Morning Market Update - 25 June 2020


Pre-Open Data

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Key Data for the Week

Key economic data released this week:

  • Wednesday – US – Housing Price Index rose 0.2% in April, above expectations for a fall of 0.4%.
  • Thursday – US – Bank Stress Test Information
  • Thursday – US – Gross Domestic Product
  • Thursday – US – Initial Jobless Claims
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Australian Market

The Australian sharemarket rose 0.2% yesterday, to close higher for a fourth straight session in another mixed day of trade. 

The Financials sector weakened as the big four banks were mostly lower; ANZ was the weakest performer, down 0.8%, NAB fell 0.6% and Westpac slipped 0.4%, while Commonwealth Bank closed up 0.3%.

The Health Care sector saw strong gains; Sonic Healthcare gained 4.7% after announcing it expects flat earnings this year and most of its divisions have returned to pre COVID-19 revenues, while CSL and Ramsay Health Care both rose 1.1%.

Energy stocks were lower; Oil Search fell 3.2%, Santos slipped 1.7% and Woodside Petroleum lost 1.6%.

Freedom Foods Group dropped 14.5% after announcing Chief Executive Rory Macleod was on leave, a day after the resignation of its Chief Financial Officer. The company was placed in a trading halt, with a company announcement due next week.

The Australian futures market points to a 1.57% fall today, driven by weaker overseas markets.

Overseas Markets

European sharemarkets were lower on Wednesday, with the broad based STOXX Europe 600 down 2.7%. Travel stocks were amongst the weakest performers; International Consolidated Airlines fell 8.5%, Ryanair lost 5.8% and Air France slipped 3.9%.

 

US sharemarkets also fell overnight, with investors concerned about the resurgence of COVID-19 cases and the potential for new lockdown measures. All sectors closed lower, with Energy the weakest performer as WTI crude closed down 5.8%.

 

By the close of trade, the Dow Jones fell 2.7%, the S&P 500 lost 2.6% and the NASDAQ weakened 2.2%.

CNIS Perspective

The International Monetary Fund (IMF) has announced the decline in global growth due to the COVID-19 pandemic will be worse than it first anticipated. It now expects the world’s GDP to shrink by 4.9% this year, compared to its April forecast of a contraction of 3%. The IMF also expects a much deeper drop in consumer spending than it had previously estimated.

 

American political and business leaders have begun putting the brakes on the US’s gradual economic reopening, amid indications of a new wave of coronavirus cases spreading quickly in western and southern states. Apple said it was closing its seven retail stores in Houston, which authorities believe could be emerging as a new US hotspot, just days after shutting outlets in Arizona and three other southern states.

 

Adding to its trade war with China, trade tensions between the US and Europe flared up again overnight as Washington considers new tariffs on US$3.1bn of European goods, amid a dispute over aircraft subsidies.

With 131 days to the US Presidential election and stock markets appearing to be ahead of future earnings performance, market fluctuations are set to continue for 2020, on course to be the most volatile year in history.    

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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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