you don’t want to miss out, but on the other, you don’t want to try and catch the falling knife!

One factor we are considering is when to expect the turnaround in the US economy. It is still the largest economy in the world and pivotal to the financial market recovery.

At the moment though, cases of Covid-19 are still escalating in the US, and given the volume of people, their health system and importance of their economy generally, it seems logical that markets will turn around, when the virus is under control.

A graph of the number of active cases illustrates the US seems a long way from being clear of the virus and therefore recovery mode.

Other countries are also experiencing the rapid growth in cases, but none are as important to global financial stability as the US.

Total Cases

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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