Morning Market Update - 25 November 2019

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 – US – Housing Price Index
    • Tuesday – US – New Home Sales
    • Wednesday – AUS – Construction Work Done
    • Wednesday – US – Gross Domestic Product
    • Thursday – EUR – Consumer Confidence
    • Thursday – EUR – Industrial Production
    • Friday – EUR – Unemployment Rate

S&P ASX 200 Last 12 Months

Australian Market

The Australian sharemarket ended the final trading session of the week higher for the first time since Tuesday, led by strong gains in the Energy, Industrials, Information Technology and Materials sectors. Despite Friday’s gains, the ASX 200 endured its worst week in two months, as uncertainty around the US-China trade dispute continued to weigh on the market.

The Financials sector continued to be weighed down by Westpac, which gave up 1.6% on Friday, to end the week ~7% lower. The stock has now fallen to its lowest level since February, as its board said it "unreservedly apologises" for the money laundering and child exploitation scandal involving unmonitored payments to Southeast Asia. The other major banks were mixed; Commonwealth Bank strengthened 0.3% and ANZ lifted 0.2%, while NAB slipped 0.2%.

The Australian futures market points to a 0.18% rise today, being driven by broadly stronger international markets on Friday.

Overseas Markets

European sharemarkets rose on Friday, as positive news around the US-China trade deal and upbeat economic data out of major eurozone economies helped shares to log their best session in three weeks. Adjusted German GDP data confirmed the economy grew 0.1% in the September quarter, while French business activity rose in November. The German DAX gained 0.2%, the broad based STOXX Europe 600 rose 0.4% and the UK FTSE 100 strengthened 1.2%.

US sharemarkets also ended the session higher on Friday, as both the US and China made positive comments about a phase one trade deal, with President Trump stating a deal was “potentially very close”. Nordstrom rose 10.6%, after the luxury goods retailer announced quarterly profit beat forecasts. Tesla fell 6%, following mixed reviews on its newly unveiled electric pickup truck. By the close of trade, the Dow Jones gained 0.4%, while the S&P 500 and NASDAQ both added 0.2%.

CNIS Perspective

According to new estimates from the OECD, the world economy is now growing at its slowest pace since the financial crisis, as it expects global GDP growth of 2.9% for both this year and next, down from 3% in 2020. OECD chief economist Laurence Boone reported that "it would be a policy mistake to consider these shifts as temporary factors that can be addressed with monetary or fiscal policy: they are structural".

Besides trade wars and a sharp Chinese slowdown, bigger concerns include climate change, digitalisation, and ageing demographics.

While not an OECD member, China is tracked by the OECD, and is forecast to grow marginally faster in 2019 than had been expected in September, with growth of 6.2% rather than 6.1%.

However, the OECD said China will lose momentum, with growth of 5.7% expected in 2020 and 5.5% in 2021, in the face of trade tensions and the gradual transformation of activity away from exports.

Interestingly, the outlook for Britain improved marginally from September, as the prospect of a no-deal exit from the European Union recedes.

British growth was upgraded to 1.2% this year, from 1.0% previously, however, is expected to tick back down to 1.0% in 2020, before returning to growth of 1.2% in 2021.

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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