Morning Market Update - 24 May 2017


Pre-Open Data


Key Data for the Week

Key economic data released this week:

  • Tuesday – EUR – German Business Climate index was stronger than expected, rising to 114.6 in May, from a reading of 113.0 in April. Business confidence is at its highest level since the data began in 1991.
  • Wednesday – US – New Home Sales
  • Wednesday – AUS – Construction Work Done
  • Wednesday – US – Markit Manufacturing PMI

Australian Market


The Australian market traded higher after open, buoyed by the big banks and a positive lead from the US. However, the positivity was short lived, as the major lenders failed to hold onto early gains and heavy sell-offs from regional banks and mining stocks further exaggerated the downward trend, and the ASX 200 index closed lower. There were mixed results from the sectors; Healthcare gained most significantly, while Materials lagged.

Rio Tinto announced it will further reduce debt by up to US$2.5b via a bond purchase plan.

Fairfax continues to sit at six year highs, as two private equity firms remain interested in its purchase.

The Australian futures market points to a 0.19% rise today, following mixed global markets overnight.

Overseas Market

European share markets were mixed again on Tuesday. Shares in technology stocks led gains, with Nokia up 6.4% after settling a patent dispute with Apple. Positive purchasing manager surveys supported share prices. The Euro STOXX 600 index rose by 0.2%, and, while the German DAX was higher by 0.3%, the UK FTSE lost 0.2%.

US share markets rose as traders assessed White House budget proposals. The budget plan was largely as expected, including measures to increase infrastructure and military spending and cut government spending by US$3.6 trillion over a period of 10 years.

Global oil prices rose ahead of Thursday’s meeting between OPEC oil ministers and some non-OPEC oil producers like Russia. Analysts expect them to agree to further production cuts, with Saudi Arabia favouring the cuts being extended to March 2018.

The White House plans to sell half of the nation's 688 million barrels of oil stockpile from 2018 to 2027, raising US$16.5 billion. However, investors are sceptical whether Congress will support the plans. Brent crude rose by US$0.28, or 0.5%, to US$54.15 a barrel.

CNIS Perspective

Tax reform is never easy in any country, but if ever there was a case where tax reform is welcome, and even overdue, it has to be India’s announcement to introduce a GST.

In a country where less than 1% of the 1.3 billion population pay income tax, the new GST will boost tax revenues and broaden India’s tax base.

While it has taken a decade of debate and negotiation to agree on the GST, it is an enormous step forward that will reshape India’s economy and raise significant tax revenues that can be used for infrastructure, education and health, and lay the ground work for longer term growth. India’s growing economy needs, and its relatively young population wants, more and better roads, railways, airports, electricity, communications and ports.

Asian economic growth has long been dominated by China, with talk that India had the potential to also be a big player. The introduction of the GST is exactly what is needed to underpin India’s economic growth, and see this become a reality.

Contact Us

Should you wish to discuss this or any other investment related matter, please contact our Investment Services Team on (02) 4927 8844.


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, Investment Market, China, GST

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